Consolidation Ownership Structure
Ownership structure defines the hierarchical relationships between entities within a corporate group (such as subsidiaries and associates). Group consolidation uses this ownership structure to consolidate data from the entity level to the group level, enabling users to aggregate financial data efficiently while maintaining compliance with predefined structures.
Understanding Ownership Structure
Purpose - The ownership structure determines how data aggregates from individual entities up to group or subgroup levels in financial consolidation processes. It establishes the corporate hierarchy that drives consolidation logic.
Configuration Location - Ownership structures are managed by configuring the Ownership Structure under Rates.
Ownership Field Type - Ownership is a specific field type that is automatically created when a reference model is created in a Consolidation model. The Method property is required in the ownership structure to enable the relationship field to work properly.
Relationship Model - The ownership structure creates relationships between entities. Automatic journals and elimination rules reference this Consolidation and Ownership model with relationship between entities that transactions are posted against, when consolidated at group/subgroup level.
Prerequisites for Group Consolidation
Before defining consolidation rules, you must create:
Reference Sheet - A consolidation sheet that serves as the basis for consolidation rules. This sheet must contain the required field types: Version, Time, Account, Flow, Organization Unit, Dataset, and Group (Currency).
Ownership Structure - Defined under Rates, this structure establishes the entity relationships and hierarchies needed for group consolidation.
Creating Consolidation Rules
Consolidation rules can be created directly from the Functional Area, under the Rules section. Users define the details for respective rules by selecting a Reference Sheet (a consolidation sheet) and an Ownership Structure.
Interco Elimination Rules - Define and apply interco elimination rules to automatically eliminate inter-group income and expenses. These rules streamline the reconciliation process by automating the offset of intercompany transactions, ensuring accuracy and consistency in financial consolidation.
Auto Journal Rules - Set up auto journal rules to automate complex consolidation adjustments based on predefined logic. Auto Journal streamlines financial adjustments by automating journal entries within group consolidation, ensuring accuracy and efficiency.
Configuring Group Consolidation in Sheets
To incorporate rules or Formula metrics in the Consolidation sheet action:
Step 1: Navigate to Sheet Details - Open the Consolidation Sheet and go to Sheet Details > Actions > Group Consolidation.
Step 2: Add Matrix - Add matrix and configure it by selecting the Update Method as either Rule or Formula:
- Formula - Add input metrics and define custom formulas, similar to default formula metrics
- Rule - Select from the predefined rules where the same reference sheet is used
Note: The currency for Output Metric, used in the configured formula or rule, must be of type Group.
Step 3: Configure Triggers and Method - Update triggers and specify the consolidation method in the Actions tab of the sheet detail page.
Step 4: Execute - Execute the rule from the Group Consolidation Action. The execution status can be monitored in the Event Log.
Automatic Journal Configuration
Automatic journals are system-defined journal postings based on consolidation elimination rules defined per the Ownership structure (for subsidiaries, associates, etc.). Automatic Journals filter input data when Applicable to and Relationship conditions are met.
Required Fields - Automatic Journal works based on the defined Dataset, Version and Currency type Group subtype Account, Flow and Ownership type field. These fields are based on the tagged Model used for the calculation.
Configuration Parameters
| Parameter | Description |
|---|---|
| Output Dataset | Select from the Dataset field the data set to be used to record and save the result of the calculation |
| Applicable to | Set the Version and Groups field member |
| Active | Option to park (inactive) or activate the Automatic Adjustment rule |
| Relationship | Entity and Interco relationship to be used in the calculation |
Important: Method is a required property in ownership structure to have the relationship field working.
Execution Sequence
Actions required to generate Automatic Entries for Consolidation follow a defined sequence:
Currency Conversion to Group Currency - Based on Ownership structure, convert entity data from local currency to common group currency.
Intercompany Eliminations - Eliminate transactions between entities within the group/subgroup based on ownership relationships.
Automatic Journals - Post necessary consolidation adjustments based on predefined rules and ownership structure relationships.
Note: Rules defined are executed in the sequence they are defined to address dependencies. Automatic Entries is considered Calculation task and Currency Conversion, Intercompany Eliminations, Automatic Journals are considered Actions under Automatic Entries.
Monitoring Execution
The system processes rules by filtering input data, checking applicability, calculating values, and posting results directly to the Consolidation Sheet. Aggregated execution improves performance by reducing data volume, while logs ensure traceability and audit readiness. The execution status can be monitored in the Event Log.