D96139GC10_les14

14 Introducing Consolidations

Copyright © 2016, Oracle and/or its affiliates. All rights reserved.

Objectives After completing this lesson, you should should be able to: • Discuss consolidation methods. • Explore the reporting consolidation option. • Examine the balance transfer consolidation option. • Define integration with Oracle Hyperion Financial Management with Oracle Fusion General Ledger.


Oracle Financials Cloud: Enterprise Structures with General Ledger Implementation 14 - 2

Consolidation Methods


Select the best Oracle Fusion Accounting Hub consolidation solution for your enterprise: •

•

•

Reporting Only Consolidations: If your subsidiaries and your corporate ledger share the same chart of accounts and calendar. Balance Transfer Consolidations: If your subsidiaries and your corporate ledger have either or both different charts of accounts and diff erent calendars. Financial Management Consolidations: If there are complex factors in your financial consolidation requirements such as: -

-

Complex company structures such as joint ventures, minority interest holdings, partially or fully owned subsidiaries. Multiple heterogeneous systems including non general ledger data sources that are required to support non-financial or industry specific metrics, disclosures, and footnote schedules.


Reporting Only Consolidation Method: Example


All subsidiaries and your corporate ledger share the same calendar. One of your subsidiaries has a local chart of accounts and local currency. This subsidiary uses a secondary ledger to record balances in the corporate chart of accounts and t he corporate currency. Two subsidiaries have a local currency and use reporting currency f unctionality to record balances in the corporate currency. With the Reporting Only Consolidation method, perform the following tasks: •

•

•

•

Group the ledgers in a ledger set. This assumes the ledgers share the same chart of accounts and calendar. Translate balances to the corporate currency for ledgers not in the corporate currency. Include these ledgers in the ledger set. In the example, the Reporting Currency and Secondary Ledgers are included in the ledger set. Create eliminating entries. Report using the ledger set and the corporate currency as parameters to view t he consolidated balances.

Note: If each entity’s ledger has a different chart of accounts or calendar from the corporate chart of accounts and calendar, a secondary ledger would need to be maintained that conforms to the common chart of accounts and calendar so that this could be included in t he consolidation ledger set. Oracle Financials Cloud: Enterprise Structures with General Ledger Implementation 14 - 4

Reporting Only Consolidation Method: Example Your company, Vision Corporation, needs to consolidate across its entities worldwide using the Reporting Only Consolidation Method.

You have four entities: • Vision US • Vision Canada • Vision UK • Vision Germany


•

•

•

Vision Corporation uses secondary ledgers and reporting currencies to align all ledgers to the corporate chart of accounts, calendar, and currency. The Vision Corporate ledger is an elimination ledger to hold the elimination entries. Financial Reporting functionally is used to create the consolidation reports.


Reporting Consolidation with Multiple Levels: Level One Vision North America Elimination Ledger with:

Vision EMEA Elimination Ledger with:

• Vision US

• Vision UK

• Vision Canada

• Vision Germany


The Vision Corporation Consolidation can happen at two levels. For level one, both ledger sets have been created for the three ledgers to enable creat ion of consolidation reports in Financial Reporting. Level One creates eliminations for transactions between Vision US and Vision Canada and then for transactions between Vision UK and Vision Germany.


Reporting Consolidation with Multiple Levels: Level Two • Vision Corporate elimination ledger is used to record elimination entries between all four entities. • A ledger set has been created for the five ledgers to enable creation of consolidation reports in Financial Reporting.


Level two creates eliminations for transactions between all four subsidiaries.


Elimination Entries Example The arrows represent the business transactions occurring between the entities.


The balances need to be eliminated in the consolidation are between entities within each ledger set.


Elimination Entries Example: Transaction Vision US pays Vision Canada 10,000 USD for copper wiring. Company

Company

Vision US Expense due from Vision Canada

Debit

Credit

10,000 USD

Vision US I/C Payable due from Vision Canada Vision Canada I/C Receivable from Vision US

10,000 USD

10,000 USD

Vision Canada Revenue received from Vision US

10,000 USD



Elimination Entries NA Level One Example: Elimination Entry • The eliminations are accomplished using the Calculation Manager by creating allocation rules. • The elimination adjustments are recorded in an elimination ledger. Company

Company

Vision US I/C Payable

Debit

Credit

10,000 USD Vision US Expense

Vision Canada Revenue

10,000 USD 10,000 USD

Vision Canada I/C Receivable

10,000 USD



Balance Transfer Consolidation Method


•

•

•

•

•

•

If multiple subsidiaries and the corporate ledger do not share the same chart of accounts and calendar, use the Balance Transfer Consolidation method and the reporting solutions listed in the graphic. Translate balances to the corporate currency for ledgers not in the corporate currency. Create a chart of accounts mapping to map subsidiaries account values to the corporate chart of accounts. Transfer balances from the subsidiaries to the corporate consolidation ledger using Run the Transfer Ledger Balances Process which transfers between any source and target ledger pair or the Balance Transfer process for Balance Level secondary ledgers. Create eliminating entries using journal entries or the Calculation Manager in the corporate consolidation ledger. Generate a report on the consolidated balances net of eliminations in the corporate consolidation ledger.


Transfer Ledger Balances Process Parameters • Source and Target Ledgers • Chart of Accounts Mapping • Source Ledger and Target Ledger Period • Run Journal Import • Create Summary Journals • Run AutoPost • Balancing Segment



Practice 14-1 Overview: Creating a Chart of Accounts Mapping This practice covers the following topics: • Mapping chart of accounts.



Practice 14-2 Overview: Submitting the Transfer Ledger Balances Process This practice covers submitting the transfer ledger balances process.



Reporting Only Versus Balance Transfer: Pros Reporting Only Consolidation • No need to run additional processes to consolidate unless ledgers have a different currency than the consolidation currency. • View the consolidated balances anytime. This cannot be done in the Balance Transfer Consolidation method because that method requires a balance transfer be done to achieve consolidation. • Faster close. Balance Transfer Consolidation: Does not require a standardized chart of accounts and calendar.


When reviewing balances that use either consolidation method, verify that the translation to the consolidation currency is current.


Reporting Only Versus Balance Transfer: Cons • Reporting Only Consolidation: Requires a standardized chart of accounts and calendar for the subsidiaries and corporate ledgers to group ledgers into ledger sets. • Balance Transfer Consolidation: – May require an additional consolidation ledger to maintain balances or the current parent ledger can serve as the consolidation ledger. – You need to run the balance translation process if the currency is different from the consolidation currency, and then run the transfer processes to view the consolidated balances. – Maintaining charts of accounts mappings can be labor intensive. – Outdated balance transfers have to be reversed and posted, and then a new balance transfer process needs to be run every time the source ledger's balance changes. Copyright © 2016, Oracle and/or its affiliates. All rights reserved.

Additional Information for Balance Transfer Consolidation: •

•

You can use your parent ledger and just transf er the subsidiary balances directly into that ledger. When the source ledger’s balances change may require translation to be run again if ledger currency is different than consolidation currency. The previous transfer will need to be reversed and the transfer run again.


Oracle Hyperion Financial Management Integration Overview



Financial Management Integration Option • The Oracle Fusion Accounting Hub includes integration to Oracle Hyperion Financial Management through the Enterprise Resource Planning (ERP) Integrator. • Use the integration to bring general ledger balances from the Oracle Fusion Accounting Hub to Oracle Hyperion Financial Management to perform complex consolidations. • Drill through from Oracle Hyperion Financial Management to the Oracle Fusion Accounting Hub balances.



Financial Management Integration Implementation • Map chart of accounts values and hierarchies from the Oracle Fusion Accounting Hub to the Oracle Hyperion Financial Management dimensions. • Load data from the general ledger balances table to Oracle Hyperion Financial Management after performing account transformation of the Oracle Fusion Accounting Hub chart of accounts in Oracle Hyperion Financial Management. • Perform advanced consolidation in Oracle Hyperion Financial Management. • Drill through from Oracle Hyperion Financial Management to the Oracle Fusion Accounting Hub balances stored in the general ledger balances table.



Mapping Segments to Financial Management Dimensions Map one to one or concatenate segments into a single Oracle Hyperion Financial Management dimension.


When integrating with Oracle Hyperion Financial Management, you can use the above dimensions for consolidation. Data is summarized across segments that are not mapped to Oracle Hyperion Financial Management dimensions. In this example: •

Company is mapped to Company.

•

Cost Center and Line of Business are concatenated and mapped to Department

•

Account is mapped to account.

•

Product is mapped to Product.

•

Intercompany is not mapped and its data is summarized.


Summary In this lesson, you should have learned how to: • Discuss consolidations methods. • Explore the reporting consolidation option. • Examine the balance transfer consolidation option. • Define integration with Oracle Hyperion Financial Management with Oracle Fusion General Ledger.



D96139GC10_les14

Recommend Documents