fc 10.0 starter kit for ifrs operating guide.pdf

8/9/2019 FC 10.0 Starter Kit for IFRS Operating Guide.pdf

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SAP® BUSINESSOBJECTS™ FINANCIAL

CONSOLIDATION 10.0, STARTER KIT FOR IFRS Operating Guide


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Copyright © 2011 SAP AG. All rights reserved. SAP, R/3, SAP NetWeaver, Duet, PartnerEdge,ByDesign, SAP Business ByDesign, and other SAP products and services mentionedherein as well as their respective logos are trademarks or registered trademarks of SAP AGin Germany and other countries. Business Objects and the Business Objects logo,BusinessObjects, Crystal Reports, Crystal Decisions, Web Intelligence, Xcelsius, and otherBusiness Objects products and services mentioned herein as well as their respective logosare trademarks or registered trademarks of Business Objects S.A. in the United States andin other countries. Business Objects is an SAP company. All other product and service

names mentioned are the trademarks of their respective companies. Data contained in thisdocument serves informational purposes only. National product specifications may vary.These materials are subject to change without notice. These materials are provided by SAP

AG and its affiliated companies ("SAP Group") for informational purposes only, withoutrepresentation or warranty of any kind, and SAP Group shall not be liable for errors oromissions with respect to the materials. The only warranties for SAP Group products andservices are those that are set forth in the express warranty statements accompanyingsuch products and services, if any. Nothing herein should be construed as constituting anadditional warranty.

2011-03-01

Legal No part of this starter kit may be reproduced or transmitted in any form or for any purposeDisclaimer without the express permission of SAP AG. The information contained herein may be

changed without prior notice.Some software products marketed by SAP AG and its distributors contain proprietarysoftware components of other software vendors.The information in this starter kit is proprietary to SAP. No part of this starter kit‟s contentmay be reproduced, copied, or transmitted in any form or for any purpose without theexpress prior permission of SAP AG. This starter kit is not subject to your licenseagreement or any other agreement with SAP. This starter kit contains only intended content,and pre-customized elements of the SAP® product and is not intended to be binding uponSAP to any particular course of business, product strategy, and/or development. Pleasenote that this starter kit is subject to change and may be changed by SAP at any time

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Contents

Chapter 1 Introduction ........................................................................................................................ 10

Presentation ......................................................................................................................... 10

Organization ................................................................................................................ 10

Other Documentation................................................................................................... 10

Database Structure .............................................................................................................. 10

Flow-Based Consolidation ................................................................................................... 11

List of Accounting Flows .............................................................................................. 12

Entering Data in Flows................................................................................................. 14

Balancing Flows........................................................................................................... 15

Chapter 2 Initializing the Consolidation ............................................................................................ 16

Section Objectives ....................................................................................................... 16

Key Points .................................................................................................................... 16

Suggested Approach ................................................................................................... 16

Documents to be kept .................................................................................................. 16

Updating Reporting Units ..................................................................................................... 16

Key Concepts .............................................................................................................. 16

Structure of the Reporting Unit Table .......................................................................... 17

Procedure .................................................................................................................... 17

Breakdown by Division ................................................................................................ 18

Creating Packages ............................................................................................................... 18

Creating a Reporting ID ............................................................................................... 19

Creating Reporting Sets .............................................................................................. 20

Sending Opening Packages ........................................................................................ 20

Entering and Updating Conversion Rates ........................................................................... 20

Conversion Rate Tables .............................................................................................. 20

Conversion Rate Types ............................................................................................... 21

Entering Conversion Rates .......................................................................................... 21

Chapter 3 Collecting Data ................................................................................................................... 23


Key Points .................................................................................................................... 23


Entering Data at Data Entry Site .......................................................................................... 23

Receiving Packages .................................................................................................... 23

Loading Data into Packages ........................................................................................ 24

Publishing Packages ................................................................................................... 24

Receiving, Checking and Integrating Packages .................................................................. 24


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Receiving Packages .................................................................................................... 24

Running Package Controls .......................................................................................... 24

Integrating Packages ................................................................................................... 24

Sending a Given Package Several Times ................................................................... 24

Chapter 4 Consolidation Scope ......................................................................................................... 26


Key Points .................................................................................................................... 26


Documents to be kept .................................................................................................. 26

Concepts and Definitions ..................................................................................................... 26

Definitions .................................................................................................................... 26

Defining Scopes........................................................................................................... 28

Portfolios .............................................................................................................................. 29

Creating Portfolios and Portfolio Occurrences ............................................................ 29

Copying a Portfolio Occurrence ................................................................................... 30

Controls and Corrections ............................................................................................. 30

Printing a Portfolio Occurrence .................................................................................... 31

Scopes ................................................................................................................................. 32

Statutory and Reporting Scopes .................................................................................. 32

Creating a Scope ......................................................................................................... 32

Making Changes to a Statutory Scope Manually ........................................................ 32

Specific Cases ............................................................................................................. 33

Hierarchical Scope ....................................................................................................... 33

Printing a Scope .......................................................................................................... 33

Chapter 5 Processing the Data: Key concepts ................................................................................. 34


Key Points .................................................................................................................... 34


Introduction .......................................................................................................................... 35

Manual Journal Entries ........................................................................................................ 37

Procedure .................................................................................................................... 37

Defining a Journal Entry Header ................................................................................. 37

Audit IDs ...................................................................................................................... 38

Converting Data ................................................................................................................... 40

Main Principles ............................................................................................................ 40

YTD and Periodic Conversion ..................................................................................... 41

Consolidation Processing .................................................................................................... 42

Defining a Consolidation .............................................................................................. 42

Running a Consolidation Processing........................................................................... 42


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Retrieving and Checking Data ............................................................................................. 43

Data Retrieval Reports ................................................................................................ 43

Checking Consolidated Data ....................................................................................... 43

Chapter 6 Making adjustments to individual accounts ................................................................... 46


Key Points .................................................................................................................... 46

Correcting Package Data ..................................................................................................... 46

Correcting Differences for Net Income N-1 ................................................................. 46

Recommended Solution: Package Processing ........................................................... 46

Other Package Corrections ......................................................................................... 50

Making Adjustments to Packages ........................................................................................ 51

Making Fair Value Adjustments ................................................................................... 51

Other Adjustments ....................................................................................................... 53

Making IFRS Adjustments ................................................................................................... 53

Chapter 7 Intercompany Transactions .............................................................................................. 56


Key Points .................................................................................................................... 56


Checking Intercompany Declarations .................................................................................. 56

Running Intercompany Reconciliations ....................................................................... 56

Correcting Differences ................................................................................................. 59

Elimination of Internal Transactions..................................................................................... 61

Elimination of Reciprocal Transactions ....................................................................... 61

Dividends ..................................................................................................................... 64

Provisions .................................................................................................................... 67

Gains or Losses on Internal Transfer of Assets .......................................................... 70

Chapter 8 Deferred Taxation .............................................................................................................. 75


Key Points .................................................................................................................... 75

Overview .............................................................................................................................. 75

Identifying the Bases of Deferred Tax ......................................................................... 75

Booking Deferred Tax .................................................................................................. 75

Accounting for Deferred Tax ........................................................................................ 76

Chapter 9 Consolidation Entries ........................................................................................................ 77

Section objectives ........................................................................................................ 77

Calculation of Non-controlling Interests ............................................................................... 78

Principles ..................................................................................................................... 78


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Elimination of Investments ................................................................................................... 80

Principles ..................................................................................................................... 80

Converting Consolidated Shareholders' Equity and Investments in Subsidiaries ............... 85

Principles ..................................................................................................................... 85

Manual Journal Entries ................................................................................................ 85

Analysing the changes in the foreign currency exchange reserve for the Group ....... 89

Optional Conversion Process on Investment and Capital/Share Premium ................. 90

Equity Method ...................................................................................................................... 92

Principles ..................................................................................................................... 92

Booking of Goodwill ............................................................................................................. 96

Full and Proportionate Consolidation Methods ........................................................... 96

Goodwill for EM Entities .............................................................................................. 98

Chapter 10 Scope Changes .................................................................................................................. 99


Key Points .................................................................................................................... 99

Overview of the Scope Changes ......................................................................................... 99

Typology of Scope Changes ....................................................................................... 99

Scope Changes: Using the Right Flow ...................................................................... 100

Events Covered in this Documentation ..................................................................... 101

Incoming Entities ................................................................................................................ 101

Preparing the Reporting Cycle .................................................................................. 101

Automatic Processing ................................................................................................ 102

Manual Processing .................................................................................................... 103

Outgoing Entities ................................................................................................................ 104

Preparing the Reporting Cycle .................................................................................. 104

Automatic Processing ................................................................................................ 106

Manual Processing .................................................................................................... 107

Chapter 11 Completing the Consolidation ........................................................................................ 108

Section Objectives ..................................................................................................... 108

Key Points .................................................................................................................. 108

Checking the Statement of Comprehensive Income ......................................................... 108

Overview of the Statement of Comprehensive Income Reports ............................... 108

Calculation matrix ...................................................................................................... 109

Manual Journal Entries .............................................................................................. 110

Path between the Statement of Comprehensive Income and the Statement ofChanges in Equity ...................................................................................................... 110

Checking the Statement of Changes in Equity .................................................................. 111

Checks Specific to Certain Accounts ......................................................................... 111

Checking Variation Flows .......................................................................................... 111


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Performing Detailed Checks for Reporting Units ....................................................... 113

Calculation matrix ...................................................................................................... 114

Checking the Statement of Cash Flows ............................................................................. 114

Overview of the Statement of Cash Flows Reports ................................................... 114

Analyzing Differences ................................................................................................ 115

Manual Journal Entries .............................................................................................. 117

Checking IFRS adoption .................................................................................................... 119


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Introduction

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Introduction

Presentation

Organization

The operating guide is organized according to the steps performed in a consolidation processing.

Preparing the reporting cycle: This step describes how the consolidation is initialized (seeInitializing the Consolidation on page 16), how package data is collected (see Collecting Data onpage 23) and how the Group structure is defined (see Consolidation Scope on page 26).

Processing the data: This step describes the main concepts (see Processing the Data: Key concepts on page 34), how intercompany transactions are eliminated (see Intercompany Transactions onpage 53), how deferred taxes are computed (see Deferred Taxation on page 75) and how

technical consolidated journal entries are posted (see Consolidation Entries on page 77).

Completing the consolidation: in this step the entire consolidation is validated on the basis of theStatement of Changes in Equity and the Cash Flow Statement (see Completing the Consolidation on page 108).

Each section presents:

Key points

A detailed approach with references to other sections for more information.

Other Documentation

The following documentation is available:

Product Documentation: This document, available in the application, describes functions andprocedures.

Configuration Design Documentation: This document offers in-depth knowledge aboutcustomizing the database structure.

You should refer to this documentation to get detailed information about:

using the application for operations and customization purposes.

making changes to the setup of the Starter kit.

Database Structure

All of the information in the database is identified by a set of elements required for storing, processing andretrieving data. These elements are called dimensions.

The following dimensions are used in the configuration:

Required dimensions

All of the data stored in the database must be identified by these dimensions.

CATEGORYThe configuration provides one category scenario, called A-Actual , to be used for statutoryconsolidations.

DATA ENTRY PERIOD: The date on which the information is entered for all of the defined

periods using the following format: YYYY.MM PERIOD: The same value as the data entry period in a statutory consolidation.


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REPORTING UNIT: The company or Business Unit whose data is being entered.

CURRENCY: The currency in which the data is stored.

ACCOUNT: The balance sheet and income statement accounts as well as technical accounts

for consolidation purposes, for example suspense accounts. FLOW (see Flow-Based Consolidation).

AUDIT ID: The ID that identif ies the origin of the data for packages, local adjustments,manual journal entries, and automatic journal entries.

Analysis dimensions

PARTNER: The reporting unit involved in an intercompany transaction.

MANAGEMENT UNIT: In-built dimension not used in the starter kit

PARTNER MANAGEMENT UNIT: In-built dimension not used in the starter kit.

SHARE: The held company in the investment portfolios.

COUNTRY: The breakdown of external sales by geographical area.

ANALYSISUsed to build the Statements of Cash Flows, Changes in equity, Comprehensive income. Alsoused for data entry on a daily basis for flows F20/F40 on Investment, F40 on Issuedcapital/Share premium and F06 on Dividends.

Note: These dimensions do not always contain values.

Dimensions specific to consolidation processing

SCOPE, VARIANT and CONSOLIDATION CURRENCY: These dimensions are used to identifya consolidation definition.

Technical dimensions

JOURNAL ENTRY NUMBER

LEDGER

ORIGINAL REPORTING UNIT

TECHNICAL ORIGIN

GEOGRAPHICAL ORIGIN

Note: Data for these dimensions is automatically loaded by the application.

Example

Reporting unit RU1 has € 5 000 in cash at the end of the 2009 fiscal year.This information, which originates from the data entry package, is stored as follows in the database:

CategoryData Entry

PeriodPeriod

Reporting

unitCurrency Account Flow Audit ID Amount

A 2009.12 2009.12 RU1 EUR A2610-Cash

on hand

F99-

Closing

PACK01-

Package Data5 000

For more information on the database structure, see the functional design documentation.

Flow-Based Consolidation

The flow dimension is used to identify and analyze the changes between the opening and closing balances.The accuracy of automatic processing depends on whether data has been correctly entered in flows. Flowsdiffer according to the account being analyzed.


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List of Accounting Flows

Types of Flow

Opening and closing balances correspond respectively to flows F00 and F99. Variation flows can beorganized into the following categories:

Flows for Current Transactions

Income statement

Transactions for the income statement are posted in flow Y99.

Debt management

Movements in debt management items, made up of current assets and liabilities (excluding provisions) andthe cash flow are posted in variation flow F15 .

Example

You want to enter an amount of 100 € excluding VAT from the sale of goods.

In company accounts:

Account Debit Credit

Sale of goods 100

Accounts receivables 100

In the application:

Account Flow Debit Credit

P1100 Revenues Y99 100

A2210 Trade receivables, Gross F15 100

Depreciation, impairment and provisions

The balance sheet movements due to depreciation, impairment and provisions are posted using thefollowing flows:

F25 - Increase in depreciation

F35 - Decrease in depreciation

Example

You want to enter a gross amount of 100 as allowances for provisions on shares.

In the accounting system:


Depreciation on investment 100

Allowance/depreciation of investments 100

In the application:


A1812 Investments in subsidiaries, JV andassociates, Impair.

F25 100

P2210 Allowances for provisions on shares Y99 100

Equity

In equity accounts, shareholders' equity is processed separately from the other items.


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Movements in shareholders' equity usually originate from:

The distribution of dividends (posted in flow F06 )

The income of the current fiscal year (recorded in F10 )

The increase or decrease in capital (posted in F40 )

Movements that come under “Other comprehensive income”, for example, flow F55 on fair valuereserve

Other specific operations, like acquisition (flow F20 ) and disposal (flow F30) of treasury shares

Note: In the Equity section of the Balance sheet, there is no specific account for the Net profit of the period.This net profit must be included in account E1610-Retained earnings.

Non-current assets and liabilities

For the non-current assets and liabilities:

Increases are posted in F20 .

Decreases are posted in F30 .

Investments in subsidiaries and capital subscription (increase, decrease or creation of capital)are posted in F40 .

Example

You invest in the creation of Company F by subscribing 1 000 to its capital. During the year, you buy anassociate‟s share for 250. This investment is financed by a bank loan.

In the accounting system:


Investments in subsidiaries 1 250

Bank loans 1 250

In the application:


A1810 Investments in subsidiaries, JV and associates F40 1 000

A1810 Investments in subsidiaries, JV and associates F20 250

L1510 Borrowings, Non current F20 1 250

Transfers between items

Transfers between balance sheet accounts are recorded in F50-Reclassification.

Adjustment to IFRS standards

Variations in fair value for financial assets and liabilities are posted in F55-Fair value.

Flows for Specific Transactions

The flows used for specific transactions are as follows:

Changes in accounting policies: The impact on balance sheet items is posted in F09-Change inaccounting policies, which must balance (Total Assets = Total Liabilities).

Contribution to capital and merger transactions: The impact on balance sheet items, includingissue of shares for capital contribution, is posted in F70-Internal mergers. Any impact on the netincome for the period is recorded in account P1620-Merger result .


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Flows Specific to Consolidated Accounts

The flows specific to consolidated accounts are generated automatically by the application and are asfollows:

Effect of foreign exchange rate variations: F80

Effect of variations in scope:

F01: Incoming units

F02: Change in consolidation method (old). This flow is used as the reverse opening flowfor reporting units that change their consolidation method, for example from the equitymethod to a full or proportionate consolidation or vice versa.

F03: Change in consolidation method (new). This flow is used as the incoming flow of thenew consolidation method.

F04: Change in consolidation rate. This flow records the impact of change in consolidationrate for subsidiaries consolidated using the proportionate or equity method.

F92: Change in interest rate. This flow corresponds to the impact of change in Group

financial interest on the equity.F98: Outgoing units

Entering Data in Flows

In Data Entry Packages

In the consolidation package, you must enter the closing balance in F99. Flow F15-Net variation is thenautomatically calculated by subtracting the sum of the opening flow and other movement flows from theclosing flow (F99).

Flow F15 is used as a control flow that should be analyzed using the relevant variation flows, for all thebalance sheet items except:

Cash accounts

Current assets/liabilities accounts, excluding depreciation, impairment and provisions, for which nodetailed analysis by flow, like increase/decrease, is required to build the Statement of cash flows.

Example

Company A has assets of up to 100 at closing, as compared to 50 at opening. After entering or importingdata, the assets variation table should be as follows:

ACCOUNTS CODE F00 F99F20

IncreaseF30

DecreaseF50

Reclass.Other

Control(F15)

Assets A11xx 50 100 50

Movements during the fiscal year correspond to an investment of 80 and a sale of 30. Data shouldtherefore be entered in the schedule as follows:

ACCOUNTS CODE F00 F99F20

IncreaseF30

DecreaseF50

Reclass.Other

Control(F15)

Assets A11xx 50 100 80 -30 0

In Journal Entries

Regardless of whether they are automatic or manual journal entries, they are automatically saved in amovement flow that carries over data to the closing balance of the balance sheet.


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Balancing Flows

Certain flows must be balanced for assets and liabilities/equity. Others must ensure that assets - liabilities =income.

Flow Assets –Liabilities =

Equity Assets - Liabilities = Income(income statement accounts)

F00 – Opening X

F01 – Incoming units X

F03 – Change in consolidation method (new) X

F09 – Change in accounting policies X

F50 – Reclassification X

F70 – Internal mergers X (P1620)

F80 – Currency translation adjustment X

F99 – Closing X

If these principles are not respected in manual journal entries, then cash flow statements maynot be balanced. Data retrieval reports are used to ensure that flows are balanced.


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Initializing the Consolidation

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Section ObjectivesTo present all of the tasks required to run a new consolidation processing.

Key Points

To initialize a new consolidation processing, you should:

Update the list of companies and data entry sites

Create packages for the data entry period or send opening packages to the subsidiaries

Enter the conversion rate for the period

Before creating packages or sending packages to subsidiaries, you should add all of the Group's

incoming companies to the list of companies. You can manage the list of companies in the DimensionBuilder module of the Setup domain.

You can manage the opening packages to be sent to subsidiaries and opening balances, if required, in theReporting Organizer and RU Organizer modules of the Operation domain.

Conversion rates for the period can be entered before or after you send the packages to the subsidiaries.For the list of companies, however, you must update it first in order to determine exact ly whichcurrencies will be required for the consolidation.

Suggested Approach

1. Update the list of companies in the group and the list of data entry sites.

2. Create packages or send opening packages to subsidiaries.

3. Enter conversion rates for the period.

Documents to be kept

Printout of the conversion rate tables

Updating Reporting Units

The Reporting Unit is the elementary component of the Group‟s structure. Each Reporting Unit populates apackage.

In a statutory consolidation, a Reporting Unit is usually a legal entity, but it can also be a sub-group, abranch, a business unit, or a department.

Key Concepts

The reporting unit table contains all of the reporting units for which the Group has defined a code,regardless of whether or not they will be consolidated.

You can assign a code to companies that are not linked by their capital to the Group. You usually do soin the following cases:

When the Group is included in the consolidated accounts of another Group, even though itconsolidates data at its own level. By specifying a code for sister or parent companies, you

can manage all of the data required for the top level consolidation process (for example,investments and intercompany transactions).


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When the Group wants to perform breakdowns by partner (customers/suppliers) using consolidateddata.

The code TP-999-Third parties corresponds to all of the reporting units that do not have acode. You should never delete it.

Structure of the Reporting Unit Table

A certain amount of information for each Reporting Unit is stored in the database. This information includescharacteristics or sub-characteristics. This information is required because it enables the Reporting Unit tobe correctly included in the consolidation processing.

Currency

This identifies the currency in which data is collected.

Country

This indicates the country in which the Reporting Unit's headquarters are located. This characteristic isused to produce geographical area analysis.

Company

This is the legal entity to which the Reporting Unit belongs. A Reporting Unit may be its own legal entity.This information is required when the consolidation scope is being defined.

Several business units (BUs) may correspond to the split of one legal entity. In that case, all these BUs willhave the same Company (corresponding to the Head BU).

Purpose

This characteristic is used to distinguish between Legal entity, Business unit, Sub-consolidation, Archived,and Technical Reporting Units.

Division

When your consolidation definition is based on a hierarchical scope, the Division characteristic is used toeliminate intercompany transactions by distinguishing between inter/intra segment transactionsduring a consolidation processing.

Branch

This sub-characteristic identifies the branch for each Division. It is used to create a Reporting Unit hierarchythat can be used in the Scope Builder module.

The Division characteristic and Branch sub-characteristic share the same reference table.

Procedure

To add a Reporting Unit (Dimension Bu i lder module, Setup dom ain )

1. Expand the tree structure to display Data sources > Amounts > RU-Reporting unit. Check thatthe Load data mode is enabled.


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2. Select File > New.

In the General tab, enter the code, short description and long description you want to assign tothe new reporting unit.

In the Properties tab, enter the characteristics and properties for the new reporting unit.3. Translate the descriptions in the Translate tab.

If you do not translate the descriptions into other languages, then when subsidiariesopen the application in a language other than English, they will not be able to seethe descriptions of their partners when entering intercompany data.

4. Select File > Save.

5. Select File > Close.

Breakdown by Division

To ensure a correct breakdown by Division/Branch, you should:

Create new members in the Division/Branch list.

Select the Branch sub-characteristic for each of the divisions.

Select the Division characteristic in the Reporting unit table for each of the reporting units.

Note: The breakdown by division as proposed in the IFRS Starter kit is based on the following principle: 1 reporting unit = 1 division = 1 branch.

If your Group holds companies corresponding to multiple divisions, you have to split the legal entityor entities into several mono-division reporting units.

To create a new Division or Branch

1. In the Dimension Builder module of the Setup domain, expand the tree structure to displayReference tables > EN-DIVISION and check that the Load data mode is enabled.

2. Select File New.

In the General tab, enter the code, short description and long description you want to assign to thenew activity or branch.

3. For a new Division, enter the Branch sub-characteristic in the Properties tab.

4. Select File > Save.

5. Select File > Close.

Creating Packages

You create packages in three stages:

Create a reporting ID in the Reporting Organizer module of the Operation domain.

Define the list of reporting units included in the reporting ID in the RU Organizer module of theOperation domain and adapt these settings for some of the reporting units, if needed.

Generate the packages on the current site or send packages to another data entry site in the

RU Organizer module of the Operation domain.


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Creating a Reporting ID

A Reporting ID consists of:

A category, like a type of data to be processed. For example category A for statutory consolidations.

A data entry period, for example 2009.12 for the yearly consolidation on 31 December 2009.

A Reporting ID contains properties that are applied by default to all of the packages includedin it, except for changes made individually to the properties of certain Reporting sets (RU Organizer module).

In the IFRS Starter kit, the following options must be considered when creating a Reporting ID:

Category Scenario

The Starter Kit comes with one category scenario: A-Actual , version C-Current .

Data Entry Folders

In the IFRS Starter kit, two package formats are available:

P-A - Package for Actual

This package is used when entering data for entities consolidated using the Full or Proportionateconsolidation method.

P-E - Package for EM companies

This is a package dedicated to entities consolidated using the Equity method. The list of accounts toenter is much smaller, including only Equity accounts, Net Income for the period and Dividends paid.

In case an EM entity holds subsidiaries, it should be included in the group‟s consolidated financialstatements based on its own sub-consolidated accounts, according to IAS 28. For this reason, someconsolidation flows are available in the P-E package schedules.

Note: The same folders are available for data entry via both the Windows and Web interfaces.

Sets of Controls

Two sets of controls have been defined in the starter kit, and correspond to the package formats availablefor data entry.

Depending on which data entry folder you choose, you have to specify the corresponding set of controls (P- A or P-E).

Control Level

Two control levels can be applied to packages:

LEV1 – Balance Analysis is used to group together basic accounting controls, such as Assets – Liabilities = Equity. The controls checking the breakdown of Investments and Equity by flows alsocome under LEV1.

LEV2 – Flow Analysis is used to check that flow analyses are complete.

Origin of Opening Balances

We recommend that you use data from consolidated tables rather than preconsolidated tables (seeProcessing the Data: Key concepts on page 34) so that the data used for package opening balances isconsistent with data from the consolidated opening balances.

When several consolidations have been run using different variants, you can choose any variant for the

package opening balances, as long as the package data and corrections are identical for all variants.When initializing a consolidation for the first time, the "Opening balance data" option should be disabled.


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The rate versions enable you to specify different conversion rates for the same period and thereforesimulate different consolidations. You usually use this functionality:

To produce temporary accounts when the currency exchange rate is not yet known, for examplewhen publishing data in advance for intercompany transactions.

To run simulations using different currency scenarios.

In the Starter Kit, two conversion options are available, depending on whether you apply YTD or periodic(Monthly or Quarterly) exchange rates (this will be dealt with in detail in chapter YTD and PeriodicConversion on page 41). As a result, two rate versions are available by default: A-YTD and A-PER .

You can also create new conversion rate versions.

Conversion Rate Types

For a given rate version and period, the following conversion rate types are available:

ARPP - Average exchange rate, prior period

OR - Opening exchange rate, current period

AR - Average exchange rate, current period

CR - Closing exchange rate, current period

Daily-specific rates

The ARPP rate type is used only if you apply Monthly or Quarterly conversion (see YTD and PeriodicConversion on page 41).

Daily-specific rates were created to enable the conversion of paid dividend (F06) at the rate of distribution.Paid dividends are entered by beneficiary and date in the package and converted by default to the averagerate or at the rate of the day when entered (see Dividends page 64).

Daily rates also enable the conversion of F20/F40 on Investment and Issued capital/Share premium, basedon daily rates rather than the average rate for the period (see Optional Conversion Process on Investmentand Capital/Share Premium page 90).

A report checks the consistency between the analysis by date entered in the package and daily ratesentered in the conversion rate table.

The conversion rates entered are based on the base currency selected by users for each conversion ratetable. This currency has a conversion rate equal to one for all rate types.

The choice of this base currency is not related to the currency in which the consolidation is run.

Entering Conversion Rates

You can enter conversion rates in one of the following ways:

Enter the different rate types in the conversion rate table.

Import data from a file (see the product documentation).

Calculation Methods

Conversion rates can be expressed as follows:

Divide: The amounts entered are divided by the conversion rate for the "Certain for uncertain"

calculation method.

Multiply: The amounts entered are multiplied by the conversion rate for the "Uncertain for certain"calculation method.


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Example

The base currency is USD. Exchange rate for USD and EUR are entered as follows, depending on thecalculation method you choose:

Currency Divide Multiply

USD 1 1

EUR 0.67253 1.48692

Conversion Rates Specific to Certain Reporting Units

You can enter a conversion rate specific to one reporting unit. You use this option for incoming andoutgoing companies, for example the opening rate for an incoming reporting unit is the rate applicable atthe time it was included in the scope and not the rate applicable on the first day of the data entry period.This is explained in chapter Incoming Entities on page 101.

Daily Rates

To enter daily-specific rates for a given currency you should add columns in the right part of the conversionrate table. The list of additional rate types corresponds to the days of the year.

For example, if a particular consolidation event occurred on Sept 14th, first add the 09.14-September 14

rate type in the list of available columns, then enter the exchange rate for the relevant currencies at thisdate.

The exchange rate for the pivot currency must always be populated (with a value of 1) for any of thedate-specific rate types to ensure a correct conversion process.

Besides, if the consolidation currency differs from the pivot currency, you must also populate theexchange rates of the consolidation currency for any of the date-specific rate types.

In case you apply periodic conversion, enter daily-specific rates only for the dates included in the period(month or quarter).

For example, if you use quarterly conversion, the conversion rate table for Q3 should only include rates fordates from Jul 1

st to Sept 30

th. Indeed, if a consolidation event occurred in Q2 and you entered specific

exchange rates for the corresponding date in Q2 conversion rate table, the conversion for F20 or F40 hasalready been done in the consolidation for Q2 and should not be re-processed in Q3.


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Collecting Data

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Collecting Data

Section ObjectivesTo describe how package data is collected.

Key Points

At local data entry sites, data is loaded manually into consolidation packages by entering data , orautomatically by interfacing with the accounting system or by importing data tables.

After the data is entered or imported, controls must be run on packages, which are then published and sentto the consolidation department (in the case where data entry is decentralized).

In order for the package data to be included in the consolidation, packages must be integrated into thedatabase.

Suggested Approach

At data entry site:

1. Receive the opening package sent by the consolidation department (if applicable).

2. Enter or import data to the package.

3. Run controls on the package.

4. Publish the package so that its data is made available to the consolidation department.

At the consolidation department:

1. Receive the packages (if applicable).2. If there are no send conditions, check that the package sent has reached the control level required.

If this is not the case, then run controls and correct the errors.

3. Integrate package data into the database.

Entering Data at Data Entry Site

Receiving Packages

To receive packages, perform the following actions:

Define an inspection task so that it can detect the objects to be received. If objects are detected bythis task, then a new reception task RYYMMDD.000x will be automatically created.

Run the reception task.

This procedure only applies to the Windows client when the packages are filled out on a decentralized dataentry site. In any other case, the packages are directly available on the current site without performing anyadditional action.


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Loading Data into Packages

The procedure to enter or import data into a package and to run package controls is described in detail in

the Package Data Entry Guide.

Publishing Packages

After a package has been filled out, it must be published so that it will be available at the central level whenthe consolidation is processed.

When the data entry is done on a different site from the consolidation site, the publication of a packagecreates a “Send objects” task with the package.

There are several publication options. To learn more about them, refer to the application help.

Receiving, Checking and Integrating Packages

Receiving Packages

Just like at data entry sites, to receive packages, perform the following actions (see Receiving Packages onpage 23):

Define an inspection task so that it can detect the objects to be received. If objects are detected bythis task, then a new reception task RYYMMDD.000x will be automatically created.

Run the reception task.

Running Package Controls

If the "Blocking" option was checked when the packages were created or sent to the subsidiaries, then thecontrol level set must be reached before the subsidiaries can publish or send their packages back to you.

However, the send condition is not always required for a reporting process that is carried out for thefirst time or for incoming entities. For these two cases, you will, however, need to know the control levelreached by the package before integrating it. If the package does not comply with the control level set, you willalso need to rerun controls in order to obtain details on the errors.

Integrating Packages

This step is used to integrate packages automatically in the preconsolidated table that will be used when

the consolidation is processed. This step is mandatory for running the consolidation processing and mustbe performed:

Once you have received the package and checked that its data is correct.

When changes are made to a package which is then published again, if you want these changes tobe included in the consolidated accounts.

Sending a Given Package Several Times

A subsidiary may need to send its package several times to central site if it incrementally corrected orcompleted its package data.


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Collecting Data

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If the consolidation department wants to find out which changes were made to the accounting data ascompared to the previous version, it can display/print the following schedule for the relevant Reporting Unit:

Folder Book Schedule

C4 C41 C41-05 – Compare local/pre-consolidated data

An overall control report (not detailed by elementary accounts) can also be run for all the packages relatedto one Reporting ID:

Folder Book Schedule

C4 C41 C41-10 – Check integration by Reporting Unit

You should consult these schedules before integrating the new version of package data.


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Consolidation Scope

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Consolidation Scope

Section ObjectivesTo define the consolidation scope.

Key Points

The configuration proposes three ways to define your scope:

An automatic mode, where you first enter data in packages, and then generate the portfolio and thescope automatically.

A semi-automatic mode, where you first enter data in the portfolio manually, and then generate thescope automatically.

A manual mode, where you enter data in the scope manually or copy an existing scope.Before creating the consolidation scope, you should first have updated the list of companies in the Group(see Initializing the Consolidation on page 16). This is done in the Scope Builder module of the Operationdomain.

The Starter Kit offers segment reporting capabilities, based on hierarchical scopes.

Suggested Approach

1. Create a portfolio.

2. Load data in the portfolio in one of the following ways:

Initialize it using the data collected in the packages. (mode 1)

Enter data manually or copy an existing portfolio. (mode 2)

3. Create a scope.

4. Load data in the scope in one of the following ways:

Initialize it using the portfolio. (mode 1 and 2)

Enter data manually or copy an existing scope. (mode 3)

5. Define the hierarchy to be applied for Reporting Unit Rollup calculations

Documents to be kept

Printout of the portfolio Printout of the scope

Concepts and Definitions

Definitions

Portfolios

A portfolio consists of information about the direct legal investments between companies in the samecorporation. It:

stores the number of shares and voting rights owned by companies.

stores the number of shares and voting rights held by one company in another.


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uses shares and voting rights to calculate the direct investment, financial interest and ownershipinterest of one company in another (see Rates Used ).

Consolidation Scope

The scope shows the following for all of the companies included in it:

The consolidation method, like Not consolidated (NC), Full (FC), Proportionate consolidation (PC)and Equity method (EM).

The financial interest, ownership interest and consolidation rate.

Besides this data displayed at period closing, the application also displays the data from the previousperiod. This enables you to identify scope changes:

Incoming entities (I)

Outgoing entities (O)

No variation (N)

Segment Analyses

The segment reporting, especially the Revenue by segment, relies on the Reporting Unit Rollupfunctionality. It automatically calculates the inter-intra segment eliminations using the hierarchical scopeentered in the consolidation definition. Therefore, it is mandatory to define the unit hierarchy to be appliedin the Hierarchical scope step; otherwise, the reports dedicated to segment analyses will not retrieveconsistent data.

Rates Used

Direct Shareholding, Financial Interest and Ownership Interest

The portfolio refers to three types of rate:

Direct shareholding: This represents the percentage of shares a parent company holds in the heldcompany.

Financial interest: This represents the percentage of capital that a parent company holds directly orindirectly in the held company.

Ownership interest:

When one company holds another company directly, the ownership interest is the same as theshareholding percentage.

When one company holds another one via intermediate companies, the ownership interest iscalculated by adding together the direct shareholding percentages held by the companies inwhich there is an interest greater than 50% (because the default control threshold is 50%).

Example 1

60%

50%

50%

F2

F1

M

SubsidiaryParent

companyDirect

shareholdingFinancialinterest

Ownershipinterest

F1 M 60% 60% 60%

F2 M

F1

50%

50%

80% (1)

50%

100% (2)

50%

(1)Percentage of financial interest of M in F2 = 50% (direct) + 60% x 50% (indirect via F1) = 80%

(2)Percentage of ownership interest of M in F2 = 50% (direct) + 50% (indirect via F1, as morethan 50% of F1 is held)


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Example 2

20%

50%

50%

F2

F1

M

SubsidiaryParent

companyDirect

shareholdingFinancialinterest

Ownershipinterest

F1 M 20% 20% 20%F2 M

F1

50%

50%

60% (1)

50%

50% (2)

50%

(1) Percentage of financial interest of M in F2 = 50% (direct) + 20% x 50% (indirect via F1) = 60%

(2)The percentage of F1 in F2 is not taken into account because M's interest in F1 is less thanthe threshold.

Consolidation Rate

Besides the financial and ownership interests, scopes also display the consolidation rate. This ratedepends on the consolidation method:

For a fully consolidated company, it is 100%.

For a proportionate consolidation, it represents the share of assets and liabilities(or expenses and income) included in the Group balance sheet (or income statement). It is equalto the sum of all direct shareholdings in the subsidiary held by companies in the scope, after theconsolidation rates for the latter have been applied accordingly.

For a company consolidated using the equity method, it represents the Group share used tocalculate the consolidated value of the investments in associated undertakings. It is calculated in thesame way as in a proportionate consolidation.

Example

20%

80%

F2

F1

M

CompanyOwnership

interestConsolidation

methodFinancialinterest

Consolidationrate

F1 80% Full 80% 100% (1)

F2 20% Equity method 16% 20% (2)

(1)F1 fully consolidated so consolidation rate = 100%

(2)Consolidation rate for F2 = direct rate via F1 (20%) x F1 consolidation rate (100%) = 20%

Initial Values/Revised Values

The number of shares as well as the rates displayed in portfolios and scopes have two different values:

Initial value: This is the value calculated by the application using source data when initializing thefollowing automatically:

Portfolios (source data = preconsolidated data)

Scopes (source data = portfolio)

Revised value: You can enter this value manually in a scope or portfolio. If this value exists,then it will take priority over the initial value when applying rates in consolidation processing.

Defining Scopes

The configuration proposes three ways to define consolidation scopes in order to select which entities areto be consolidated, the consolidation method and rates to be used.

You must define the unit hierarchy to be applied, whichever way for defining scopes you choose.Otherwise, consolidations using a set of rules that includes a Reporting Unit Rollup rule cannot be

processed.


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Automatically

Portfolio is automatically generated by loading data entered in consolidation packages:

By the subsidiaries in schedule PA2600 : This schedule outlines the distribution of capital in number

of securities per shareholder (group and third party) after having entered the total amount of capital(account E1110 ) and the total number of shares (account XE1110 ).

By the shareholder in schedule PA2400 : This schedule analyzes the variation in investmentsecurities held, by number (account XA1810 ).

The direct shareholding rate is derived from the total number of capital shares declared by the subsidiaryand the number of shares held declared by the parent company or companies. The scope is thengenerated automatically using the portfolio.

This is the surest method because you can check that shares declared by subsidiaries and parentcompanies correspond, and because the rates for direct shareholding, financial interest, ownership interestand consolidation are calculated automatically.

Semi-AutomaticallyIn this method, you enter the portfolio manually and then generate the consolidation scope automatically.

This method is often used when the consolidation department wants to build the scope before havingreceived all the packages, assuming that legal data is available and up-to-date in the central database.

Manually

This method consists of loading data in the scope either by entering it manually, or by copying anexisting scope. This method is adopted when defining pro forma accounts, or when performing simulations.It does not, however, enable you to check the consistency of the data entered.

PortfoliosCreating Portfolios and Portfolio Occurrences

You manage portfolios in the Scope Builder module of the Operation domain. You enter datain a portfolio in two stages:

Create a portfolio with a code and description, and specify a number of settings for loading andcalculating rates. This is only mandatory when performing the reporting cycle for the first time.

Create a portfolio occurrence in order to enter data for a given data entry period.

Properties Tab

“Voting rights are proportionate to shares” Option

If you select the "Voting rights are proportionate to shares" option, then the number of shares that you enterare applied automatically to the number of voting rights, which are then used for calculating ownershipinterest.

Moreover, the fields displaying the number of voting rights are grayed out. You can only change this valueby changing the value for the number of shares.

Therefore, this option is:

to be deactivated when you initialize the portfolio with data entered in packages, which is therecommended method,

only advisable when portfolio is entered manually, in order to avoid a double keying.


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Other Parameters

The table below indicates the manner in which you should enter the other Properties tab‟s parameterswhen defining either a Portfolio or a Portfolio occurrence. These parameters are required only if you want toinitialize the portfolio using the data collected in the packages.

Parameter ValueOnly available for aportfolio occurrence

Reporting ID (Category) A – Actual

Reporting ID (Data entryperiod)

[Data entry period of theconsolidation]

X

Period [Same value as Data entry period] X

Flow F99 – Closing position

Non-group reporting unit TP-999 – Third parties

Audit ID filter AU1-S-R – Level S and R, i.e.

package origin

Initialization Tab

If you want to initialize the Portfolio occurrence using the information collected in the packages, theInitialization tab should be filled out as follows:

Parameter Value

For declaring

capital stock

Parent company SH - Share

Subsidiary RU – Reporting unit

Shares AC1-001 – Issued capital – Number of stocks

Voting rights AC1-001 – Issued capital – Number of stocks

For declaring

portfolio

Parent company RU – Reporting unit

Subsidiary SH - Share

Shares AC1-002 – Investment in subsidiaries, JV,

associates – Number of shares

Voting rights AC1-002 – Investment in subsidiaries, JV,

associates – Number of shares

Copying a Portfolio Occurrence

In the application, you can copy a list of investments from one portfolio occurrence to another, regardless ofthe other initialization settings.

Controls and Corrections

Controls of the Investment

Control reports are available in the software to check the consistency of portfolio data. The Control reportsavailable are the following:


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Consolidation Scope

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Investments Greater than 100%

This report displays errors coming from stockholdings greater than 100%, for instance, when the totalnumber of shares held is bigger than the share capital declared by the subsidiary or when the sum of directand indirect stockholding is greater than 100%. We recommend that you print this report using revised

data, which is used to generate consolidation scope from portfolio.

Missing Capital Stock

This report shows the list of reporting units that have not entered the number of shares included in theircapital, on the account used for the initialization of the investment.

Revised Data/Declarations

This report shows the discrepancies between a holding and its subsidiary on revised values. The subsidiaryenters in its data package the number of shares by shareholders. The holding enters the number of sharesit holds. This report reconciles these two declarations.

Note: The “Control for declarations” report also shows the reconciliation, but on initial values. We

recommend that you check the revised values, given that they are used for the initialization of theconsolidation scope.

Initial Data/Declarations Control

The discrepancies displayed in this report between the initial value of the shares and the declared sharesindicate that the pre-consolidated data (integrated data packages and manual journal entries) has beenmodified since the last initialization of the investment.

This report should be used only if the portfolio was initialized using the data collected in the packages.

Correcting ErrorsUse one of the following methods to correct errors:

Direct correction of the package data

It is the easiest way for correcting, but the following steps must strictly be performed:

1. Enter the corrections in the data package.

2. Control and save the data package.

3. Publish and integrate the package.

4. Re-initialize the investment in the portfolio occurrence. This step is critical.

When the dialog box “Do you want to save your changes” appears, click Yes if you want to

keep any manual modification you might have made within to the portfolio occurrence.

Manual correction of the investment

The major drawback of this solution is the fact that the corrections recorded in the investment will not becarried forward on the opening balance of the following year.

Printing a Portfolio Occurrence

You can customize the display of portfolio occurrence investments on screen or paper by adding, removingand sorting the columns displaying rates, number of shares and voting rights.


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Scopes

Statutory and Reporting Scopes

In the application, you can create two types of scope:

Statutory scopes: These scopes must be generated using a portfolio. They cannot be changed

without first changing the capital and investment rows in the portfolio.

Reporting scopes: These scopes can be created with or without a portfolio and all of their

data can be changed directly.

The consistency between the basic information (the number of shares and voting rights) and the rates inthe scope can only be guaranteed by using statutory scopes .

Creating a Scope

There are two ways of populating a scope, depending on whether or not you want to use a portfolio.

Setting up a Scope using a Portfolio

This can be done with a Statutory scope or a Reporting scope.

You can specify the settings for the opening scope. The application uses this information to identify theincoming and outgoing reporting units and the rate variations to be used in consolidation processing.

When using the built-in unit Rollup functionality, you must define the hierarchy of the Reporting Units in the„hierarchical scope‟ step.

Note: All reporting units belonging to the scope at opening and closing must be included in the hierarchy sothat the Rollup calculations can be performed.

Setting up a Scope without a Portfolio

This can only be done with a Reporting scope.

For each Reporting Unit, all the parameters (consolidation method, rates, and so on) can beentered/modified.

You must define the Reporting Unit hierarchy if you want to retrieve consistent segment analyses.

If needed, an opening scope can be specified.

Making Changes to a Statutory Scope Manually

Adding and Deleting Companies

It is possible to add a company to the scope. To do this, the modification must be done in the Investmentsstep of the scope. Then, in the Scope step, check the consolidation method and change it if needed.

The same method applies when you want to delete a company from the scope. In the Scope step, youneed to make sure the consolidation method is “Not consolidated (NC)”.

Changing the Consolidation Method

Consolidation methods are automatically assigned according to the ownership interest threshold defined inthe “Initialize using a portfolio” step in the scope editor.

If you select the “Full Consolidation” method, the consolidation rate will automatically be 100%. In the other

cases, for example for proportionate or equity methods, however, you must change the consolidation ratemanually to ensure that the consolidated accounts are valid.


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Financial Interest and Ownership Interest

In statutory scopes, you cannot change the financial and ownership interests directly. You should thereforechange the number of shares and voting rights in the Investments step.

Specific Cases

Incoming Companies

By default, the processing applied to incoming companies uses the financial interest and consolidation rateat closing. You can specify intermediate rates

(1)in order to process the incoming transaction in the incoming

flow and one subsequent operation (purchase or partial disposal) in a variation flow.

Outgoing Companies

In the application, you can manage Reporting Units:

leaving the scope at the start of the period

leaving the scope during the period

acquired, “merged”, at the start of the period

acquired, “merged” during the period

By default, an outgoing company is considered as leaving the consolidation at the beginning of the period.To manage the other three cases, select the Incoming/Outgoing tab, and enter the following parameters:

If the company is merged with another Reporting Unit in the Group, enter the code of this

reporting unit.

If the company is outgoing, “merged”, during the period, you can consolidate its income and

expenses until the effective outgoing date. To do this, enter the data entry period corresponding tothe package whose data you want to integrate.

Opening rates are applied by default to companies outgoing or acquired during the period. If you want touse different rates to calculate the non-controlling interests in the net income for the period, check the"Intermediate rate" option and enter these rates.

Hierarchical Scope

As mentioned before (see Segment Analyses on page 27), some of the segment analyses provided by theIFRS Starter Kit are based on Reporting Unit Rollup rules. Consequently, defining a hierarchical scope isrequired in order to retrieve consistent segment analysis data. The secondary hierarchy tab is not used inthe starter kit.

Printing a ScopeThe procedure is identical to the one described for printing a portfolio occurrence (see above).

(1) In the current version of Financial Consolidation, you cannot manage intermediate consolidation rates for companiesconsolidated using the proportionate method. Therefore, you should enter an intermediate consolidation rate that is equal to theconsolidation rate at closing.


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Processing the Data: Key concepts

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Section ObjectivesThis chapter is the first section that describes how data is processed. It will provide a general overview ofthe transition made by package data as it is processed to produce the Group's consolidated accounts.

Key Points

The steps involved in processing package data in order to produce consolidated accounts are:

Integrate data from consolidation packages.

Enter manual journal entries.

Run the consolidation processing to:

Integrate package data according to the consolidation method and consolidation rate.

Convert amounts in foreign subsidiary accounts.

Generate automatic processing.

Each type of data is assigned with a different audit ID to facilitate the analysis of the transition from local toconsolidated figures. An audit ID is used to:

Provide an audit trail for the amount:

Data entered in packages is associated with audit ID PACK01 or local adjustment audit IDs

Data from automatic processing or manual journal entries is associated with other audit IDs

Indicate (in its long description) the purpose of non-package entries, for example PRO20-Elimination

of internal provisions - Auto.Besides the audit ID, each data is identified by its technical origin, which is used, for example, to distinguishbetween automatic processing, manual journal entries, opening balance data.

The following sections will present in greater detail how package data is processed automatically andmanually:

Adjustments to company accounts (see Making adjustments to individual accounts on page 46)

Checking and eliminating intercompany transactions (see Intercompany Transactions on page 53)

Posting consolidation journal entries (see Consolidation Entries on page 77)

Suggested Approach

Our approach for checking and analyzing data is closely linked to the methods used by the consolidationdepartment.

Regardless of the methods used, we recommend that you use reports available in the application (seeChecking Consolidated Data on page 43) to check that the consolidated accounts are generated correctlybefore ensuring that the data meets accounting requirements.


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Introduction

Before running a consolidation processing, there are two data sources available:

Package data, which corresponds to data entered in packages only, regardless of whether it wasentered in data entry schedules or posted by manual journal entry by the subsidiary.

Unlike consolidation data, package data is not identified by scope, variant or consolidation currency. Toconsult this data in the Report Navigator module, you should therefore run data retrieval reportswithout specifying any variable for the scope, variant and consolidation currency fields.

Preconsolidated data, which corresponds to:

Package data that is integrated in the central site's database. When you integrate package data,preconsolidated data is generated.

Data from manual journal entries posted in the Manual Journal Entries module.

Data from automatic journal entries produced by running preconsolidation rules, if these rules havebeen set up as an enhancement to the current configuration.

After running a consolidation processing, there are three levels of consolidated data for each consolidation:

Package amounts in the original data entry currency, corresponding to:

The previously defined preconsolidated amounts limited to the companies in the scope used inthe consolidation definition and to the manual journal entries posted using an audit ID taken intoaccount at the original currency level.

Certain automatic journal entries generated by running consolidation rules that are triggered atthe original currency level.

Automatic journal entries are generated by running a consolidation processing. Depending on

the purpose of the automatic journal entry, it may be generated at the local, converted orconsolidated level.

Converted amounts:

This includes all of the package amounts in the original data entry currency that are convertedusing the consolidation currency

The currency conversion is performed during the consolidation processing.The concepts underlying the currency conversion are described in chapter Converting Data onpage 40.

Additionally, this amount level includes the manual journal entries posted using an audit IDtaken into account at the converted level and automatic journal entries generated at

converted level.

Consolidated amounts:

This includes all of the data at the converted level after the consolidation rates are applied.

The consolidation rates are applied during consolidation processing.

This also includes the manual journal entries posted using an audit ID taken into account atconsolidated level and automatic journal entries generated at consolidated level.


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Each of the amount levels described above is stored in a separate data table. The relationship between thedifferent amount levels is seen in the following diagram:

Example:

Company A is held by the Group at 50% and consolidated using the proportionate method (consolidationrate = 50%) in scope P1 and fully consolidated in scope P2. Company A enters 100 CUR for Revenues(account: P1100 ). The average conversion rate for CUR is 0.08 for 1 EUR.

Retrieval of the data without scope/variant

Account Flow Package Preconsolidated

P1100 Y99 100 100

Retrieval of the data with scope/variant

Scope Variant Account Flow Original

Currency Converted Consolidated

S1 1 P1100 Y99 100 1 250 (=100/0.08) 625 (= 1 250 x 50%)

S2 1 P1100 Y99 100 1 250 (=100/0.08) 1 250 (= 1 250 x 100%)

Run consolidation processing 2(scope S2, variant 1)

Run consolidation processing 1(scope S1, variant 1)

PACKAGE AMOUNTS

Enter manual journalentries in the ManualJournal Entriesmodule

Applyconsolidation

rates

Convert toconsolidation

currency

PRECONSOLIDATED AMOUNTS

Enter datain consolidationpackages

Integrate packages

PACKAGE AMOUNTS(Original Currency)

CONVERTED AMOUNTS

CONSOLIDATED AMOUNTS

PACKAGE AMOUNTS(Original Currency)

CONVERTED AMOUNTS

CONSOLIDATED AMOUNTS


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Manual Journal Entries

Procedure

You manage manual journal entries in the Manual Journal Entries module of the Operation domain.

Manual journal entries are organized:

by reporting ID A reporting ID corresponds to a category and data entry period pair. In the configuration, thecategory is A.

by ledger within the reporting ID

Ledgers are created by the accountant depending on requirements and on the method usedto organize manual journal entries. You can, for example, have one ledger per type of journal

entry, (for example journal entries with the same audit ID, such as goodwill impairment, orcorrection of package data), or one ledger per reporting unit. You can also use one ledgeronly to group together all of the journal entries in the consolidation.

You define a ledger for:

A given environment (package and/or central manual journal entries)

A set of audit IDs

One or more categories

A journal entry can only be posted for one Reporting Unit and one audit ID.

Defining a Journal Entry Header

When you create a journal entry, the header fields should be filled out as follows

Compulsory fields:

Reporting Unit: Entity for which the journal entry is posted.

Audit ID.

Period: The default value is the current data entry period.

Journal entry currency: Currency in which the journal entry is posted. The default value is thedata entry currency. It can be changed except for certain audit IDs whose journal entriesmust be in the data entry currency.

Note: The Reporting currency field is grayed out and its value is the data entry currency, as

defined in the reporting unit table or as specified later in the reporting set.

Restrict values to be included:

Scope: This is used to restrict the journal entry to the specified scope. If there is no value inthis field, then the journal entry is taken into account for all scopes in which the company isconsolidated.

Variant: This is used to restrict the journal entry to the selected variant.

Consolidation currency: This is used to restrict the journal entry to consolidations using a

specific currency. When you select certain audit IDs that only accept the consolidationcurrency, then the value here is identical to the value of the journal entry currency.

Parent reporting unit: In this configuration, you should not select a value for this field.


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The controls run on manual journal entries are as follows:

Controls to check the global debit/credit balance when the journal entry is posted forba