Namaste!
Let's continue from the last blog where we have analyzed part of the requirements questionnaire response.
https://padmaja-vemireddy.blogspot.com/2020/01/automation-of-financial-consolidation.html
we will continue analyze remaining responses to be able to deliver the requirements document.
4. How many Legal Entities and Reporting Chart of Accounts?
Please expect to see the list of divisions/locations/legal entities which are responsible to generate and submit the Trial balances as soon as monthly close happens. Along with that, list of reporting roll ups to meet any management reporting requirements.
In case of reporting chart of accounts, hear out the current pain points with redundant GL accounts/local chart of accounts (COA) and how they are being mapped to the reporting or summary or global chart of accounts.
Based on above response from client, we were able to put together following sections of the
requirement document.
5. Do you anticipate to have consolidation application built using GL Accounts or Summary Accounts level?
I would be very interested to learn the response to this question. The reason being many clients prefer to build the consolidation application at GL account level. It is not their fault since the general belief is having all the GL accounts in one consolidation application would act as a single source of truth.
Fair expectation from client stand point!
But it is very important to convince them that consolidation application would and should never replace the local GL specific reporting systems.
Consolidation application would be overwhelmed if we dump all local GL accounts of all entities.consolidation performance would be degraded drastically from minutes to hours on month end consolidation close.
Best practice would be to design 200 to 400 global chart of accounts (COA) in Consolidation application depending on Financial and Statutory reporting requirements.
Advise clients to publish these global COA to all entities and let controllers own the mapping exercise of GL accounts to global COA.
Many Consolidation projects would be delayed due to one reason, that is under estimate the effort and complexity involved in this mapping exercise.
Also we expect to see a response on reporting roll ups for the Balance Sheet, Income Statement, Statement of Equity and Cash Flow.
6. Will you be using multiple currencies?
Should be a straight answer on public and reporting currency requirements
7. Please explain any custom Inter company elimination requirements or is it standard eliminations?
Expect to see a response like how currently an use of elimination companies and how the corporate controllers book elimination entries into these elim companies to enable elimination upon consolidation.
8. Can you please explain about requirement of Minority Interest calculation?
There may be instances where client holds substantial portion of ownership in other entities. Expect to see a description how minority interest gets calculated
Output:
9. How often will data be refreshed? Daily or monthly
Client may describe how the GL data is being fetched into one common system or location? Is it daily or month end ?
10. Do you anticipate Master data management issues? If so, do you have an anticipated plan to deal with these?
Expect to see if client has any centralized master data management (MDM) tool to maintain the GL COA and global COA? If they don't have any MDM tools in place, expect a write-up on what is the current process for governance of metadata?
11. How many reports do you anticipate will need to be generated?
Expect to see the list of management, legal and statutory report packs that are being generated from their current consolidation system.
Sample Reports:
Output: Detailed list of report templates and security matrix to determine who access what reports
12. Do you generate a “standard” management reporting book? How often?
Expect to see a description on frequency of financial statements for public reporting is being generated
Describe monthly business reporting process to get a view of the balance sheet, income statement and cash flows
13. Are you planning to include Income Statement, Balance sheet and or cash flow reporting? At what level?
Expect a response on how the income statement, balance sheet and cash flow reporting at the consolidated level is being produced
How the legal entity level reporting is being handled?
13. Do you plan to do allocations? Briefly explain the complexity.
Does client book manual allocation entries in their GL systems?
How elimination entries are booked in the elimination companies for these to eliminate?
or do they plan to book allocations in consolidation application in future? If yes, expect a detailed write-up on process
14. Briefly explain about currency translation requirements
Expect to see a description how the local and reporting balance sheet amounts are being translated using month end foreign exchange rate and income statement amounts using the average exchange rate
Does client have any foreign exchange issues to create cash flow statements?
15. What do you anticipate for Training requirements? Training course for all, train-the-trainer, etc.
Any training requirements for such as user, train-the-trainer, system administrator after the implementation of consolidation application.
16. What are your documentation requirements?
Describe the need of Technical and system related documentation
Documentation need for system administrators.
That's it! we are done with the questionnaire.
Since we have reviewed and analyzed all the responses from requirement questionnaire, it is time to move on to finish the remaining portion of the requirement document.
As you all know we have written 4 sections of the document so far in the earlier blog:
https://padmaja-vemireddy.blogspot.com/2020/01/hyperion-financial-management_16.html
The sections we have covered in so far are:
In next blog we are going to finish off by documenting the below sections:
I will see you guys in next blog.
Note:
Let's continue from the last blog where we have analyzed part of the requirements questionnaire response.
https://padmaja-vemireddy.blogspot.com/2020/01/automation-of-financial-consolidation.html
we will continue analyze remaining responses to be able to deliver the requirements document.
4. How many Legal Entities and Reporting Chart of Accounts?
Please expect to see the list of divisions/locations/legal entities which are responsible to generate and submit the Trial balances as soon as monthly close happens. Along with that, list of reporting roll ups to meet any management reporting requirements.
In case of reporting chart of accounts, hear out the current pain points with redundant GL accounts/local chart of accounts (COA) and how they are being mapped to the reporting or summary or global chart of accounts.
Based on above response from client, we were able to put together following sections of the
requirement document.
- Process related challenges to reduce the COA redundancy
- Complexity involved with mapping exercise from local COA to global COA
5. Do you anticipate to have consolidation application built using GL Accounts or Summary Accounts level?
I would be very interested to learn the response to this question. The reason being many clients prefer to build the consolidation application at GL account level. It is not their fault since the general belief is having all the GL accounts in one consolidation application would act as a single source of truth.
Fair expectation from client stand point!
But it is very important to convince them that consolidation application would and should never replace the local GL specific reporting systems.
Consolidation application would be overwhelmed if we dump all local GL accounts of all entities.consolidation performance would be degraded drastically from minutes to hours on month end consolidation close.
Best practice would be to design 200 to 400 global chart of accounts (COA) in Consolidation application depending on Financial and Statutory reporting requirements.
Advise clients to publish these global COA to all entities and let controllers own the mapping exercise of GL accounts to global COA.
Many Consolidation projects would be delayed due to one reason, that is under estimate the effort and complexity involved in this mapping exercise.
Also we expect to see a response on reporting roll ups for the Balance Sheet, Income Statement, Statement of Equity and Cash Flow.
6. Will you be using multiple currencies?
Should be a straight answer on public and reporting currency requirements
7. Please explain any custom Inter company elimination requirements or is it standard eliminations?
Expect to see a response like how currently an use of elimination companies and how the corporate controllers book elimination entries into these elim companies to enable elimination upon consolidation.
8. Can you please explain about requirement of Minority Interest calculation?
There may be instances where client holds substantial portion of ownership in other entities. Expect to see a description how minority interest gets calculated
Output:
- Templates and Process documents for minority interest calculations
9. How often will data be refreshed? Daily or monthly
Client may describe how the GL data is being fetched into one common system or location? Is it daily or month end ?
10. Do you anticipate Master data management issues? If so, do you have an anticipated plan to deal with these?
Expect to see if client has any centralized master data management (MDM) tool to maintain the GL COA and global COA? If they don't have any MDM tools in place, expect a write-up on what is the current process for governance of metadata?
11. How many reports do you anticipate will need to be generated?
Expect to see the list of management, legal and statutory report packs that are being generated from their current consolidation system.
Sample Reports:
- Balance sheet by legal entity and segment
- Cash Flow by legal entity and segment
- Statement of Equity by legal entity and segment
- Trend reports for P&L and Balance Sheet (i.e. monthly / quarterly)
- Note disclosures for various balance sheet and income statement accounts
Output: Detailed list of report templates and security matrix to determine who access what reports
12. Do you generate a “standard” management reporting book? How often?
Expect to see a description on frequency of financial statements for public reporting is being generated
Describe monthly business reporting process to get a view of the balance sheet, income statement and cash flows
13. Are you planning to include Income Statement, Balance sheet and or cash flow reporting? At what level?
Expect a response on how the income statement, balance sheet and cash flow reporting at the consolidated level is being produced
How the legal entity level reporting is being handled?
13. Do you plan to do allocations? Briefly explain the complexity.
Does client book manual allocation entries in their GL systems?
How elimination entries are booked in the elimination companies for these to eliminate?
or do they plan to book allocations in consolidation application in future? If yes, expect a detailed write-up on process
14. Briefly explain about currency translation requirements
Expect to see a description how the local and reporting balance sheet amounts are being translated using month end foreign exchange rate and income statement amounts using the average exchange rate
Does client have any foreign exchange issues to create cash flow statements?
15. What do you anticipate for Training requirements? Training course for all, train-the-trainer, etc.
Any training requirements for such as user, train-the-trainer, system administrator after the implementation of consolidation application.
16. What are your documentation requirements?
Describe the need of Technical and system related documentation
Documentation need for system administrators.
That's it! we are done with the questionnaire.
Since we have reviewed and analyzed all the responses from requirement questionnaire, it is time to move on to finish the remaining portion of the requirement document.
As you all know we have written 4 sections of the document so far in the earlier blog:
https://padmaja-vemireddy.blogspot.com/2020/01/hyperion-financial-management_16.html
The sections we have covered in so far are:
- Current system overview
- Current pain areas
- AS-IS Process flow (High level)
In next blog we are going to finish off by documenting the below sections:
- Scope of the project
- Implementation expectations
- Functional requirements
- TO-BE Process flow
- Data Migration and Validation
- Security
- Appendix
- GL Accounts and Global COA
- List of entities and ownership details for Holding companies
- List of cost centres/locations or any other segments
- Reporting roll ups for all COA's
- Templates for Data Loads
- Process docs for Translations
- Process docs for Consolidations
- Process docs for Eliminations
- Security Matrix
I will see you guys in next blog.
Note:
I have published an Advanced courses on Hyperion Essbase, Planning and HFM on Thinkific Learning Platform. Please apply the coupon codes found on the site to avail the discounts on the courses. Please check it out if you are interested.
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