How to perform consolidation

Consolidation is the period-end process of combining the financial results of separate subsidiaries with the parent company to form a single, combined statement of financial results.

The Global Consolidation System (GCS) provides the flexibility to help manage your consolidation needs regardless of your company structure. You can maintain multiple companies with different accounting structures, different accounting calendars, and different local currencies.

To consolidate multiple companies with single set of books, first complete eliminating entries, and then create reports on the consolidated parent.

This document focuses on the Global Consolidations System (GCS) which can consolidate data from any Chart of Accounts, Calendar or functional currency. In addition, GCS can consolidate data from other accounting systems besides Oracle.

To consolidate multiple sets of books on multiple application instances, financial data must be moved from diverse sets of books and data sources into a single consolidation set of books. For those subsidiaries whose sets of books are located external to the applications instance where you plan to perform your consolidation activities, you must maintain dummy sets of books.

Configure consolidation book

It is recommended to configure separate consolidation book that is not directly fed from any Subledger or non-Oracle information source be defined.

Once the book is defined, at least one period will have to be opened.

If you have multiple Sets of Books on multiple instances or non-Oracle General Ledger Systems, create dummy sets of books within GCS parent’s database instance. Each of these sets of books represents the subsidiary sets of books on disparate application instances.

Configure Consolidation responsibility

Oracle comes with two Global Consolidation responsibilities: Global Consolidation System Super User and Global Consolidation System User. The Global Consolidation System Super User has access to certain setup processes while the other consolidation responsibility does not.

Assign consolidation book to consolidation responsibility

To access the consolidation book, the GL Set of Book Name profile option needs to be set to the consolidation book for the Global Consolidation responsibility.

Assign consolidation responsibility to user

Open consolidation book period

Enter in the ‘first’ period to be used within the consolidation book. This period should actually be one period earlier than the period during which you want to run reporting.

Configure consolidation mappings

To consolidate multiple sets of books that have different functional currencies, accounting calendars, or charts of accounts, the subsidiaries’ chart of accounts must first be mapped to the consolidated chart of accounts. A consolidation mapping is a set of instructions for mapping accounts or entire account segments from a subsidiary set of book to the consolidated set of books.

In the choice between Segment Rules and Account Rules for mapping the Subsidiary’s code combinations to those of the Parent, the use of Segment Rules is advisable. Account rule maintenance can become extensive when faced with mapping the many different possible code combinations one-by-one or group by group.

Segment Rules map company values to company values, departments to departments, etc. Account rules map a specific subsidiary account or a range of accounts to a specific account in your parent set of books. In most cases, the use of only Segment Rules is sufficient to map the data. However, in cases where a particular department-account combination maps to a different account, this will need to be handled via Account Rules.

Each segment of the consolidation book chart of accounts can be subject to a different rule. The rule types are Copy Value / Single Value / Rollup Rules.

Configure mapping sets

Maps can be grouped into Mapping Sets for the purposes of running one request to extract and upload subsidiary data from multiple books into the consolidation book.

Import data from other instances or Non-Oracle systems

The Global Consolidation System provides a convenient interface to allow you to import subsidiary data from any external source, such as a separate database instances of Oracle General Ledger, or an entirely separate non-Oracle accounting system. A requirement of this process is that a dummy set of books was created within the GCS parent’s database for each subsidiary on disparate Oracle instances or other systems.

There are two options available for gathering data from disparate sources:

· Use the Application Desktop Integrator (ADI) to work in a spreadsheet environment. Transfer the subsidiary information from the external system into ADI’s journal worksheet. Then upload the entries to the GCS system where they can be posted to the parent subsidiary.

· Use SQL Loader to load data from diverse sources into the GCS open interface.

Configure Exchange Rates

Configure daily, period and historical rates.

Perform Revaluation

Revaluation is only required if one or more transactions were entered with a currency other than the functional currency of the Set of Books. Configure, run revaluation and check the results.

Post the Revalue Journal.

Perform Translation

Translation refers to the process of translating functional currency account balances to another reporting currency. Translation is required whenever consolidating books have varying currencies.

Perform Consolidation

There are three options for running consolidations:

· In the Subsidiary Book responsibility, you can push balances from each subsidiary book as they are closed; or

· In the Consolidated Book responsibility, you can pull balances from each subsidiary book separately; or

· In the Consolidated Book responsibility, you can pull balances from all subsidiary books at the same time using a Mapping Set. All subsidiary books must be closed before using a mapping set.

Consolidation of data

Once subsidiary data is transferred to the consolidated set of books, there are several more steps to combine it with other enterprise-wide data.

1. Run Journal Import if not a consolidation run option.

2. Review unposted journal batch created from consolidation transfer.

3. Post consolidated journal in parent set of books.

If Run Journal Import was not chosen as one of the consolidation run options, this process has to be run. Specify Consolidation as the source in the request.

After import review the journals and post the journals.

Create and post elimination Journals

Use General Ledger’s standard journal entry functions to create eliminating entries in parent set of books. We can also use Applications Desktop Integrator’s Journal Wizard to create eliminating entries.

In addition, you can use the Global Consolidation System to create elimination sets, which are a variation of General Ledger’s recurring and mass allocation journals. With elimination sets, you define eliminating entries that repeat every accounting period.

Run the reports

General Ledger includes online inquiry and reporting features for reviewing and reporting on your consolidated balances.