Financial Intelligence | think before you jump…...

What is financial intelligence, I hear you say? Well it goes by many names and comes in many shapes…

Example 1: You have a single intercompany account in your ledger, but you need to present this in your consolidation and/or reporting solution as either an asset or a liability, depending on whether the balance this month is a debit or credit.

Example 2: You have 20 sales tax (VAT) accounts in your ledger. You need to evaluate the sum of all the accounts and present the entire amount as either an asset or liability in your consolidation and/or reporting solution, depending on whether the cumulative balance is a debit or a credit.

In my experience, there are the following three approaches to solving this challenge:

  1. use the ledger to present the information in the required format. This can be done via an automated or manual month-end journal;
  2. use the ETL (Extract Transfer Load) process via a rule based mapping to transform the data; and
  3. load the data into the consolidation and reporting tools in the format of the ledger, and use scripts within these tools to copy this data into presentation accounts.

Which of these three options are right for you, depends on your business process. I thought it would be useful to share the following considerations when you are deciding which of the three options to use:

  • In my experience clients are often cautious about putting presentation journals in their ledger, because of the concern that these will not be visible or auditable in the consolidation and reporting solutions. There are effective solutions to this requirement via the ledger setup;
  • Rule based mapping solutions should be evaluated to confirm that they a) do not jeapodise the audit trail and b) will support solutions that allow you to drill from a consolidation or reporting tool back to your ledger. For example, logic groups in Oracle Financial Data Manager (FDM) can affect the audit trail and the ability to drill through;
  • If the mapping approach is selected, the mapping must be available to all the consolidation and reporting tools: say HFM (Oracle Hyperion Financial Management), Oracle Essbase and OBIEE (Oracle Business Intelligence Suite Enterprise Edition); and
  • The third option, using scripts to create the presentation data in the consolidation and reporting tool, has the obvious risk that if these multiple scripts fall out-of-alignment, the tools will not reconcile.

As a final comment, in my experience, regardless of which of the three approaches you decide to use, incorporating a masterdata governance tool can provide a robust as well as a flexible long–term solution…

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