Question about Consol system

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sowrudy
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Joined: 22 Feb 2022, 03:26

Question about Consol system

Post by sowrudy »

Hi All,

Just quick question about consol system.
In a big company with its consolidated system like SAP, is the elimination done automatically by the system so at year end, we don't need to do select with movements (investmentin Sub, dividend, etc) to eliminate? Also, once elimination entries are done in the consol system, are the entries reversed from the group level and the new set of elimination entries are booked again on next reporting period? I would imagine if there is no reversal entry, the consol system needs to just book the movement instead of the actual balance.
DanSal
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Joined: 23 Apr 2023, 23:45

Re: Question about Consol system

Post by DanSal »

Would like to know the same

Can anyone help ?
Leo
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Joined: 05 Apr 2020, 22:31

Re: Question about Consol system

Post by Leo »

Elims are performed by the system, and carried forward.
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Marek Muc
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Re: Question about Consol system

Post by Marek Muc »

why is this distinction important to you DanSal (i.e. reversing auto entry vs adjusting movement each year) if it's done by the software anyway?
DanSal
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Re: Question about Consol system

Post by DanSal »

Hi Marek

Mainly because you can get outages between IC transactions _ so for example in Hyperion consolidation, the automation still needs manual entries - at least that is what I have seen
Which system have you used?
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Marek Muc
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Re: Question about Consol system

Post by Marek Muc »

I've worked with Magnitude which was acquired by SAP at some point

So you need to manually adjust standard IC eliminations like investment vs equity or dividends?
DanSal
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Re: Question about Consol system

Post by DanSal »

I think we need to manually amend when there are outages in Hyperion - how is it in Magnitude? Also how do you record the parent reserves adjustments, NCI, goodwill impairments, etc
Is that manual?

Thanks Marek
Daniel
Leo
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Re: Question about Consol system

Post by Leo »

HFM has become quite old, and lots of groups are moving, or have moved into other software, such as SAP BFC, Tagetik, etc.

SAP BFC is the new version of Magnitude has my preference because it's quite user friendly. All of the points you've mentioned, except goodwill which you have to post a manual journal entry, are automatic.
Leo
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Re: Question about Consol system

Post by Leo »

Depending on the country, a system can be more or less used. SAP BFC is often used in France, and Tagetik is Italian.
DanSal
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Joined: 23 Apr 2023, 23:45

Re: Question about Consol system

Post by DanSal »

Hi Leo thanks

Good to know - so how is for example the parent reserves calculation in an automated way? At some points you credit or debit the reserves - for example, the share of profit from subsidiary or any provision for unrealised profit, all that is automated as any transactions are posted in the consol?

Any chance you know of a demo to watch online - would be excellent :)
Leo
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Re: Question about Consol system

Post by Leo »

Hi, SAP BFC has all the necessary documentation you need, if you are interested, you should contact them. When you mention parent's reserve, did you mean parent's reserves or group reserve...

One thing you should keep in mind it's that, whichever the software, the consolidation rules apply to all. That means that the treatment by those software will not deviate from the study book.
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Marek Muc
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Re: Question about Consol system

Post by Marek Muc »

I would add that no software will be able to handle all kinds of interco transactions and certain manual consolidation adjustments are usually necessary
DanSal
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Joined: 23 Apr 2023, 23:45

Re: Question about Consol system

Post by DanSal »

Hi guys thanks

Leo, yes, I meant group reserves - sorry about that

I will try to see if there are any videos in YouTube of SAP. I just want to see how it works

Thanks
Leo
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Re: Question about Consol system

Post by Leo »

https://www.youtube.com/watch?v=JOJPh4calmE

English version must exists.
DanSal
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Re: Question about Consol system

Post by DanSal »

Look promising Leo -

Trying to find in English - let me see if I get lucky

Thanks :)
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