Automation of Financial Consolidation and Reporting using HFM - Requirements Document - Part 1

Namaste!

I have started writing a blog on HFM Requirements workshop after kick starting the project, earlier.


https://padmaja-vemireddy.blogspot.com/2020/01/hyperion-financial-management.html

oh, let me give a name for this project. since ultimate goal of any HFM project is to reduce the over all reporting close time by stream lining and automation of consolidation processes, I would call this project "Automation of Financial Consolidation and Reporting".

In this section, I am going to discuss what happens next after finance stake holders provide the responses to the questionnaire during the Requirements workshop?

Well, Project manager and Business Analyst analyze the responses and make several follow ups with Finance group and put together a draft version of a Business requirements document (BRD) or Functional Specification document (FSD).

This document is a starting point to capture all the requirement gathered during workshops. This document has to be clear enough to validate the understanding of the end to end process flow of the current consolidation and reporting process.

Here are the high level contents of the BRD or FSD document:

Please note that this is a sample write up to give you an idea of what content should go in here.
It cannot be a generic document and not one size fit for all 


First of all, it is very important to understand all the required stake holders. I would encourage to create a consolidated list of finance related departments, starting from Core Accounting who are responsible for "Record to Report" to all the way down to "Treasury" department.

Here is a sample snapshot of interested stake holders who may be directly or in-directly impacted by your project called "Automation of Financial Consolidation and Reporting".

Above diagram represents all the departments and their primary responsibilities under finance domain.

If you were able to draw the above diagram during the Requirements workshop, you are close to success with stakeholder communication piece of the Project management pillars. Since you identified all interested parties, it is time to socialize with them and get a buy-in for the scope of the project drafted in Project-Charter which is Project Manager's responsibility.

From the requirements standpoint, since we know all the stakeholders, it is time to get the working templates from above contacts to understand the data, standards, processes, calculations and report packs. Some of the templates, we would be interested in:

• Entity wise Trial Balance Formats
• Schedules
• Financial Report Templates
• Statutory Report Templates
• Any Commentary and Foot notes Templates
• Reconciliation Templates
• Inter company Transactions Templates
• Inter company Elimination Processes and Templates
• Translation methods and Historical data Translation Processes
• Minority Interest Calculations
• Allocation Calculations
• Movement of Balances
• Consolidation methods and Processes

Once we gather the above documents, Business Analyst along with Project Manger and Solution Architect, take a stab at it to analyze further to be able to prepare the "Gap-Analysis" at the end of the Requirements work shop.

Quickly, Gap Analysis is a process of finding the gaps between scope of the project and current state of the system.

After Analysis, we should be able to document the overview and pain points of the current financial consolidation processes/system


Current System Overview:

• Presently the financial statements i.e. Profit and Loss Accounts, Balance Sheet and Cash Flow Statement, along with Non-GL data i.e. Notes to Accounts, Fixed Assets Schedule and Other information are as per local GAAP and IFRS. 

• Books of Accounts of Client and all it's entities are maintained in Oracle EBS R12 and financial statements consolidated through consolidation HUB. 

• Financial statements of companies which are not using Oracle are exported to excel spreadsheets.

• Final consolidation of all the subsidiaries is being done manually on a spreadsheet based on financial statements of subsidiaries.

Current Pain Areas:

• Consolidations are being done in excel which is prone to manual errors. 
• Excel is being used to consolidate financials are having issues with security, data sanctity, size and format of the data.
• Delay in receiving Trial Balance from all the locations. 
• Lack of clarity in data received from locations.
• Lack of global COA or standard COA.  COA Mapping is being performed manually in excel.
• Inter-company transactions are captured manually and eliminations is are performed manually.
• Translations are manual and error prone
• Incredible amount of time and effort on consolidation exercise.

AS-IS Process Flow (High Level):

So far so good. I will cover rest of the business requirements document in next blog.

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