Financial Consolidations & Eliminations

Hello List,

I am currently at a company where we are going through an Xe implementation. This company's setup includes over 50 companies, and hundreds of business units. They have complex intra as well as intercompany all over the place.

I am looking for any documentation that may be out there to help me out with setting up consolidations and eliminations. Is there any best practices type documentation / white paper out there?

Any assistance / advice is welcome. Thanks in advance.

Dave

Dave,

I do not think that there is any information out there as a white paper that may help you.

Have you checked the manual (General Accounting II), if yes and it does not help. Can you at least be specific on what you want to accomplish.

Example:

Are you looking for OW to perform the eliminations for you? Balance sheet and Income?

What would your client want to happen?
I had worked at a client where they did all income elimination manually and balance sheet was performed by system.

Sincerely

OWman

Dave,

Back when I was a World user, the company I worked for had around 500 companies set-up. We used dummy companies to hold the consolidating entries. When you run your consolidated reports, include the dummy companies in your data selection and presto, you have consolidated Financial Statements. This way your individual companies are still intact for other reporting purposes. You could also set up a new ledger type to accomplish the same thing (Personally, I prefer the dummy company method). We had a custom program that would calculate and post the consolidating entries as part of the closing process. Could easily be accomplished now using RDA. Hope this helps.

Ken

XE SP 16
Win2000/Oracle 8.1.6.

Owman,

I have looked at the XE documentation that comes on
the CD. Is this what you mean by General Accounting
II?

I am sure my client would want to have as much
automation as possible in doing the eliminations and
therefore, yes both on B/S and P/L.

I am just looking to get some ideas and various
approaches if there are any. Even better if get setup
steps. My initial thought is to setup pseudo
companies, and business units as consolidating
companies. Then maybe use cat codes in order to
consolidate. I guess I have an option to use a
separate ledger or is this a must?

So, all in all, I am looking for a good overview on
this to come up with the best approach for this
company.

Thanks for your help!

Dave



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Ken,

So do you also setup pseudo business units with the
pseudo companies? And then pull these together into
consolidating reports?

How about eliminations...any thoughts on that?

Thanks for your help!

Dave



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Dave,

Well, you will need at least one BU set-up in your Pseudo (dummy) company. You cannot post directly to a company number. Perhaps two BU's if you need consolidating entries for both BS & IS. Your consolidation would look something like this.

Co #001 : $100
Co #002 : $ 50
Co #100 : $(25) Dummy Company With eliminating entry.
Con. Total: $125

As for automation, it's hard to make any suggestions not knowing your company's needs. I have seen some companies use the allocation program to create these entries. Others simply book a JE each month. Some will import from a spreadsheet. Then you also have custom programs. Take your pick. It is also dependent on how detailed your consolidated FS will be. Are you planning on making consolidating entries on an account by account basis, or will you just be making a summarized adjustment at the company level?

Because JD Edwards can accommodate virtually any organization structure, I don't know of any standard method to approach consolidations. Could be you need to hire a consultant who specializes in JD Edwards consolidations to come in and make some recommendations based on your company's specific needs.

Hope this helps a little. Good luck.


Ken

XE SP 16
Win2000/Oracle 8.1.6.

Forgot to mention elimination rules as another option. Have not personally seen this used. Again it all depends on your specific situation.

Peace.



Ken

XE SP 16
Win2000/Oracle 8.1.6.

I think you should look at the suggestions given you by Ken:
A new ledger type to allocate everything to at the end of the month therefore consolidating your number (pseudo company)

Elimination entries:
It has to be according to your company's needs.
It could be that when one company sells to another that there is a markup, you have to take it into consideration.

It could be that all intercompany sales are at cost, you have to decide and then use allocation (all types to help you accomplish what you want)

There has to be an analysis of your needs as suggested by Ken for you to get a wise and AICPA and FASB compliant answer.

All I am saying is that I agree with Ken suggestions.

OWman

Re: Financial Consolidations & Eliminations

Ken,

I found this old thread that addresses our current dilemma. One more question: You are talking about using the standard financial reports and functionality, not using Batch (Online) Consolidations, right?

Thanks much

Re: Financial Consolidations & Eliminations

Steve,

I have not really used the One World online consolidation program. I do have some experience with the World online consolidator and the methods I explained worked on this program very well, so I would make the assumption that they also would work using the One World tool, but I have no experience to back that up.

The key is to use catagory codes to "group" the needed companies together when running your consolidation. For example, you may want to run FS's by individual company, management groups, geographic regions, state, country, etc... If there are different eliminations needed for the different consolidation types, you may need multiple dummy companies. Just remember to assign the correct dummy company to each consolidating catagory code.

Hope this helps.

Re: Financial Consolidations & Eliminations

Ken,
Thanks for the quick reply.

I guess what we are really struggling with is do we have to use the Batch Consolidations or can we just include the Pseudo consolidations BU in our reports.

It looks to me like the Batch Consolidations is just used in situations where you have a hugh number of BU's you are trying to consolidate and running reports over them directly is a system hog. So you create this Pseudo company and then run your reports over it. But you have to purge it and redo it each month.

If your consolidation reports run fine without doing the Batch Consolidations you don't need to do all this extra work of creating the consolidated Pseudo company.

Do you know if I'm missing something? Is there some functionality within the Batch Consolidations that I'm missing?

Re: Financial Consolidations & Eliminations

Steve,

Here is my under standing...

The purpose of the online consolidation is to view consolidated information via an inquiry screen rather than running a report. Use the catagory code method in your online consolidation and you should get the same results as your reports. (In previous posts I believe I said to attach catagory codes to the company, you should actually set these up by BU, remember, you can only post to a BU not a company #.) Think of Company # as your first level of consolidation. Then set up catagory codes for additional levels of consolidation.

The purpose of the dummy (Pseudo) company is to hold eliminating/consolidating entries. For example, for one company I worked for in the health care industry, we needed to apply a medicare limit to each individual office (Company#), we also had to apply that limit to each legal entity (Group of company #'s). This required an adjustment to revenues when looking at the legal entity level of consolidation which we posted to the dummy(pseudo) company. We then used a catagory code to group all BU's in these companies including the dummy company. See the excel attachment.

The only time the dummy company is used is to hold these consolidating entries. I hope this make sense.