IFRS Update – Standards published in 2011

At the end of 2010, the IASB and the FASB (Financial Accounting Standards Board) decided to amend their common work plan in order to refocus on priority projects. The main objective was to complete the most important convergence projects by 30 June 2011, in time for the SEC’s (Securities Exchange Commission) planned 2011 vote on the adoption of IFRS.

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by Patricia Meteil-Dutartre is member of SAP EPM

SAP BusinesssObjects Edge Planning and Consolidation- Streamline Planning and Reduce Business Risk

To manage performance efficiently, midsize companies need a unified planning, budgeting, and consolidation solution. The SAP® BusinessObjects™ Edge Planning and Consolidation application streamlines the planning process and produces management reports that instill confidence and reduce business risk.

CFOs and other senior managers are under tremendous pressure to maximize profitability, reduce operational costs, minimize risk, and improve stakeholder confidence. That pressure is even higher in a slow economy when revenue forecasts are at risk and profitability is in danger.

To be effective, business leaders need reliable, up-to-date financial and operational data both for planning purposes and for budgeting, forecasting, analysis, and statutory and management reporting. They need to be able to integrate corporate and departmental planning, model cost scenarios, and perform sensitivity analysis in order to determine operational budgets based on strategic plans and assumptions. They also need a way to help ensure a fully documented audit trail and compliance with regulatory mandates such as the Sarbanes-Oxley Act for consolidating and reporting company information. The key to their success is an effective planning and consolidation environment.

Midsize companies face the additional pressure of having to operate with limited IT resources. Hence, they often resort to unmanaged spreadsheets for planning and consolidation, rendering the process chaotic, frustrating, and ineffective. The spreadsheets give them familiar modeling functionalities but lack structured processes and centralized data – resulting in significant time and manual effort throughout the planning process. Budgeting can quickly deteriorate into a “spreadsheet nightmare” in which operations managers submit unrealistic budgets, executives change figures without the operations managers’ knowledge, and version control problems multiply. There is a risk of errors resulting from a lack of checks and balances when entering or updating data. Statutory consolidations can be equally problematic when data is distributed across different departments, systems, and even countries.

The problem is made worse when critical operational and financial information is scattered across multiple applications and databases, or trapped as unstructured data residing in employee spreadsheets or e-mail attachments. Changing to a packaged software solution is usually too complex and expensive to meet the needs of midsize organizations. That’s why most of these organizations continue to settle for unmanaged spreadsheets – and to operate at a significant competitive disadvantage.

The SAP® BusinessObjects™ Edge Planning and Consolidation application addresses these issues by providing an integrated planning, budgeting, forecasting, and consolidation solution designed specifically for midsize organizations. The solution bridges the gap between the creation of financial and business plans and the daily operation of those plans – and does so at a cost midsize organizations can afford. By offering an integrated set of planning and budgeting tools and providing an intuitive, userfriendly solution, it helps align plans across the entire organization – driving great results no matter the size of the organization. That’s why many midsize companies are turning to SAP BusinessObjects Edge Planning and Consolidation.

How to … Configure the Ownership Manager Automated Calculations for SAP BusinessObjects Planning and Consolidation 10.0, version for Netweaver.

Issue:

How to … Configure the Ownership Manager Automated Calculations for SAP BusinessObjects Planning and Consolidation 10.0, version for Netweaver.

Ownership Manager has the ability to calculate proposals for key financial parameters (Consolidation Method to be employed, Consolidation Percent, Percent Control, and Percent Financial Interest). This guide provides a detailed explanation of the technical components of the Ownership Manager's data model and the key components required for these calculations.

 Issue:

Application Parameters for Consolidation

As a prerequisite to using consolidations, you must update some settings via the ’set application parameters’ option from the web client. The parameters reference how organizational information from the ownership application is used for example. You did this back on day one and now you’ll see how they (the ones that start with ’ORG’ )are used in the Dynamic Hierarchy Editor (DHE).

• Opening Balance: Enables the business rule table for balance carry forward.
• Org_Accountlist: Member id’s of the ownership account dimension that store methods, % consolidation and , % ownership.
• Org_Accountdown: member id of the ownership account that specifies the Position of a consolidation entity within the group.
• Org_intco: the 3rd party member in the Intercompany dimension.
• Org_ownershipcube: name of the linked Ownership application.
• Org_parentproperty: property name in the Groups dimension to define the hierarchy used in the dynamic hierarchy editor.
• Ownership_App: the consolidation logic requires the Ownership application .

Consolidación Legal en SAP BPC - Aplicaciones

La aplicación Ownership es del tipo: Non Reporting / Ownership. LAs dimensiones que contiene son Categoría y Time. La dimensión Entity es la misma que la apliación Legal. O_Acct (OwnAccount) contiene los Porcentajes, Metodos, y Parent Positions. La dimensión Groups contiene los Grupos de Consolidación.


Los datos de Ownership: Todos los datos están incluidos en un Grupo específico. Los datos de Ownership son capturados y almacenados por Entity y Intco. Los procentajes y los métdodos son por Entidad.

Overview of Business Rules

The following Business Rule (table-based logic) Functions are delivered with SAP Business Planning and Consolidation:

• Account Transformation.
• Currency Conversion
• Intercompany Booking
• Carry-Forward Rules
• US Eliminations
• Validations
• Automatic Adjustments

Business rules provide the mathematical foundation for your SAP Business Planning and Consolidation applications.
 
Business Rules is table based logic that provides the flexibility to customize certain delivered functions to meet specific business needs, without having to understand scripting/programming

What is Financial Consolidation?

Financial consolidation is an accounting process that allows a company to summarize operating data for all subsidiaries in a single set of financial statements. This procedure also helps investors and regulators understand the full scope of a corporation's activities and ensures that these activities comply with rules, guidelines and requirements applicable to the company.

Simply stated, financial consolidation means regrouping financial data for a company's segments and subsidiaries into a set of accounting records---as if these records were the financial statements of a single company.
  

Function
# Financial statement consolidation serves three purposes. First, it helps regulators review all decisions that a company's top management makes and ensures that these decisions comply with regulations and industry practices. Second, it allows investors to gauge a firm's market share, competitive standing and business performance. Third, it helps a company's top leadership evaluate the economic health of the company and identify nonperforming areas, countries or segments.


Significance
# Financial consolidation is a process that complies with generally accepted accounting principles (GAAP) and SEC requirements. This process is important for two reasons. First, it helps a regulator, such as the U.S. Department of Justice, monitor "monopoly" initiatives from companies in industries, states or sectors ("monopoly" indicates that a single company operates in a market and has no competitor). Second, it helps investors, suppliers and customers understand interrelations between companies. For example, Supplier A may decide to stop selling to Customer B if it finds out that Customer B owns Supplier C, a competitor to Supplier A.

Control Concept
# The control concept explains the level at which a company may consolidate the financial statements of a subsidiary. There are two rules: simple majority ownership and "significant control". Simple majority ownership occurs when an investor owns more than half of a corporation's equity. "Significant control" indicates practical power or influence in decision making and may occur even if an owner has less than 50 percent ownership.


Economic Entity Concept
# The concept of economic entity means that financial consolidation treats all subsidiary activities, processes and policies as if they were part of a single company. All subsidiary financial statements are grouped into a consolidated set of financial statements.

Dimensiones necesarias para una Consolidación Legal

A la hora de realizar una Consolidación Legal se necesita una serie de aplicaciones con sus respectivas dimensiones. A continuación se detallan:

Esta es la lista de todas las dimensiones necesarias para la Aplicación Legal:

C_Acct (A)
C_Category (C)
C_Datasrc (D)
Flow (S)
Group (R)
Entity (E)
Intco (I)
Time (T)


Una aplicación donde se almacenan los Ratios (Tasa) de cambio. La lista de dimensiones necesarias son:

R_Acct (A)
C_Category (C)
R_Entity (E)
InputCurrency(R)
Time(T)


Una aplicación Ownership, donde se almacenan los perímetros a tener en cuenta en la Conso. Legal
Las dimensiones son:

O_Acct (A)
C_Category (C)
Entity (E)
Time (T)
Intco (I)
Groups(R)

Ya sabes que para que para crear un dimensión tienes que ir a la consola de Admnistración, ir a la librería de dimensiones y en el panel de acciones de la izquierda "Añadir una nueva dimensión".

Definición de Métodos de Consolidación - Resumen

Método Integración Global
Este método supone la incorporación al balance de la sociedad dominante, la totalidad de los bienes, derechos y obligaciones que componen el patrimonio de las sociedades dependientes. Se utiliza el mismo criterio para las cuentas contables de la cuenta de Pérdidas y Ganancias.


Método Integración Proporcional
El método de la integración proporcional supone la incorporación al balance y cuenta de resultados de la sociedad dominante, los bienes, derechos y obligaciones, así como los gastos e ingresos de la sociedad dominada, pero en el porcentaje correspondiente, no en la totalidad.


Procedimiento Puesta en Equivalencia
Este constituye la tercera forma de integrar los datos de una sociedad y consiste en la sustitución en el balance de la sociedad dominante del valor contable de la participación por la imputación proporcional del patrimonio neto de las sociedades participadas.