Describing Consolidation Processes

Objectives

After completing this lesson, you will be able to:

  • Explain the key process steps of group reporting

Introduction to This Course

In the previous SAP S/4HANA Cloud for group reporting courses, you learned about the features and components of group reporting from a conceptual perspective.

In this course, as an intermediate business user, you'll run and monitor closing tasks in SAP S/4HANA to consolidate financial data for ABC Corporation. You’ll also use group reports to analyze and confirm the results. The focus is on group reporting from a practical, hands-on perspective.

Note
  • SAP offers a cloud product SAP S/4HANA Cloud for group reporting and an on-premise solution, SAP S/4HANA Finance for group reporting. This course covers both and you can assume all functionality described is equivalent for both.
  • If you are completely new to SAP S/4HANA Cloud for group reporting, please check the introductory learning journey.

Group Reporting Key Concepts

The following summary of the most important group reporting concepts are useful when you perform the month-end closing:

  • The preparation ledger is used to populate group reporting fields in the ACDOCA table and uses accounting substitution rules to derive consolidation units. For example, company code U.S. and profit center PC1 can be used to derive consolidation unit USPC1.
  • Posting levels track data by key process steps such as, reported data, standardized data, eliminated data, and consolidated data. Each document type is assigned to one posting level and is used to determine document numbers, reversal behavior, and permitted key figures.
  • Version Consolidation version is used to distinguish actual from plan data, select group currency, and determine the source accounting ledger. Special versions provide version-dependent configuration and sharing of objects among versions. Extension versions are used for multiple group currencies, and can be stacked for restatements and simulations.
  • Currency translation can be configured to translate from local to group currency or retain existing group currency values.
  • Intercompany eliminations can be automated for intercompany dividends, accounts payable/receivable, profit in inventory, and revenue and cost.
  • Report logic is used to dynamically determine elimination entities by using the first-common-parent for each hierarchy node to provide a consolidation view. For example, the consolidation view shows total revenue by entity along with an elimination entity for each consolidation unit hierarchy node. Alternatively, the contribution view displays revenue net of eliminations by entity.
  • Matrix consolidation provides legal and management accounting reports without data redundancy.
  • Consolidation of investments are used to automate postings for acquisitions, step acquisition, capital increase/decrease, divestitures, transfers, and mergers. Both the purchase and equity methods are supported. The rule-based and activity-based solutions are available.
  • Reporting is available with SAP Fiori apps, SAP Analysis for Office (Microsoft Excel), as well as SAP Analytics Cloud. The SAP Fiori apps include the Group Data Analysis app, which is used for routine reporting requirements. The Review Booklet app is used as a one-stop-shop for a variety of financial statements. The Group Data Analysis With Reporting Rules app is used for special reporting requirements such as cash flow and comprehensive income.

The following image includes a few of the most important components in group reporting as well as the data flow from the ACDOCA table to the ACDOCU table.

Note
In the ACDOCU table, posting level is blank for data release records. In the ACDOCA table, consolidation unit and FS item contain values because the preparation ledger is activated as part of the course scenario.

Month-End Closing Process

Before you begin running tasks for the corporate close at ABC Corporation, there are a few setup activities:

  • Check the master data of your organizational units. This includes possible changes to existing, as well as newly acquired, consolidation units. For example, perhaps a consolidation unit becomes integrated in period 1 of 2024 because the underlying company code is now in accounting. In addition, all changes to the consolidation group structure are performed at this point.
  • Check the financial statement (FS) items master data. This primarily includes updates to the mapping of new G/L accounts to FS items.
  • Update exchange rates. This includes the update of group reporting-specific exchange rates.
  • Set your global parameters to the closing year and period.
  • Open the period in the data monitor.

When the month-end closing data processing begins, you’ll prepare the data for consolidation in the data monitor.

After the data monitor tasks are complete, the consolidation monitor is used to perform consolidation tasks such as intercompany eliminations and investment eliminations. Throughout the process, you can cross-check your processed data using delivered reports.

Group reporting process

The group reporting process consists of six steps.

  1. Data collection: Release data from SAP S/4HANA Finance and import from outside sources into group reporting.
  2. Data preparation: Calculate net income and retained earnings, perform currency translation, adjust the data to align with corporate accounting standards, and validate the data.
  3. Intercompany: Reconcile and match intercompany transactions. Eliminate intercompany activity.
  4. Investment eliminations: Record ownership data and run the investment and equity elimination.
  5. Reporting: Analyze the results with SAP S/4HANA reporting options or with SAP Analytics Cloud.
  6. Balance carryforward: In the new year, open the period and carryforward balance sheet items into the new year.
Note
Reporting takes place continuously through each process step. After the closing is completed, the final balance sheet, income statement, and cash flow reports can be viewed.

Business Scenario for this Course

In a corporation, the local close is for the legal subsidiaries (company codes) to meet their own local accounting standards in their local currency. For example, a US subsidiary prepares financial reports that meet U.S. GAAP (generally accepted accounting principles) accounting requirements in USD.

On the other hand, the corporate close process involves the preparation of consolidated financial statements in the group currency with values that reflect group accounting standards. Of course, the local close occurs before the group close.

Note
One of the key advantages of group reporting is that the local and group close can take place in the same SAP S/4HANA system with the same user interfaces.

Ownership Structure for ABC Corporation

In the following animation, you’ll learn about the ownership structure that we’re using for the course scenario as well as the types of intercompany transactions we need to address. In addition, you'll learn about the ownership eliminations that we need to perform as well as the U.S. GAAP and IFRS reporting requirements.

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