Financial Consolidation or Financial Management
Having seen the various approaches & tools to financial consolidation, let’s look at the must-have needs and supportive architecture.
Packaged Applications are typically used by finance teams to structure and automate the monthly or quarterly aggregation of historical results and include best-practice methodology. But with growing complexity, financial consolidation is becoming more of financial management these days. Primary requirements are Accelerated Reporting Cycles and Reduced Cost of Compliance. Specifically,
At a need level:
| Capability | Detail |
| Reporting | Flexible solution in the Market, Periodic Consolidation, Segment Reporting and Financial Intelligence |
| Consolidation | Multi GAAP capabilities, Multi Level Consolidations, flexibility, variance, , Inter Company elimination and Phased submissions |
| Compliance | Audit trail, Workflow, documentation attachments, commentaries, electronic questionnaires and disclosures |
| Data Integration | Data integration tool employed to collect data from disparate sources, mapping multiple source chart of accounts to common chart of account, pre-build validations & uploading data which has passed |
| Smart View for Office | Bi-directional capabilities within MS suite for in time and accurate information |
At a compliance level:
| Sarbanes-Oxley Requirement | Financial Management |
|
Submissions contain audit trail
Mandatory review/approval procedures Multiple organization hierarchies and Autonomy from transaction systems Web solution, I/C reconciliation, journals |
| IAS/IFRS Requirement | Financial Management |
|
IFRS, Multi-GAAP, and Local Statutory
Custom dimensions; financial intelligence, journals with audit trail Segment reporting, specialized currency, |
Simple Consolidation Architecture:
Critical Success Factors
For a successful financial management implementation, bear in mind the following factors:
- Segregated and dedicated internal resources together with management commitment is critical to on time and on budget delivery (Governance model, Steering Committee)
- Data Conversion/Integration is more complex and time-intensive than all assumptions
- Data Integration and Reports Development is very time consuming, but can successfully be done offshore for significant cost reduction
- Network, connectivity and performance testing needs to be done well in advance of rollout; (over-utilized networks require upgrades and can take several months)
- Initial and ongoing server and software tuning and optimization is required
- Don’t underestimate project management role and resources
