Pc100nw Ifrs Operating

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SAP BUSINESSOBJECTSTMPLANNING AND

CONSOLIDATION 10.0,VERSION FOR SAP NETWEAVER

STARTER KIT FOR IFRS SP1

Operating Guide


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Copyright

2012 SAP BusinessObjects. All rights reserved. SAP BusinessObjects and its logos,

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2012-04-26

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BPC NW 10.0, starter kit for IFRS

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Contents1 INTRODUCTION ................................................................................................................................. 51.1 Presentation ....................................................................................................................................... 51.2 Starter Kit Organization .................................................................................................................... 51.3 Flow-Based Consolidation ............................................................................................................... 71.4 Users ................................................................................................................................................. 112 INITIALIZING THE CONSOLIDATION ....................................................................................... 122.1 Key Points ........................................................................................................................................ 122.2 Planning and Consolidation Administration prerequisites ......................................................... 122.3 Preparatory tasks ............................................................................................................................ 153 COLLECTING DATA ........................................................................................................................ 203.1 Key Points ........................................................................................................................................ 203.2 General data entry principles ......................................................................................................... 203.3 Data entry controls .......................................................................................................................... 213.4 Data entry approval process .......................................................................................................... 224 PROCESSING CONSOLIDATED DATA: KEY CONCEPTS ....................................................... 234.1 Key points ........................................................................................................................................ 234.2 Overview of the transition from local to consolidated data ........................................................ 234.3 Managing Incoming Entities ........................................................................................................... 274.4 Manual Journal Entries ................................................................................................................... 294.5 Running a consolidation processing ............................................................................................ 304.6 Retrieving and checking data ......................................................................................................... 315 MAKING ADJUSTMENTS TO INDIVIDUAL ACCOUNTS ........................................................ 335.1 Key Points ........................................................................................................................................ 335.2 Correcting Input Data ...................................................................................................................... 33


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5.3 Making Adjustments to Input Data ................................................................................................ 396 INTERCOMPANY TRANSACTIONS ............................................................................................. 416.1 Key Points ........................................................................................................................................ 416.2 Elimination of Internal Transactions ............................................................................................. 417 DEFERRED TAXATION .................................................................................................................. 537.1 Key Points ........................................................................................................................................ 537.2 Overview ........................................................................................................................................... 53

8 CONSOLIDATION ENTRIES .......................................................................................................... 558.1 Audit IDs ........................................................................................................................................... 558.2 Apportionment as per the Consolidation Method ........................................................................ 568.3 Calculation of Non-Controlling Interests ...................................................................................... 578.4 Elimination of Investments ............................................................................................................. 608.5 Converting Consolidated Shareholders' Equity and Investments in Subsidiaries .................. 65 8.6 Equity Method .................................................................................................................................. 748.7 Booking of Goodwill ........................................................................................................................ 799 SCOPE CHANGES ............................................................................................................................. 839.1 Overview of the Scope Changes .................................................................................................... 839.2 Incoming entities ............................................................................................................................. 849.3 Outgoing entities ............................................................................................................................. 8710 COMPLETING THE CONSOLIDATION ................................................................................... 9010.1 Key Points ........................................................................................................................................ 9010.2 Checking the Net Equity ................................................................................................................. 9010.3 Checking the Statement of Cash Flows ........................................................................................ 93


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1 Introduction

1.1 PresentationThe 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, for instance by

entering exchange rates and scope data (seeInitializing the Consolidation on page12)and how input data

is collected (seeCollecting data on page20).

Processing the data: This step describes the main concepts (seeProcessing Consolidated data: Key

concepts on page23), how intercompany transactions are eliminated (seeIntercompany transactions on

page41), how deferred taxes are computed (see Deferred Taxation on page53)and how consolidation

journal entries are posted (seeConsolidation entries on page55).

Completing the consolidation: In this step the entire consolidation is validated on the basis of the

Statement of Changes in Equity, the Statement of Other Comprehensive Income and the Statement of

Cash Flows (seeCompleting the consolidation on page90).

Each section presents:

- Key points

- Content of the Business Process Flow (BPF) when relevant

- 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 via the helpbutton,

describes functions and procedures.

- Configuration Design: This document offers in-depth knowledge about customizing the

configuration. You should refer to this documentation to get detailed information about using the

application for customization purposes or making changes to the setup of the starter kit.

- Data Entry Guide: This document is based on the starter kits Business Process Flow for Data

Entry and provides a step by step guidance for data entry.

- Simplified Description: This document provides general information on the data collection

process, consolidation process and reports and the analysis process with the starter kit. A

description appendix document is also published to detail the lists of items that exist in the starterkit.

1.2 Starter Kit Organization

1.2.1 Models

The starter kit includes one environment, SAP_IFRS_SP1. This environment is made up of the following

models:

- One model to collect and retrieve financial data:

o Consolidation

- Two support models used to collect non-reporting data necessary to the conversion and the

consolidation process:

o Rates


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o Ownership

1.2.2 Dimensions

All of the information in the database is identified by a set of elements required for storing, processing and

retrieving data. These elements are called dimensions.

The SAP_IFRS_SP1 environment includes 13 dimensions. The following table gives a description of each

dimension and an overview of how dimensions are assigned to the models.

Dimension Description

Models

Consolidation

Rates

Ownership

CATEGORYFour pre-defined categories: ACTUAL, FLASH, BUDGET and

FORECASTX X X

TIME The date on which the information is entered X X X

ENTITY The Company or Business Unit whose data is being entered X X

CURRENCYThe currency in which the data is stored (seeConversion of

foreign subsidiaries accounts on page25)X

ACCOUNT

The balance sheet and income statement accounts as well as

technical accounts for consolidation purposes, for example

clearing accounts

X

FLOWBalance position (at opening /closing) or variation typesexplaining the change occurred during the period. SeeFlow-

Based Consolidation on page7

X

AUDITID

The ID that identifies the origin of the data for input data, local

adjustments, manual journal entries, and automatic journal

entries

X

INTERCO The entity involved in an intercompany transaction X X

CONSOSCOPE The scope for which consolidated data is generated X X

INPUTCURRENCY The currency for which an exchange rate is defined X

RATEID The rate type (such asAverage rate, Opening rate) X

RATEENTITY Entity for which a generic or a specific rate is entered X

OWNACCOUNTThe type of information stored in a scope (such as

Consolidation method, Financial interest rate)X

Any amount stored in a model (for example, Consolidation) is identified with one member of each

dimension assigned to this model.


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Example

Entity S002 (whose currency is EUR) has 5 000 in cash at the end of the 2011 fiscal year. This

information, which was entered via a data entry schedule, is stored as follows in the database:

Category Time Entity Currency Account Flow Audit ID Interco Consoscope Amount

ACTUAL 2011.DEC S002LC-local

currency

A2610-

Cash on

hand

F99-

Closing

position

INPUT-

Input Data

I_NONE- No

intercompany

G_NONE- No

consolidation5 000

In each model, all the assigned dimensions must be populated when an amount is entered orgenerated by an automated processing. On some dimensions, dedicated members areavailable to store the data when no detail is required (such as I_NONEfor the Intercodimension and G_NONEfor the Consoscopedimension).

The way to populate the Intercodimension depends on the account:

- If the account is non-interco (for example,A2610-Cash on hand): enter I_NONE

- If the account accepts an intercompany breakdown (for example,A2210-Trade receivables, Gross):

enter the total amount for this account on Interco I_NONE. When required, enter the details of

intercompany amounts by partner on the relevant Interco member(s) (for example, I_S001).

The amount attributable to third-parties is not stored on a dedicated member of the Intercodimension. It is equal to the difference between I_NONEand the sum of identified group

partners. This difference is displayed in relevant input forms or reports but is not stored inthe database.

Note: For more information on the database structure, see the Configuration Designdocumentation.

1.3 Flow-Based ConsolidationThe 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. Flows

members to be used differ according to the account being analyzed.

1.3.1 List of Accounting Flows

Types of Flow

Opening and closing balances correspond respectively to flows F00and F99. Variation flows can beorganized into the following categories:

Flows for Current Transactions

Income statement: Transactions for the income statement are posted in flow PL99.

Current assets and liabilities other than provisions: Movements in current assets and liabilities (excluding

provisions) and the cash flow are posted in variation flow F15.

Example

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


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In the accounting system:

Account Debit Credit

Sale of goods 100

Accounts receivables 100

In the software:

Account Flow Debit Credit

P1100 Revenues PL99 100

A2210 Trade receivables, Gross F15 100

Depreciation, impairment and provisions:The balance sheet movements due to depreciation, impairment

and provisions are posted using the following 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.



Depreciation on investment 100

Allowance/depreciation of investments 100

In the software:


A1812 Investments in subsidiaries, JV andassociates, Impair.

F25 100

P2210 Allowances for provisions on shares PL99 100

Equity: Some dedicated flows have been created specifically for analyzing the changes in equity accounts.

Movements in shareholders' equity usually originate from:

- The distribution of dividends (posted in flow F06)

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

- The increase or decrease in capital (posted in flow F40)

- Movements that come under Other comprehensive income, for example, flow F55on fair value

reserve

- 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.


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- 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 an

associates share for 250. This investment is financed by a bank loan.



Investments in subsidiaries 1 250

Bank loans 1 250

In the software:


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 flow F50-

Reclassification.

Adjustment to IFRS: Variations in fair value for financial assets and liabilities are posted in flow 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 flow F09-

Change in accounting policies, which must balance (Total Assets = Total Liabilities).

- Contribution to capital and merger transactions: The impact on balance sheet items, including

issue of shares for capital contribution, is posted in flow F70-Internal mergers. Any impact on the

net income for the period is recorded in account P1620-Merger result.

Flows Specific to Consolidated Accounts

The flows specific to consolidated accounts are populated automatically by the application during the

consolidation process and are as follows:

- Effect of foreign exchange rate variations: F80

- Effect of variations in scope:

F01: Incoming units

F03: Change in consolidation method. This flow is used for entities that change their

consolidation method, for example from the equity method to a full or proportionate

consolidation or vice versa.

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

interest on the equity.

F98: Outgoing units


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The Flowdimension includes a dedicated member, END, used to sum up the opening andmovement flows. It is mainly used for control purposes (by comparing the amount calculated forthe ENDflow and the amount stored on flow F99), and should not be used in input forms or

manual journal entries.

1.3.2 Entering Data in Flows

In input forms

In the input forms, you must enter the closing balance in flow F99. Flow F15-Net variationis then

automatically calculated by subtracting the sum of the opening flow and other movement flows from the

closing flow (F99).

Flow F15is used as a control flow whose amounts should be allocated using the relevant variation flows,

for all the balance sheet items except:

- Cash accounts

- Current assets/liabilities accounts, excluding depreciation, impairment and provisions, for which no

detailed breakdown 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 importing

closing data, the assets variation table should be as follows:

F00 F99F20

IncreaseF30

DecreaseF55

Fair valueF50

Reclass.

F15Control

A11xx Assets 50 100 50

Movements during the fiscal year correspond to an investment of 80 and a sale of 30. Data should

therefore be entered in the schedule as follows:

F00 F99F20

IncreaseF30

DecreaseF55

Fair valueF50

Reclass.

F15Control

A11xx Assets 50 100 80 -30 0

In Journal Entries

Regardless of whether they are automatic or manual, journal entries on balance sheet accounts are

recorded via a movement flow whose amount is carried over to the closing balance F99.

1.3.3 Balancing Flows

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

income.

FlowAssets - Liabilities =

EquityAssets - Liabilities = Income(income statement accounts)

F00Opening X

F01Incoming units X

F09Change in accounting policies X

F50Reclassification X

F70Internal mergers X (P1620)

F80Currency translation adjustment XF99Closing X


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1.4 UsersTwo users are predefined in the starter kit:

- LOCALUSER: user that can only enter local data

- CONSOMNGR: user in charge of the consolidation

When installing the starter kit, it is possible to either create these users in the NetWeaver backend or

replace them with real users that are assigned to the same teams of users.

If these users are replaced, the default property values of OWNER and REVIEWER properties must be

changed in the ENTITY and the CATEGORY dimensions.

ENTITY dimension: Update the columns:

OWNER: The owner property identifies the person that must perform an activity in a business

process flow (1). This property also sets the OWNER of a given entity regarding the Work status.

REVIEWER: The Reviewer designating property is a special property used to identify the person or

team that must review an activity performed by another user in a business process flow. This

person or team member can approve or reject the action taken by the user. A reviewer can also

reopen the previous step of a business process flow

CATEGORY dimension: Only update the column OWNER

(1).A process (BPF) template is the specification of a single enterprise-wide business process, containing

tasks that can span across the various modules of Planning and Consolidation. It defines the business

processes that are presented to users as a prepackaged set of application tasks.

Process Instance: Once you have completed a process template, you can create a process, based on the

template, in the Administration screen. A process represents an iteration of the enterprise-wide business

process. It allows the user to see only the tasks relevant for that user, given his or her role and data access

privileges.

Assigning the right owners and reviewers must be done before creat ing processinstances.


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2 Initializing the Consolidation

2.1 Key PointsThe objective of this section is to present all the tasks required to go through a new consolidation process.

In the Planning and Consolidation Administration, you will have to:

- Update the list of the companies with new reporting entities in dimensions ENTITY and INTERCO

- Create the process instances enabling the users to perform their activities

- Assign the control set to the reporting (CATEGORY/TIME pair)

In the BPFC1- Consolidation, you will:

- Enter the exchange rates for the period

- Create the consolidation perimeter- Run the CopyOpening process in order to generate the opening balance

Documents to be kept

- Printout of the exchange rate table

- Printout of the consolidation perimeter

2.2 Planning and Consolidation Administration prerequisites

2.2.1 Updating Entities

Key ConceptsThe Entity is the elementary component of the Groups structure. In a statutory consolidation, an Entity is

usually a legal entity, but it can also be a sub-group, a branch, a business unit, or a department. You can

also assign a code to companies that are not linked by their capital to the Group. You usually do so in the

following cases:

- When the Group is included in the consolidated accounts of another Group, even though it

consolidates data at its own level. By creating an entity ID 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).

- When the Group wants to perform breakdowns by partner (customers/suppliers) using consolidated

data.

The Entity table will then contain all of the reporting units for which the Group has defined a code,

regardless of whether or not they will be consolidated.

In the starter kit, updating Entities involves maintaining the three following dimensions:

- ENTITY

- INTERCO

- RATEENTITY

The INTERCO and RATEENTITY dimensions should mirror the ENTITY dimension as regards the leaf-

level members (not necessarily the parents or the hierarchy). In the starter kit, I_ prefix is used to

distinguish entity members and intercompany members. In the RATEENTITY dimension, enter the code of

the ENTITY members.


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To avoid any inconsistency in the reported data or when you build the perimeter, you should always

ensure that these two tables are up-to-date. For instance, you should not add a new occurrence tothe Entitytable without adding the corresponding occurrence to the Intercotable.

Do not delete the codes ALL_ENTITY and CONSO of the ENTITY dimension and the codesI_NONE and ALL_INTERCO of the INTERCO dimension. Do nott delete the code GLOBAL of theRATEENTITY dimension.

Structure of the Entity Dimension

Some information related to each Entity is stored in the database in the form of properties. This information

is required because it enables the Entity to be correctly included in the consolidation processing and

consolidated reports.

Currency

This property identifies the currency in which data is collected.

Parenth1

This column of the entity dimension is used to build an Entity hierarchy and therefore to retrieve aggregated

contributive amounts by segment in reports. Additional hierarchies can be defined by creating the

corresponding column with the Parenth prefix as column header (e.g. Parenth2).

You should always make sure that the Parenth1property value corresponds to an existing Entity.

Elim

This property is used to distinguish between reporting entities on the one hand and technical entities that

are populated by the intercompany US elimination process on the other hand. If you want to run US

eliminations in the starter kit, dedicated elimination entities should be created (e.g. creating the

ELIM_EMEA entity for storing eliminations within EMEA). For these entities, the Elim property must be set

to Y.

However, in order to produce IFRS-based consolidated accounts, it is recommended to run the Legal

Consolidation process to trigger automatic contributive journal entries entity by entity (not the US

elimination process which populates elimination units).

IntCoThis property is used to define the link between an Entity and the corresponding member in the Interco

table. For instance, the Entity ID S000 corresponds to the ID I_S000of the Interco table.

The Intercotable has the homologous property Entitythat allows the application to make thelink between a member of the Interco table and the corresponding entity member.

Control_level

This property must be populated with 1in order to trigger the controls.

Owner

This property defines who should enter data at subsidiary level. It must be updated for all entities beforegenerating the process instances.


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Reviewer

This property defines who should approve data entered at subsidiary level. It must be updated for all

entities before generating the process instances.

Country

This indicates the country in which the Entity's headquarters are located. This property can be used to

produce geographical area analysis.

Style

This property is not used in the starter kit. It is populated by default N (normal). Additional property values

can be extended and defined in new reports for specific formatting by entity if need be.

2.2.2 Generating Business Process Flow (BPF) instances

For users at subsidiary level

Before the local users can enter their data in the system, it is necessary to grant them access to the

relevant data sets (Category/Time/Entity combinations).

This is done by assigning users to teams that have the appropriate data access profiles (e.g. Data Entry

Users team)

To generate their instance of the BPF L1 - Data Entryfor the corresponding Category/Time combination.

- Go to the Planning and Consolidation Administration.

- Click on Business Process Flows > Process Instances.

- Click on the +New button.

- Select the L1 - Data entryprocess then click on Next.

- Select the owner (The BPF Instance Owner).

- Select the category and the time then click on Next. A warning appears to say that a BPF instance

will be created for all the leaf level entities of the ENTITY dimension. Click Next.

- Activate the Start the process instance box then click on Finish.

- Close.

For users in charge of the consolidation

Before they can use the BPFs dedicated to the Preparatory tasks, the Consolidation and the Report Library,

it is necessary to grant the users in charge of the consolidation access to the relevant Category/Time

combination.

This is done by assigning users to teams that have the appropriate data access profiles (e.g. ConsolidationMngr team)

- Go to the Planning and Consolidation Administration module.

- Click on Business Process Flows > Process Instances.

- Click on the +New button.

- Select the C1 Preparatory tasks process then click on Next.

- Select the owner (the BPF instance owner).

- Select the time then click on Next.

- Activate the Start the process instance box then click on Finish.

- Close.

You should follow the same procedure to create the C2-ConsolidationBPF instance and the R1-Report

Libraryinstance.


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2.2.3 Assigning controls to the reporting

This task enables the local user to run the controls on input data entered in the input forms.

- Go to the Planning and Consolidation Administration.

- Click on Rules > Controls.

- Click in the column Assignment on the Consolidation row.

- Click on Category and active the box Actual.

- Click on Time and active the box for the relevant period.

- Click on Edit.

- Double-click on the cell and select theA-Set of control.

- Save and close.

2.3 Preparatory tasks2.3.1 Exchange rates

Before running a conversion process, the exchange rates for the relevant period must be entered by a

central user. This is done using the Rates model.

Conversion Rate Tables

A set of conversion rates applied to one consolidation is identified using the two following dimensions:

- Category

- Time (period)

Conversion Rate TypesFor a given Category and Time, the following conversion rate types are available:

- END: Closing rate

- AVG: Average rate

- DIV: Dividends rate

Note that there is no Opening rate. This is because the rate applied to the Opening position isthe Closing rate of the previous period.

The conversion rates entered are based on a base currency. This currency must have a conversion rate

equal to 1 for all rate types. The choice of this base currency is not related to the consolidation currency.

Calculation Methods

The Starter Kit is designed to express exchange rates using the "Certain for uncertain" (also called Divide)

calculation method. This is defined on a currency by currency basis via the MD property of the

InputCurrency dimension.

Example

The base currency is EUR. Exchange rate for USD and EUR are entered as follows:

Currency Rate

EUR 1

USD 1.32


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This means 1 EUR = 1.32 USD. In other words, an amount entered in USD in a data entry schedule will

be DIVIDED by 1.32 to calculate the consolidated amount when you run a consolidation that triggers a

conversion in EUR.

Entering Conversion Rates

Procedure

To enter conversion rates:

1. Go to the BPF C1Preparatory tasks > Enter exchange rates: This opens the web input form.

2. Click on Edit, and then select the InputCurrency dimension.

3. Click on Select members and add the relevant currencies to the fixed list.

4. Click OK then OK.

5. Click on Finish editing then Save.

6. Populate the current years DIV, AVG and END exchange rates, for each relevant currency.

7. Click on Save data then Yes.

8. Close Rate input.

Conversion Rates Specific to Certain Reporting Units

You can enter a conversion rate specific to one reporting unit. You could use this option for incoming and

outgoing companies. For example, the opening rate for an incoming reporting unit is the rate applicable at

the time it was included in the scope and not the rate applicable on the first day of the year.

To insert specific rate, you should:

1. Go to the BPF C1Preparatory tasks > Enter exchange rates: This opens the web input form.

2. Click on Edit, and then select the Rate by Entity dimension.3. By drag and drop, add it to the rows axis.

4. Select the button on the right of the Rate by Entity dimension and select the Move Up option. By

default, the Rate Entity ID is proposed. It corresponds to the generic rates.

3. Click on Select members and select the Rate entity andthe entities for which you have to

enter a specific rate in the fixed list.

4. Click OK.

5. Click on Finish editing then Save.

6. Populate the specific DIV, AVG and END exchange rates, for each added entity.

7. Click on Save data thenYes.

8. Close Rate input.

You should previously have entered the entiy code in the RATEENTITY dimension.

In order for the specific conversion rates by entity to be applied, it is necessary to inputnot only the specific rate for the entity (RateEntity ID) against the input currency(InputCurrency ID) -cf. (a) - but also the consolidation currency rate (stored also on theInputCurrency dimension) for this entity (RateEntity ID) cf. (b). It is therefore necessary topopulate not one but two rows by entity as illustrated below:

RateEntity InputCurrency DIV AVG END

S001 USD 1.35 1.40 1.32 (a)

S001 EUR 1 1 1 (b)


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2.3.2 Perimeter

Principles

The consolidation scope data is stored in the Ownership model. It is used when a consolidation process is

run. The consolidation scope is defined using the Create perimeter step of the BPFC1- Preparatory tasks

or directly the Ownership Manager in the Consolidation Central module.

It can be checked using the Perimeter Variations report schedule (see Preliminary checks in the BPF C2-

Consolidation).

Definitions

Consolidation Scope

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

- The consolidation method,- The financial interest rate and the consolidation rate.

Rates Used

Financial Interest

The Financial interest represents the percentage of capital that a parent company holds directly or indirectly

in the held company.

Example

60%

50%

50%

F2

F1

M

SubsidiaryFinancial

interest rate

F1 60%

F2 80% (1)

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

Consolidation Rate

Besides the financial interest rate, the scope also displays the consolidation rate, which depends on the

consolidation method:

- For a fully consolidated company (purchase method), it is 100%.

- For a proportionate company consolidation, it represents the share of assets and liabilities (or

expenses and income) included in the Group balance sheet (or income statement). It is equal to the

sum of all direct shareholdings in the subsidiary held by companies in the scope, after the

consolidation rates for the latter have been applied accordingly.

- For a company consolidated using the equity method, it represents the Group share used to

calculate the consolidated value of the investments in associated undertakings. It is calculated in

the same way as in a proportionate consolidation.


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Example

20%

80%

F2

F1

M

SubsidiaryOwnership

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%

Consolidation methods

For each consolidated entity, a method must be specified in the scope. This method is represented by a

numeric value, and combines two different notions:

- The consolidation method itself, like Full consolidation, Proportionate consolidation and Equity

method

- The change in scope, like Incoming and Leaving the scope

The following table is a summary of the combination of consolidation method stricto sensu and scope

changes.

Method

Consolidation event

No

variation

Divestment at

the end of

last year

Divestment

during the

year

Acquired last

year (internal

merger)

Acquired during

the year (internal

merger)

Parent company 111

Full consolidation 100

800

888

700

777

Proportionate consolidation 50 850 750

Equity method 20 820 720

Defining Scopes via the BPF

1. Click on Activities and select the BPFC1Preparatory tasksfor the period / categoryActual.

2. Select the Perimeter and the model Ownership.

3. Click on Edit, then Add and Select the consolidated entities in the right pane.4. Fill out the Consolidation method, Consolidation rate and Financial interest rate for each

consolidated entity.

5. Click on Save.

Defining Scopes via the Consolidation Central module

1. Click on Consolidation Central > Ownership Manager.

2. Select the Category / Period and Perimeter.

3. Click on Edit, then Add and Select the consolidated entities in the right pane.

4. Fill out the Consolidation method, Consolidation rate and Financial interest rate for each

consolidated entity.

5. Click on Save.


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2.3.3 Populating the Opening position of Balance Sheet accounts

This can be done by running the CopyOpening taskin the BPFC1- Preparatory tasks. This opens the Data

Manager / Run Package tab of the Excel Add In. You will have to:

1. Specify:

- The category (Actual)

- The currency: select LC-Local Currency and the consolidation currency(ies) in order to

populate the local opening and the consolidated opening position

- The list of consolidated entities

- The time

2. Click on Finish.

3. Click on the Data Manager tab > View Status.

4. Check that the CopyOpening Package has succeeded.

5. Close Excel.

You should not select all entities if there were entities that were exiting the consolidation scopeduring or at the beginning of the previous year. The CopyOpening process should not be run onthese entities.


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3 Collecting data

The objective of this section is to describe how the local data is collected, validated and approved.

3.1 Key Points

Data input is defined by the category (in the starter kit, the category for the statutory consolidation isActual), the entity and the period for which data is entered. In the starter kit, it is managed through theBPFL1- Local data, which consists of a unique activity data entry performed by local entry users and

reviewed by the consolidation managers.

Data input is divided into 4 steps:

- Import data,

- Enter data,

- Validate data,

- Submit data.

3.2 General data entry principles

3.2.1 Accessing input forms

Input forms can be reached using the dedicated BPFL1Data Entryor via the EPM Office add-in Excel by

opening the input forms directly from the Open server input form folder menu.

3.2.2 Data input organization

Data input forms are grouped into 3 folders according to their content:

10- Balance folder : to input closing balances in balance sheet and income statement

20- Flow Analysis folder: to detail variations in balance sheet items

30- Intercompany folder: dedicated to intercompany declarations

These input forms are appropriate for most companies.

Note that companies using the equity method only may either fill in the standard set of

input forms or only fill in the input form Net equity EM, which contains the net equity

analysis and the breakdown of dividends paid by shareholder.

3.2.3 Structure of the input forms

Each data input form, also called workbook, is divided into several worksheets according to the type ofinformation required. For instance, theFinancial Assetsworkbook contains 4 worksheets: Investment insubsidiaries, Financial receivables, Other financial assets, Cash & Cash Equivalents.

Depending on the changes you make in the input form, choose the Save and RefreshWorksheet Data button or the Save and Refresh Workbook Data button.


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3.2.4 Structure of the worksheet

EPM context

Data entry is normally done in the worksheet using the INPUT- Input data audit ID. However, adjustments

can also be entered in the input forms. To do so, click on the audit ID selection field in the EPM context at

the top of the schedule and choose INPUT11- Local adj. to Group acc. Policies audit ID.

To retrieve data for all audit IDs, use the ALL_INPUT- All local input parent of the audit ID dimension and

refresh the worksheet.

Entry area

To keep the data entry coherent and guide the performer through the data entry process:

ICtag, at the right of the account row, indicates whether the account can be detailed by partners ornot.

The formatting imposes certain rules to indicate that certain cells are not to be filled:

Cell hidden by thin gray diagonal stripes: Account/flow crossover is not authorized. For example,an increase in depreciation (flow F25) is not relevant for tax accounts.

Colored fill and bold font cell: The cell contains a subtotal resulting from a calculation formula.

When needed, the schedule displays in the last column a visual control that should be set to zero.

For more information on the data entry, refer to the Data Entry Guide.

3.3 Data entry controls

3.3.1 Running controls

Controls can be launched from the Validate data step of the BPF L1 Data Entry, which directly opens

the control monitor view.

3.3.2 Principles

A number of controls are preconfigured in the Starter Kit to validate the coherence of the data entered in

data input forms.

These controls are grouped into the set A Set of controls for actual input forms. They are displayedlogically and can be carried out progressively throughout the data entry process.

The main types of controls are listed below:

Total assets equals to total liabilities,

For assets, gross value vs depreciation/impairment checks,

Analysis of movements between opening and closing positions for the balance sheet items,

Breakdown analysis by partner,

Sum of interco values =< total account.

Controls apply to local audit IDs (INPUTand INPUT11), either audit ID by audit ID or all audit IDs

aggregated.


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All the accounting controls are blocking controls. It means that if they are not validated, data entered for the

{category, time, entity} combination is not valid and cannot be submitted for approval.

Note that it does not prevent not submitted data from being loaded in the consolidation

3.4 Data entry approval processThe validation of data input is made through the work status. Two types of users are entitled to use the

work status:

Local entry users, also known as performers.

Managers, also known as reviewers of the BPF and owners of the parent entity (owner property of

the entity dimension), who validate data input.

Depending on their attributions, users will therefore have different functionality in the data entry.

3.4.1 Submitting data

Submission

Once all controls are valid, the local entry user can submit data for approval to the manager.

Note that once you have submitted data entry, you cannot undo the operation. No

performer will be able to access data in write mode.

Procedure

1. Go to the step Submit data of the BPF L1 Data Entry.

2. Click on Submit data. It displays a windows Change work status.

3. In the field New status, select the status Submitted.

4. Then, click on the Submit button to complete the activity.

5. Submit the BPF by clicking on the Submit button to activate the reviewing process.

Approval

The reviewer can approve data or reject it.

If the reviewer approves the data input submitted by the performer, he should change the work status from

submitted to approved, which will lock data entry for all users. Then, he can complete the BPF.

If corrections are required, they can only be made by the local entry user. The reviewer selects the work

status Rejected and rejects the BPF to make data input available to the local entry user again. This is an

iterative process. The modified data entry must once again go through the validation steps and be

submitted to the reviewer/manager before being approved.

Procedure

1. Go to the step Submit data of the BPF L1Data Entry.

2. Click on Submit data. It displays a windows Change work status.

3. In the field New status, select the statusApproved/Rejected.4. Click on the approveor reject button to complete or reject the activity.


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4 Processing Consolidated data: Key concepts

4.1 Key pointsThe objective of this section is to present an overview of the tasks required to process input data and check

the consolidated amounts. The following sections explain in greater detail how the data is processed

automatically and manually:

- Adjustments to company accounts (seeMaking adjustments to individual accounts page33),

- Checking and eliminating intercompany transactions (seeIntercompany transactions page41),

- Posting consolidation journal entries (SeeConsolidation entries page55).

The BPF C2- Consolidationenables you to perform all the tasks required to process input data and check

consolidated data.

Content of BPF C2- Consolidation

Preliminary tasks

- Check data entry is completed and controlled.

- Check exchange rates.

- Check perimeter variations.

Manage the conversion of incoming entities

Post manual journal entries

Run the consolidation and check consolidated data

- Run legal consolidation process.- Check that consolidated data is generated correctly by editing control reports (dashboard, opening

balance, flow balance by audit ID and by Entity).

Check consolidated data meets accounting requirements

- View breakdown reports.

- View analysis reports.

Produce annual reports

You should have populated the opening balances in Consol idat ion Currencyusing the BPF C1

Preparatory tasks. (SeePopulating the Opening position of Balance Sheet accountspage19).

4.2 Overview of the transition from local to consolidated data

4.2.1 Structure of the table of data

The structure of the table storing the data for the Consolidation application enables you to differentiate

between:

- Data expressed in Local Currency (LC) vs. data expressed in Consolidation Currency,

- Data attached to a given scope vs. data that can be loaded in several consolidations.


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This distinction relies on two dimensions:

- Currency,

- Consoscope.

To generate consolidated data (in consolidation currency) from local data (in LC), the process is as follows.

1. Data is entered using a data entry schedule:

Entity Account Flow Audit ID Currency Consoscope Amount

E1 P1110 PL99 INPUT LC G_NONE 350

2. Data is converted during the consolidation processing and stored in Consolidation Currency without

being assigned to any scope in a first step.

Average exchange rate is 1 USD = 0.85714 EUR



E1 P1110 PL99 INPUT EUR G_NONE 300

3. In a second step of the consolidation processing, data is linked to the scope.



E1 P1110 PL99 INPUT EUR G_NONE 300

E1 P1110 PL99 INPUT EUR SCOPE1 300

In the reference table for the Consoscopedimension, any scope (except G_NONE) must be associatedwith one or several Group currencies. This information is used to identify the currency or currencies inwhich the converted data will be stored in the database.

Even if during Step 2 above the data is not associated with a scope ( Consoscopeis set to G_NONE),

the conversion process is triggered based on the scope you specify when running a consolidation.

4.2.2 Use of the Audit ID dimension

Each type of data is assigned with a different audit ID to facilitate the analysis of the transition from local to

consolidated figures. Audit IDs are used to:

provide an audit trail for the amount

- Data entered in the input forms: It is associated with the INPUTaudit ID, or possibly other local

level adjustment type audit IDs (one audit ID provided by default in the Starter Kit: INPUT11)

- Manual journal entries or automatic entries generated by the consolidation processing

Indicate in their long description the purpose of manual and automatic journal entries (e.g. ELIM10

Elimination of intercompany accountsAuto)

Audit IDs are organized in a hierarchical manner. The main groups of the hierarchy are:


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- Proportionated: This corresponds to input data (INPUT) and local adjustments to ensure

compliance with Group accounting policies (INPUT11). It also includes central corrections of input

data (INPUT91), and audit IDs used to post other adjustments (ADJ91). These four Audit IDs come

under the Restated sub-node.

Additionally, technical audit IDs are used to apply the consolidation rate for Proportionate

consolidation and Equity method (MTH_PRO, MTH_EQU) and to deal with incoming and outgoing

entities (SCO_OUT, SCO_INC).

- Elimination of internal gain/loss: Elimination of the Groups internal profits and losses on

disposal of assets.

- Elimination of dividends

- Elimination of reciprocal intercompany: Elimination of intercompany transactions (such as

receivables/payables, income/expenses) which do not have any effect on the consolidated net

income, as opposed to the other eliminations described above.- Goodwill and related CTA

- Investments elimination and related CTA

- Shareholders equityand related CTA

Specific Audit IDs are available to post Manual journal entries. This enables you to distinguish these Audit

IDs from those used by automatic processing when an automated journal entry has been set up.

Note: The names of the audit IDs used to post manualjournal entries always end with a 1. For instance:

- ELIM10 Elimination of intercompany accountsauto

- ELIM11 Elimination of intercompany accounts - man

4.2.3 Conversion of foreign subsidiaries accounts

Main Principles

Foreign subsidiary accounts are converted using the closing rate method:

- The closing balances of balance sheet accounts are converted using the closing rate, except for

equity and consolidated investments which are maintained at their historical value (seeConverting

Consolidated Shareholders' Equity and Investments in Subsidiaries on page65).

- The income statement is converted using the average rate for the period.

- The statement of cash flows is based on balance sheet variations which are converted at the

average rate for the period.

The conversion process is the first step of the consolidation package. It is performed against the

consolidation currency (or currencies) associated with the consolidation scope.

- The choice of the consolidation currency is not related to the base currency in the conversion rate

tables. The base currency is the currency with a value of 1 (seeExchange rates page15).

- For a given set of data in Local Currency, the consolidated accounts are converted into one or

several currencies (using the same conversion rate table) according to the list of currencies entered

in the GROUP_CURRENCY property of the CONSOSCOPE dimension member.

- The set of data that will be converted is identified by the property Is translated ( = Yes) of the Audit

ID dimension.

Data Conversion and Flow-Based consolidationThe conversion of flow F00for the Balance sheet items is triggered as follows:


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- For any account that is kept at its historical value, flowF00is populated by the CopyOpening

package in Consolidation currency.

- For any other balance sheet account, the F00is converted (thus stored in Consolidation currency)

based on the amount expressed in Local currency and the closing exchange rate of previous year.

A dedicated flow, F80-Currency translation adjustment, is used to store automatically the conversion

difference for each Balance sheet account that is converted at closing using the closing rate (END).

The method applied by the Starter Kit to process balance sheet accounts in Consolidation currency can be

summarized in the following table (figures to will be used in the example below).

FlowsAccounts

Accounts converted at closing rate Accounts kept at historical value

F00Opening

This flow is converted by applying the

closing rate used for the previous year

consolidation

This flow is copied from flow F99 of the

previous year consolidation

(CopyOpening, Conso. Cur)

Movement flows

(except F80)

Movement flows are converted applying the relevant rate :

F01: Closing rate used for the previous year consolidation

F06: Dividends specific rate (DIVR)

F98: Closing rate (END)

Other flows: Average rate (AR)

F99Closing Converted at the closing rate (END)Calculated as the sum of flow F00 +

movement flows

F80Currency

Translation Adjustment

Calculated on a flow-by-flow basis as the

difference between F99 and (F00 +movement flows)

[Not generated on the original account] *

* Amounts are generated on flow F80 of dedicated accounts E1560 and E2060 (Foreign currency translationreserve) to balance Assets with Liabilities and Equity .

Example

An entity is consolidated using the full consolidation method; the consolidation currency is EUR.

Extract from the conversion rate tables (certain for uncertain1EUR = x CUR):

Current year:

Currency END AVG

EUR 1 1

CUR 0.20 0.25

Previous year:

Currency END AVG

EUR 1 1

CUR 0.333 0.28


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Conversion and carry-over process for an account converted at the closing rate:

Account Currency

Previous

year

Current year

F99 F00 F20 F80 F99

A1110Lands and

buildings

LC (CUR) 100 100 10 - 110

EUR300

(100/0.333)

300

(100/0.333)

40

(10/0.25)

210

(difference)

550

(110/0.20)

From a technical standpoint, F80 is calculated as follows:

Difference between opening and closing

rates at opening: (100/0.20)(100/0.333) = 200

Difference between closing and average ratesfor increase during the period: (10/0.20)(10/0.25) = 10

Total: 210

Conversion and carry-over process for an account kept at historical value:

Account Currency

Previous

yearCurrent year

F99 F00 F10 F80 F99

E1110Issued

capital

LC (CUR) 100 100 100

EUR 270* 270 270

E1610Retained

earnings

LC (CUR) 200 200 20 220

EUR 560* 56080

(20/0.25)640

E1560Foreign cur.

transl. reserveEUR 110** 110 620 730

* This amount corresponds to the historical value of capital and retained earnings at the end of the previousyear

** This amount represents the translation differences accumulated over previous years, on all the equityaccounts (in this example, E1110 and E1610).

: Translation difference of the year: [(100/0.20)-(100/0.333)] + [(200/0.20)-(200/0.333)] + [(20/0.20)-(20/0.25)]=620

4.3 Managing Incoming Entities

4.3.1 Principle

When an entity is consolidated for the first time in one consolidation scope, the opening flow F00must be

populated based on the position at the date when the entity enters the scope and converted at the related

spot rate. The amount is then transferred to the F01flow (Incoming entities position) by the consolidation

process to allow you to identify the impact of scope changes in the balance sheet movements.

Once submitted on F00, the opening position of incoming entities must be loaded into the closing position

(flow F99) of the previous year-end in local currency by using the CopyData of Data ManagementPackages. This will cause the net variation flow F15to be calculated as the closing position value, which is


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necessary for equity accounts whose converted closing position is calculated as the sum of the opening

position and movement of the period using the entitys specific exchange rates (seeConversion Rates

Specific to Certain Reporting Units page16). In that instance it is necessary to input the entitys spot rate

applicable when the entity enters the scope both for the closing rate (END) and the average rate (AVG) so

that the F15 flow - and consequently the F99 flowis properly calculated for equity accounts.

This procedure is compulsory in order to apply a relevant conversion process for incoming entities while

keeping the conversion principle and the operation process consistent with other entities:

- By default for a new entity, the local opening position amounts cannot be populated in input forms

by the CopyOpening process since there in no source data. By following the procedure above, the

opening position is stored on the previous period end for all entities. Consequently if the

CopyOpening process is triggered again for all entities, the opening position (F00) of incoming

entities will not be reset to null.

- Concerning the conversion, the converted opening position of equity accounts is maintained assuch as carried over from the prior period converted value. The procedure above allows you to

populate the correct converted value in a way similar to the first time consolidation (seeFirst

Consolidation Processon page65).

4.3.2 Operation

Copy of Y Opening to Y-1 Closing

1. Logon in Excel and select the Data Manager menu.

2. Click on Run Package and select Consolidation > Data Management > Copy data > Run.

3.Active the Replace and clear data value option.

4. Click on Yesto run the default logic script.

5. Click on No check of work status.6. Set the following values:

a. Flow F00F99

b. Time YY-1

c. Consoscope G_NONEG_NONE

d. Entity Incoming entity code =>

e. Currency LCLC

f. CategoryACTUALACTUAL

7. Click on Run then Finish.

Another possibility is to perform the Import opening to Y-1 closingtask of the BPF in the Specific for

incoming entities group of tasks using the values described above.

Convert the Y-1 data of incoming entities

Perform the following tasks in the Specific for incoming entities group of tasks:

- Enter specific Average and Closing rates (= spot rate) for the incoming entity (for its reporting

currency and for the basis currency) in the exchange rate table of the previous year end.

- Create a perimeter FX-INCOMING for the previous year endcontaining all the incoming entities

of the current period. This perimeter is only created for the purpose of converting ingoing entities.

- Run the consolidation for the previous year on the FX-INCOMING perimeter (CategoryACTUAL) to

trigger the conversion.

- Run a CopyOpening on the current periodto load converted data (in Consolidation Currency) in

F00for the Incoming entities.


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4.4 Manual Journal Entries

4.4.1 Procedure

To post a manual journal entry, launch the following BPF step:

Activities > C2Consolidation> Post manual journal entries

You can also go to Consolidation Central > Journals

Defining a Journal Entry Header

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

Most of the fields are compulsory, as they correspond to dimensions of the Consolidation application:

- Category

- Time- Consoscope

- Currency

- Entity

- Audit ID

The Description field is optional, but it is recommended to fill it.

No journal entry should be posted on the LC-SCOPE1 combination, because the correspondingamounts would not be converted in this case. More generally, if a consolidation scope is defined inthe journals header, then you should also specify the currency of the consolidation for which this

journal entry will be valid.

Dimensions used in the Journal Entry Details

Each dimension must be populated when you create a journal entry. In particular, each journal entry row

should specify the following dimensions:

- Account

- Flow

- Interco

If a Manual Journal Entry should impact both the account total and one or several group partners,one journal row must be defined to record the impact on I_NONE in addition to the journal row(s)recording the impact on the group partner(s).

Note: For more information on how to populate the Interco dimension, seeDimensions page6

Audit IDs dedicated to Manual Journal Entries

The table below presents all of the audit IDs that you can use to post a manual journal entry.

We assume that the consolidation perimeter is SCOPE1 and its Group_Currency=EUR

Name Description Consoscope Currency

Restated

INPUT91 Input data - Central correction G_NONE LC


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ADJ91 Other adjustment - Central - Man. G_NONE LC

Elimination of internal gain/loss

DIS11 Elim. of inter G/L on disp. of assets - dep - Man. SCOPE1 EUR

Elimination of reciprocal intercompany

ELIM11 Elimination of intercompany accounts - Man. SCOPE1 EUR

Dividends elimination

DIV11 Elimination of internal dividends - Man. SCOPE1 EUR

DIV21 Currency translation adjust. on dividends - Man. SCOPE1 EUR

Goodwill and related CTA

GW01 Disclosure of GW and bargain purchase - Man. G_NONE LC

GW11 Booking of goodwill and bargain purchase - Man. SCOPE1 EURFGW11 Booking of NCI GW and bargain purchase - Man. SCOPE1 EUR

GW21 Currency translation adjust. on goodwill - Man. SCOPE1 EUR

FGW21 Currency translation adjust. on NCI GWl - Man. SCOPE1 EUR

Investments elimination and related CTA

INV11 Elimination of investments - Man. SCOPE1 EUR

INV21 Currency translation adjust. on inv. - Man. SCOPE1 EUR

INV31 Adjust. on G/Lon disp. of a subs., JV or associate G_NONE LC

INV32 (*) Adjust. G/L disp. of a subs., JV or asso-Cons.Curr G_NONE EUR

Shareholder's Equity and related CTA

NCI11 Calc. of non controlling interests - Correction SCOPE1 EUR

FVA11 Fair value for incoming entities (central) - Man. G_NONE LC

CTA01(*) Currency translation adjustments - Equity - Man. G_NONE EUR

CONS01 Consolidation entry not splittable SCOPE1 EUR

(*) These audit ID must be posted with Consoscope = G_NONE and currency = Consolidation Currency to

be loaded in the consolidation

Note: Manual journal entries posted in Local Currency are automatically converted into all the currencieslinked to the Consolidation perimeter.

4.5 Running a consolidation processing

4.5.1 First consolidation

When operating the consolidation for a given scope for the first time in the application, it is necessary to

populate and process the prior year-end time period for this scope in addition to the first required

consolidation. This is because the flows dedicated to the scope change analysis are properly populated by

the consolidation engine provided that at least one automatic journal entry has been detected in the

consolidation used as opening consolidation, which by default is the prior year end (December, year -1).

To do so it is recommended that you copy all input-level opening data of the first required consolidation

(flow F00) into the closing data (F99) and opening data (F00) of the prior year-end time period, including


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intercompany breakdowns. This breakdown by intercompany in the balance sheet triggers automatic

eliminations carried over to the closing position. After the consolidation process, the closing data of the prior

year end time period will contain the appropriate source data for the opening data of the following

consolidation, notably the opening automatic journal entries.

4.5.2 Subsequent consolidation

As explained before, the consolidation processing involves two processes in BPC:

- Conversion (applying currency conversion rules)

- Consolidation (applying adjustment rules)

To run the consolidation:

1. Launch Activities / BPF C2- Consolidation, Actualfor the period.

2. Click on Consolidation / Consolidation.

3. Enter the Category (ACTUAL), the time, the perimeter.

4. Click on Execution mode = Full consolidation.

5. Click on OK.

4.6 Retrieving and checking data

4.6.1 Retrieval Reports

The configuration offers a wide range of retrieval reports that can be used to check analyze and publish the

consolidated data.

These reports are accessible via two BPFs:

C2 Consolidation

This BPF, mostly dedicated to data processing, includes reports to check the consolidation process

(consistency checks such as opening balances) along with the main financial statements. Thanks to these

reports (that are also available in BPFR1Reports library), it is possible to process and check data in an

iterative manner without closing the C2ConsolidationBPF.

R1 Reports library

This BPF is composed of the complete set of retrieval reports, to publish and analyze the consolidated

data, and also to perform consistency checks on the consolidation process. It contains four sections:

- Annual Report (main financial statements),

- Analysis Reports (details of the financial statements),- Breakdown Reports (breakdown by entity or partner),

- Control Reports (consistency checks such as opening balance is equal to closing balance of

previous year).

In the remainder of this chapter, you will learn about the control reports. Further information on publishing

and analyzing the financial statements will be dealt with later on (seeCompleting the consolidation on page

90).

4.6.2 Checking Consolidated Data

This paragraph describes the reports you can use to check that the consolidated data is consistent.

These reports are grouped together in BPF C2Consolidationand come under the Consolidationgroup oftasks. The corresponding sub-steps are as follows:


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BPF Steps

C2Consolidation > Consolidation

Check dashboard

Check opening balanceCheck flow balances by audit ID

Check flow balances by Entity

We recommend that you expand the Dashboard reportafter each consolidation

processing.

In general, errors can originate from:

- Incorrect or incomplete data entry. In this case, re-launching the Data validation sub-steps of the

BPF L1Data Entrywill enable you to detect and correct the error.

- Incorrect data entry in the conversion rate table, such as a subsequent change made to the closing

rate for year N-1 (inconsistency between the current closing rate for N-1 and the one used when

processing the consolidation for N-1).

- Manual journal entries that do not comply with the conventions in this configuration. For example,

unbalanced flows as described inBalancing Flows page10.

Zoom on the Data Consistency Dashboard

To run the Data Consistency Dashboard, launch the following BPF step:

C2-Consolidation > Consolidation > Dashboard

This report is used to validate the overall consistency of the consolidation data by checking, for the entire

Group that:

- The assets equal the liabilities and equity on the balance sheet (this control is made on each flow

for which it is relevant)

- The flow analysis is consistent, e.g. the closing flow is equal to the sum of the opening flow and

variation flows, the balance sheet net income (flow F10) is equal to the income figure on the

Income statement.

- The clearing accounts for balancing consolidation entries are equal to zero or cancel each other out

at Group level.

The Data Consistency Dashboard should be run after each consolidation processing. If the assets dontequal liabilities and equity, or if there are inconsistencies between the BS net income and the P&L, you

should run the Flow balance by audit ID workbook in order to identify the audit ID that generates the error.

Then, you should identify the entity that generates the error by running the Flow balances by Entity.

To check the clearing accounts, you can use the Breakdown or Analysis reports.


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5 Making adjustments to individual accounts

This section outlines:

- Corrections made to input data,

- Adjustments booked at central site.

5.1 Key PointsThe manual adjustments described below are based on the following examples:

- Processing differences for net income N-1,

- Correcting input data,

- Making fair value adjustments.

5.2 Correcting Input Data

5.2.1 Processing differences for Net Income N-1

After company accounts have been sent to the Group and used for the consolidation, corrections may need

to be performed. As a result, there may be differences between the data sent and the modified data. You

can manage these differences in two ways during the next accounting period.

The recommended solution consists of taking these differences into account in the input forms. The second

solution consists of posting these differences in manual journal entries at central site. However, this solution

may create some inconsistency. This is because if the N-1 difference is not processed, this generates a

variation flow F15in net equity and this will prevent the data from being validated. For this reason, the

second solution is not recommended and should be reserved for exceptional cases.

Regardless of the solution, local and consolidated data will balance only during period N+1. At the closing

of N, even if the amount of retained earnings is the same, the calculation of the net income ( flow F10) will

differ between company and consolidated accounts (see example below).

Recommended Solution: Input forms

Existing differences in N-1 net income can be processed as follows in the input forms:

- The first solution consists in integrating the difference between the provisional N-1 net income and

the final N-1 net income in the net income for the period. In this way, the consolidation department

does not need to post any manual journal entry. However, it creates a discrepancy between local

accounting data and the data entered on net income (flow F10) in the input form.

- The second solution consists of posting this difference in transfer flow F50in order to impact both

reserves asset and liability items affected by the last journal entries of period N-1. In this way, local

data and the data entered in input forms will both balance at closing. However, this solution

requires the consolidation department to book this difference by manual journal entry.

These solutions are illustrated below:

- After local data has been submitted, a correction was made to Revenues.

- The information entered in the input forms on 31/12/N-1 and the final data are shown below:


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AccountsInput data 31/12/N-1

(1)

Final accounts

(2)

Difference

(2)(1)

ASSETSA2210 Trade receivables, Gross 1 000 1 100 + 100

LIABILITIES

E1610 Retained earnings / F10 600 660 + 60

L2410 Current income tax

liabilities

400 440 + 40

INCOME STATEMENT

P1110 Revenues 1 000 1 100 + 100

P5010 Income tax expense - 400 - 440 - 40

At period N closing, we assume that:

- No income has been entered during the period.

- All of the net income for N-1 was allocated to retained earnings (scenario 1) or distributed (scenario

2).

- All receivables and debts have been settled.

Booking the Difference in Net Income (Solution 1)

Input forms 31/12/N (scenario 1no distribution)

The data entered for period N must contain the net income from N-1 that is not taken into account in Group

income.

The closingbalance entered in the workbook Balance is shown below:

Accounts Local 31/12/N Input data 31/12/N

ASSETS

A2610 Cash on hand 660 660 = receivables (1100)debts (440)LIABILITIES

E1610 Retained earnings 660 660

INCOME STATEMENT

P1110 Revenues 0 100

P5010 Income tax expense 0 - 40

Enter data in schedule Net Equityto show variations in net equity:

ACCOUNTS CODE F00 F99 F06 F10 F20 F30 F40 F55 Spec. Control

Retained earnings E1610 600 660 60

Net equity 600 660 60


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Input forms 31/12/N (scenario 2distribution of net income)

The closing balance entered in workbook Balance is shown below:

Accounts Local 31/12/N Input data 31/12/N

LIABILITIES

E1610 Retained earnings 0 0

INCOME STATEMENT

P1110 Revenues 0 100

P5010 Income tax expense 0 - 40

Enter data in schedule Net Equity to show variations in net equity:


Retained earnings E1610 600 0 -660 60

Net equity 600 0 -660 60

Further remarks

When the difference between final net income and local income is spread over small sums in a large

number of accounts in the income statement, the Group may authorize its subsidiaries to enter the

difference in other operating income/expense accounts.

Processing the Difference in Reclassification Flow F50(Solution 2)

Input forms 31/12/N (scenario 1no distribution)

The closing balance shows the company accounts. The impact from the last journal entries for period N-1 is

booked in flow F50.


ACCOUNTS CODE F00 F99 F06 F10 F20 F30 F40 F55 F50 Control


Net equity 600 660 60

Enter data in flow F50in schedule Specific operationsto show the impact of the reclassification:

ACCOUNTS CODE F09 F50 F70

Trade receivables, Gross A2210 100

Cash on hand A2610

Assets 100

Retained earnings E1610 60

Current income tax

liabilitiesL2410 40

Equity and liabilities 100


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Input forms 31/12/N (scenario 2distribution of net income)

Enter data in schedule NetEquityto show variations in net equity:

ACCOUNTS CODE F00 F99 F06 F10 F20 F30 F40 F55 F50 Control

Retained earnings E1610 600 0 -660 60

Net equity 600 0 -660 60

Enter data in flow F50in schedule Specific operationsto show the impact of the reclassification:

ACCOUNTS CODE F09 F50 F70

Trade receivables, Gross A2210 100

Cash on hand A2610

Assets 100

Retained earnings E1610 60

Current income tax liabilities L2410 40

Equity and liabilities 100

Journal entry to be posted at central site

The subsidiary should provide the consolidation department with information on the difference between the

provisional net income and final net income. Once the consolidation department has the breakdown by

item, they can then post the following journal entry:

Audit ID Account Flow Debit Credit

ADJ91 P1110 Revenues PL99 100


P5010 Income tax expense PL99 40

L2410 Current income tax liabilities F15 40



E1610 Retained earnings F50 60

If this is not the case, then the journal entry should be posted in another operating income or expense

account:


ADJ91 P1210 Other income PL99 60







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5.2.2 Alternative Solution: Manual Journal Entry Posted at Central Site

If the difference between the provisional net income and final net income is not processed in the input

forms, this results in the following data (example in scenario 1):

Closing balance

Accounts Input data 31/12/N

ASSETS

A2610 Cash and cash equivalents 660

LIABILITIES

E1610 Retained earnings 660




Net Equity 600 660 60

At central site, the manual journal entry to be posted is as follows:

Audit ID Account Flow Debit CreditADJ91 P1110 Revenues PL99 100

P5010 Income tax expense PL99 40


If you do not know the breakdown by item for this difference, then the journal entry should be booked in

another operating income or expense account:


ADJ91

P1210 Other income

PL99

60


5.2.3 Other Corrections to Input Data

Corrections made to input data can be divided into several categories:

- Corrections that should be taken into account in the opening balance of the next periods input

forms and which include the following:

o Errors in input forms that do not affect local accounts, for example Partner errors in

intercompany declarations,

o Errors in local accounts that will be taken into account in the final financial statements,

o Errors in adjustments to Group accounting standards.

- Corrections that should not be sent in opening balances to the next periods input forms,


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- Correction journal entry that affects Group level only, for example Processing of certain

intercompany differences (seeIntercompany transactions on page41).

o Errors in local accounts that will only be taken into account in the N+1 financial statements.

Corrections to be taken into Account in the Opening Balances of Next Years Input forms

The corrections to be made can be entered directly in the relevant reporting unit's input forms, using one of

the following Audit IDs, depending on what caused the error:

- INPUTInput data,

- INPUT11Local adj. to Group acc. Policies.

It is also possible to post at the central level a journal entry that will impact the opening balance in the next

periods input forms. The Audit ID to use is INPUT91-Input data - Central correction. It will be transferred

automatically to Audit ID INPUTin the opening balances for the next year.

Other Corrections

Principles

If the corrections do not affect the opening balances for the next periods input forms, then they should be

posted by manual journal entry using Audit IDADJ91.

Examples

Corrections having an impact on net income for the period

The company has forgotten to book the sum of 100 from an invoice for the purchase of goods. This

expense which is tax deductible is posted in company accounts in period N+1.

The journal entry to be posted is as follows:


ADJ91 P1120 Cost of sales PL99 100

L2310 Trade payables F15 100

L1410 Deferred income tax liability F15 40

P5020 Deferred tax expense PL99 40

Interco analysis:

When you post a manual journal entry, transactions must always be entered on IntercoI_NONE (total amount). Then, if the account accepts an Intercompany breakdown and ifneeded, you may add rows detailed on the relevant partner(s).

For more information on how to populate the Interco dimension, seeDimensions onpage6.

Transfers between items

If you need to transfer an item between two accounts in the Income statement or in the Balance sheet, the

journal entry to post is as follows:


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ADJ91 Pxxxx Income/expense account PL99 X

Pc100nw Ifrs Operating

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