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    Carolina Silva
    "PElim" (Partner Elimination) in FCCSAnswered
    Topic posted September 13, 2019 by Carolina SilvaRed Ribbon: 250+ Points, tagged Consolidation, Eliminations 
    169 Views, 18 Comments
    Title:
    "PElim" (Partner Elimination) in FCCS
    Content:

    Hello,

    I have a transaction with Entity A and Intercompany X. During consolidation process I need to eliminate in the source entity (Entity A) and also, to create an entry in the partner (Entity X). This technique is known as "PElim" (Partner Elimination). As far as I know, it's not available in FCCS and  in fact i can not do that through configurable consolidation or script.

    Does anyone some solution or know when it will be available in FCCS?

    Thanks,

    Carolina

    Best Comment

    Krishnan Venkatachalam

    HI Carolina,

    While the entry will be balanced at a consolidated level at each entity level it will be off. e.g. If you were to pick standalone Balance sheet of Entity A it should not have any eliminiations, but if this entry is posted against Entity A, the Balance sheet will be off.

    Regards,

    Comment

     

    • Krishnan Venkatachalam

      HI Carolina,

      Generally you NEVER post an elimination entry at the entity itself as that could cause an issue with the standalone Balance Sheet. Any reason why you are trying to do this? Or did I misread the ask?

      Regards,

    • Carolina Silva

      Thanks for your answer.

      I am migrating HFM to FCCS and in consolidation rules are the  elimination in the source entity (Entity A) and also, the creation an entry in the partner (Entity X). Of course it will be balanced, i will create another entry in the partner, to balance the Balance Sheet.

      • Krishnan Venkatachalam

        HI Carolina,

        While the entry will be balanced at a consolidated level at each entity level it will be off. e.g. If you were to pick standalone Balance sheet of Entity A it should not have any eliminiations, but if this entry is posted against Entity A, the Balance sheet will be off.

        Regards,

    • Carolina Silva

      Hello,

      I am just talking about one part of my rules, in the final every balance sheets, individual and consolidated it will be ok. They are ok in HFM.

      So, my question is do you know if there is some solution to create an entry in the partner entity, Entity X? In configurable consolidation I can not redirect the dimension Entity and in the script I can not use the entity in FIX ou in the left hand side.

      Thanks for you help,

       

    • Keith Glide

      "Partner Elimination" functionality is being added to the existing FCCS Configurable Consolidation feature. This will provide similar functionality as the "PElim" capability of HFM.

      Basically, a data point in a consolidation source data-set that has an Inter-company entry that is either a sibling or descendant of a sibling of the entity being processed can be used to post entries into the Elimination Consolidation member of the relevant sibling (or siblings). The posting can only be made to a sibling of the entity being processed (i.e. the source and target must have a common parent). A new Data Source member ("Partner Elimination") will be used to isolate entries generated not by the entity in which the data is posted but by a sibling. The Partner Elimination data will include as the Inter-company entry, the ICP name of the entity from which the posting was generated.

      It will be the responsibility of the rules-writer to ensure that balanced entries are posted. As an example, some Partner Elimination rule-sets will contain four rules... two to post balanced entries in the source entity and two to post balanced entries in the target entity. At the common parent, one entry from each of the two sibling entities will often offset through a "link" or "plug" common account. This is not the only valid use-case for the Partner Elimination feature but is a common one.

      We expect the Partner Elimination feature to be released in 19.12... but as usual, all caveats apply and this estimate might be changed depending on the outcome of QE testing. But as a teaser, following is an example of a configurable consolidation rule screen with the Partner Elimination capability enabled.

      • Krishnan Venkatachalam

        Hi Kieth,

        Can you help me understand from an accounting perspective when this will be required. I still dont get that part. If you have any links to share, let me know.

        Regards,

        • Keith Glide

          Partner Elimination is not required from an accounting perspective. It is just a technique that can be used in consolidation rules to generate elimination entries that for example:

          1. Provide a better "audit trail"

          The existing seeded consolidation rules eliminate Investment In Subs against Owner's Equity. The two eliminations offset in the Goodwill Offset account. But the offset does notr occur until the Entity Consolidation member of the common parent. Some users want to see the offset occur in Elimination, usually of the owned company. So in the Investment In Subs rule-set, Investment in Subs is reclassified to a "Link" account (e.g. "FCCS_Investment Link") and two additional entries are created in the partner (owned entity) between Goodwill Offset and Investment Link. In this way the net difference in Goodwill Offset can be seen in the path from the owned entity to the common parent. Without the use of Partner Elimination, the net contribution to Goodwill Offset must be traced in the common parent by the inter-company partner entry in those data points at Entity Consolidation. But at the end of the day, the results are the same.

          2. Generate entries that would otherwise require more detailed source data entry

          Elimination of Profit in Inventory requires elimination of profit (inter-company revenue less cost of sales) in a selling entity and elimination of the profit margin of the selling company in the valuation of inventory still held by the related party buying company. Typically, the source data of the selling company sale will include the inter-company partner details... but the selling company cost of sales, buying company purchase cost and inventory held will not include inter-company details. So a Partner Elimination entry can be used to adjust all four elements based only on the inter-company sale data plus a selling company cost of sales %.

          There might well be many other possible uses of Partner Elimination but these are the two that come immediately to mind.

      • Nouria Kehli

        Thank you Keith for this information, our clients are waiting for it desperately.  Hope we get it by the mentioned date. ;-) 

      • Nouria Kehli

        Thank you Keith for this information, our clients are waiting for it desperately.  Hope we get it by the mentioned date. ;-) 

    • Carolina Silva

      Hello,

      Thanks for your help.

      But will it only be avaiable here? In custom rules (FCCS_10, FCCS, 20 etc), will I still be unable to write the entity on the left hand side?

      I am asking this, because in HFM rule file the PELIM is used with multiplications of ownership percentage, for example, multiplying the the entity consolidation percentage and partner consolidation percentage (this multiplications isn't just with PELIM, i also have entity eliminations that use multiplications of ownership percentage). And this moment, I only can do that through script.

      So, although the PELIM is very usefull for my project, I can not create all the rules with PELIM, if it will only available in configurable consolidation. I only will can create all the rules in configurable consolidation, if with PELIM i can multiply ownerrship percentages. This way, i can create the eliminations according the multiplications.

      Thanks,
       

      • Keith Glide

        The FCCS "Partner Elimination" functionality will be available only in Configurable Consolidation rule-sets. This is the same limitation as the "PElim" feature of HFM which is available only in the HS.Con / Sub Consolidate rules. It is not possible to write to an entity that is not the current entity being processed in either HFM Sub Calculate rules or FCCS Insertion Point rules. There are significant data integrity / calculation status integrity conditions that need to be met for both systems. For reference, the only HFM rules that allow writing to a different entity are the HS.Con / Sub Consolidate rules as noted, plus the HS.Alloc / Sub Allocation rules. Sub Allocate in HFM must be executed on an ad-hoc basis and cannot form part of a consolidation process.

        Configurable Consolidation rules require that the rules-writer select a "factor" against which to multiply the source data. The factor can be selected from the entity or partner ownership management percentages or can be a fixed (specific) percentage. For further details on how to write Configurable Consolidation rules, please see the Admin Guide starting here: https://docs.oracle.com/en/cloud/saas/financial-consolidation-cloud/agfcc/consolidation_configurable_rules.html. There are also several Overview and Tutorial Videos that can be found here: https://docs.oracle.com/en/cloud/saas/financial-consolidation-cloud/videos.html.

    • Carolina Silva

      Hello,

      Thanks for your answer.

      So, if  "Parner elimination" will only be availabe in Configurable consolidation I have another issue. I can not do the multiplications between ownership percentages, for example, multiplying the entity consolidation percentage and partner consolidation percentage. 

      • Keith Glide

        Correct... at present you would not be able to apply a factor other than those currently available in the factor selection drop down list.

        We do have an enhancement: 28022189 - FCCS - CONSOLIDATIONS - ULTIMATE OWNERSHIP AND DATA VALUES AS FACTORS that is planned for Q2 of 2020.

        I would suggest that if you have a specific case (i.e. Entity % multiplied by Partner %) that could be added to the existing drop-down options, then I would suggest that you create an "Idea" on Customer Connect and we can assess how much interest there is in this use-case.

        • Carolina Silva

          Keith, just to confirm:

           In configurable consolidation feature, I can´t  use the ownership percentages from the last period of the prior year, right?

           

          • Keith Glide

            Correct... the current options are:

            1. Current [period]

            2. Prior [period]

            3. Change in [change from prior to current period]

            4. Lower of Entity and Partner

            5. Specific %

            We would need to add "Last period of prior year" to the option list.

            • Carolina Silva

              In enhancement: 28022189 - FCCS - CONSOLIDATIONS - ULTIMATE OWNERSHIP AND DATA VALUES AS FACTORS, what is foreseen

              Thanks

              • Keith Glide

                1. Selection of Ultimate ownership parameters for use as a consolidation factor.

                Currently, only the level-by-level ownership parameters are accessible through the Factor drop down selection (although ultimate ownership data is stored). Ultimate ownership data reflecting the ownership of each level 0 entity in relation to each of its ancestors (as shown on the virtual "flat" structure Ownership Management screen) should also be available for use as a consolidation factor.

                2. Selection of an FCCS data point for use as a consolidation factor.

                Data from a Consol cube POV selected by the rules-writer should be available for use as a consolidation factor.

    • Carolina Silva

      Thanks for the reply Keith.

      I followed your suggestion and i created an "Idea". Hope other users are interested too.