PC100NW IFRS Configuration

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SAP® BUSINESSOBJECTS™ PLANNING AND CONSOLIDATION 10.0, VERSION FOR SAP NETWEAVER

STARTER KIT FOR IFRS Configuration Design

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Copyright

© 2011 SAP® BusinessObjects™. All rights reserved. SAP BusinessObjects and its logos, BusinessObjects, Crystal Reports®, SAP BusinessObjects Rapid Mart™, SAP BusinessObjects Data Insight™, SAP BusinessObjects Desktop Intelligence™, SAP BusinessObjects Rapid Marts®, SAP BusinessObjects Watchlist Security™, SAP BusinessObjects Web Intelligence®, and Xcelsius® are trademarks or registered trademarks of Business Objects, an SAP company and/or affiliated companies in the United States and/or other countries. SAP® is a registered trademark of SAP AG in Germany and/or other countries. All other names mentioned herein may be trademarks of their respective owners.

2011-06-20

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Design Documentation

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Contents INTRODUCTION ....................................................................................... 4

1. Document Objective ..................................................................................................... 4

2. Legend ..................................................................................................................... 4

A. DESIGN PRINCIPLES BY BUSINESS REQUIREMENT ........................................ 5

1. General Reporting Principles........................................................................................... 5

2. Segment Reporting ..................................................................................................... 11

3. Consolidation Principles .............................................................................................. 12

4. Journal Entries ......................................................................................................... 20

5. Periodic Figures Management ........................................................................................ 39

6. Financial Statements for Statutory Publication .................................................................. 40

7. Data Consistency Controls ............................................................................................ 43

8. XBRL Publishing ......................................................................................................... 45

9. Working Languages .................................................................................................... 46

10. Security and business workflows .................................................................................... 46

B. CONFIGURATION OVERVIEW ...............................................................49

1. Models .................................................................................................................... 49

2. Dimensions – Consolidation model .................................................................................. 49

3. Configuration Specific Dimension Properties ..................................................................... 50

4. Default Script Logic Calculations .................................................................................... 50

5. Manual Journal Entry script logic: Journal.lgf .................................................................... 50

6. Eliminations and Adjustment Rules ................................................................................. 51

7. Balance Carry Forward ................................................................................................ 52

8. Input forms and Reports Configuration Principles................................................................ 52

9. Security settings by team of users .................................................................................. 55

C. APPENDIX ......................................................................................57

1. Default.lgf Script Logic ............................................................................................... 57

2. Input form - Example of F15-Net Variation Control .............................................................. 59

3. Example of FLOWAN Property Values .............................................................................. 59

4. Journal.lgf Script Logic ............................................................................................... 60

5. CopyOpening.lgf logic script ......................................................................................... 61

6. Carry Forward Rules ................................................................................................... 62

7. Elimination and adjustment Rules .................................................................................. 63

8. Naming Convention for Method-based Multipliers ................................................................ 64

9. UJ_VALIDATION Settings .............................................................................................. 65

10. First Consolidation Process ........................................................................................... 65

Planning and Consolidation 10.0 Netweaver, starter kit for IFRS

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Introduction

1. Document Objective

This document describes how the SAP® BusinessObjects™ Planning and Consolidation 10.0 starter kit for IFRS on SAP Netweaver was designed. The first chapter is divided into business topics; for each topic the design principles are explained as a response to the related user requirements. The second chapter summarizes the configuration objects mentioned in the first chapter by product area. Appendices available in chapter 3 are screenshots and scripts referenced in the first two chapters, which provide more details about the contents of scripts, business rules, and dimensions. Specific operating processes are also explained in this chapter.

Before you attempt to change the configuration, we highly recommend that you read this document thoroughly, in order to understand how configuration objects interact in the solution, and how to enhance the starter kit in accordance with the way it was designed, when adapting the starter kit to project specific requirements.

2. Legend

Objectives / Requirements

Design principles

Consequences on the operating process

Warning

Database diagram

Accounting diagram

Blue italic Leveraged Planning and Consolidation product feature

Italic Name of the configuration object in the starter kit


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A. Design Principles by Business

Requirement

1. General Reporting Principles

1.1. Reporting Cycle

The starter kit for IFRS is designed to support a full consolidation scenario for actual data. The reporting cycle encompasses preparatory tasks, data entry tasks, consolidation tasks, and data retrieval through a library of reports.

For the successive consolidation reporting cycles, instances of the BPFs listed above are identified by the Actual Category ID.

1.2. Accounting Principles

1.2.1. Financial Standards

Reported data is consolidated according to IFRS. Local data can be collected following IFRS, or in local GAAP, and subsequently adjusted to IFRS in input forms.

The consolidation scenario is built for actuals and is divided into 4 main Business Process Flows (BPF):

Preparatory tasks: Maintain exchange rates, consolidation scope, and run copy opening balances

Data entry: Load files or manual entry of balance sheet, income statement, breakdown by movement and intercompany. Run data validation and data submission.

Consolidation tasks: Run preliminary checks, post manual journal entries, run consolidation, check the consolidation dashboard, view annual reports

Reports library: Annual reports, analysis reports, accounting reports, control reports

The Data entry tasks BPF is designed for local users whereas Preparatory tasks and Consolidation tasks BPFs are designed for central users. One consolidation process is defined for all consolidation frequencies (monthly, quarterly…).

The consolidation data is stored in a consolidation-type model named CONSOLIDATION. An „ACTUAL’ category ID is created and used for that purpose.


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Local data is stored on the INPUT audit ID 1 (audit-type dimension). Subsequent local adjustments in input forms are stored on the INPUT11 audit ID

The user can select the audit ID in the EPM context of input form. Thanks to a specific Data Access Profile, (named “Entry level”) only “Input” audit IDs (base members of “ALL_INPUT”) can be selected by local end users.

It is therefore possible to dynamically enhance the list of local restatement audit IDs available in input forms by assigning the same property value and hierarchical node to the new audit ID(s).

1.2.2. Income Statement

The Income Statement is disclosed by function.

1.3. Reporting Indicators

The chart of accounts is built in a way that makes it possible to map accounts with IFRS taxonomy items.

More details on publishing under the XBRL format with the starter kit is supplied in § 8 page 45.

1.3.1. Reference indicators

1.3.1.1. Financial Statement items

Reference indicators include balance sheet (BS) accounts and income statement accounts (IS).

The Statement of Financial Position – or Balance Sheet (BS) - distinguishes between the following items:

Non-current / current items2

Gross values / depreciation and impairment / net values

The Income Statement (IS) is composed of the following blocks of accounts:

Operating profit

Financial result

Tax (Current and deferred)

Profit (loss) from discontinued operations

1 Audit IDs are described in § A.4.1.5 page 24

2 In accordance with IAS1 – Financial Statements


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The requirements regarding the Statement of Cash Flows, the Statement of Changes in Equity, and the Statement of Comprehensive Income are detailed in chapter 6 page 40.

Structure of the Chart of Accounts

The chart of accounts is organized into hierarchies. Accounts are always included in a parent member account by populating the PARENTH1 field in the ACCOUNT dimension.

The following hierarchies are defined:

Balance sheet: includes Asset accounts (Axxxx), Equity accounts (Exxxx) and Liability accounts (Lxxxx)

Group Income: includes all P&L accounts (Pxxxx)

Codification

The codification principle allows the user to do the following:

identify the account type (A = Assets, E = Equity, …) and subtype (for the second digit 1 = Non-current item and 2 = Current item).

sort accounts in logical order in reports notably in the balance reports (assets base members, equity and liabilities base members)

In addition, for total accounts, the suffix T allows the user to distinguish between total accounts and leaf-level accounts.

1.3.1.2. Balance Sheet Movements

In order to be able to calculate the Statement of Cash Flows items and to produce the Statement of Changes in Equity, changes in the BS items are captured or calculated as follows:

For current assets and liabilities (Gross value), the net variation is calculated and displayed in input forms

For other BS accounts, a detailed analysis of movements is required

Specific operations are identified separately for all BS accounts: Reclassification, Changes in accounting policies, Internal mergers (transfer of BS accounts from the acquired to the acquiring company in case of an internal merger)

Opening balances are automatically calculated from the closing balance of the previous year.


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Using a FLOW Dimension

The FLOW dimension (Subtable type) is used to detail the value change between the opening balance (F00) and the closing balance (F99) for balance sheet accounts. All flows, excluding F99, are included in a parent member “Closing-Calculated” (END) in order to:

Easily check that the sum of the opening balance and the period movements equal the closing position in reports (END = F99)

Dynamically select the opening flow and the movement flows in reports

Account / Flow Combinations

The following common flows are valid for all BS accounts:

Positions: F00-Opening, F99-Closing

Specific flows (except for some equity accounts): F50-Reclassification, F09-Change in accounting policies, F70-Internal mergers

Additional relevant flows depend on the account. This link is defined in the FLOWAN account property (See Appendix 3). This property is used to stripe cells that correspond to inconsistent account-flow crossovers in input forms.

For P&L accounts, only flow PL99-Closing is used.

Flow Calculations and Controls

For all BS accounts, the net variation (i.e. closing balance – [opening balance + specific flows]) is calculated in flow F15-Variation. This calculation is included in the default script logic, which enables a real time calculation as and when data is input / imported at local level. (See Appendix A.1).

For non-current accounts, the net variation must be distributed on relevant flows in the corresponding input form. When saving new values, the variation flow (F15) is calculated again and must be zero in the form. The controls are performed during the data validation via specific controls rules. The flow F15 is then highlighted in input forms (see Appendix 2).

For current accounts (excluding provision and allowance accounts) the net variation amount is not distributed on flows and remains on the net variation flow (F15).

Two preventive data entry controls have been inserted in the NetWeaver backend through the UJ_validation transaction. They prevent the user from entering or importing data on the Profit and Loss flow (PL99) for Balance Sheet accounts on the one hand, and from entering or importing data on the Balance Sheet closing Flow (F99) for Profit and Loss accounts on the other hand (see Appendix Error! Reference source not found.). For more information on this feature please refer to the Planning and Consolidation on Netweaver documentation.

Opening Balances

For input data, the calculation of opening balances is executed centrally by using the “CopyOpening” Data Management Package with the Carry Forward Rules. (See § 4.1.1 page 20).


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Reminder – Input audit IDs: Input data is identified by the members of the audit ID dimension with the property DATASRC_TYPE = I (Input). More information regarding this dimension is available in 4.1.5 page 23.

1.3.1.3. Focus on Equity Accounts and Equity Specific Movements

The Statement of Financial Position does not distinguish between accumulated retained earnings of prior periods and the net income of the current period.

At local level, the following equity movements are captured:

Net income of the period: calculated from the P&L accounts

Total dividends paid (internal and external)

Subscription to capital

The appropriation of retained earnings is disclosed on one single account: E1610 – Retained earnings. The following equity-specific flows are created:

F10 – Net income of the period: is automatically calculated by the Default script logic (for audit IDs defined with DATA_SRC=I), or included in the Journal.lgf script for manual journal entries. Both scripts enable a real time calculation. (See Appendix 1 and appendix 4)

F06 – Dividends

F40 – Subscription to capital

F20, F30 and F55 are also associated with relevant equity accounts such as Treasury shares to capture the increase or decrease in values or fair value adjustments.

F00 F99 F06 F10 F40

Opening

position

Closing

positionDividends Net income

Subscription to

capital

E1110 Issued capital

E1210 Share premium l l

E1310 Treasury shares l

E1510 Revaluation surplus, before tax

E1511 Income tax on revaluation surplus

E1520 Actuarial G&L, before tax (suspense acc.)

E1521 Income tax on actuarial G&L (suspense acc.)

E1540 Hedging reserve, before tax

E1541 Income tax on hedging reserve

E1550 Fair value reserve, before tax

E1551 Income tax on fair value reserve

E1570 Equity component of compound fin. Inst.

E1610 Retained earnings l l = P&L l

E199T Equity attributable to owners of parent

Legend:

l Input


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1.4. Sign Convention

In order to fully leverage the software‟s data storage engine as well as the calculation engine of total accounts, the following rules apply to closing balances:

Assets: gross values are entered as positive amounts; amortization and depreciation are entered as negative amounts

Equity and liabilities: amounts are entered as positive amounts

Income Statement: revenues and expenses are entered as positive amounts.

Assets Amortization & Depreciation

Equity & Liabilities*

Income Expenses

Entry + - + + +

Display 100 (100) 100 100 (100)

In addition to the sign logic defined for accounts, flows use the following rules:

Assets Equity & Liabilities*

Gross values Amortization & Depreciation

Increase Decrease Increase Decrease Increase Decrease

Entry + - - + + -

Display 100 (100) (100) 100 100 (100)

*Except Treasury shares, for which the logic is reversed.

The account dimension is defined with the ACCTYPE property. Thanks to this property, values are automatically recorded with the appropriate sign for the account.

Accounts are defined with the following ACCTYPE values:

AST: Asset accounts (gross value, depreciation, impairment). Default sign is positive (debit). Entry values must be negative for depreciation and impairment

LEQ: Liability and equity accounts. Default sign is negative (credit)

INC: Income accounts. Default sign is negative (credit)

EXP: Expense accounts. Default sign is positive (debit)

As explained before, income and expenses are entered as positive amounts. To ease the readability of the Income Statement, a particular value format applies to expense accounts: values are shown in negative though they are entered as positive.

To calculate values on parent members (total accounts), the ACCTYPE property is also taken into account. The calculated value will be displayed following the ACCTYPE property.


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2. Segment Reporting

Income Statement, Assets and Liabilities by Segment

Segment reporting is built by entity aggregation, which implies that each entity belongs to only one segment. The scenario where a legal company belongs to several segments is supported by splitting legal companies into operating entities which report IS items and operating assets and liabilities, and non-operating entities which report non-operating items such as equity, tax and investments.

In terms of data entry, one BPF instance is created per entity, i.e. business unit. In order to balance BS and IS for all entities (operating and non-operating) that compose a company, two balancing accounts have been defined:

L26BL-Balancing account - Balance sheet

P22BL-Balancing account - Income statement

Example:

Intragroup/Intergroup intercompany eliminations

In the starter kit, segment reporting is built by entity aggregation. The starter kit does not provide intragroup/intergroup intercompany elimination feature.

Non Operating Operating

Segment A

Operating

Segment B

Total company

(no intra

elimination)

Assets

Fixed assets 500 100 200 800

Cash 200 200

700 100 200 1000

Equity & Liabilities 0

Equity 300 300

Net Income 40 60 100

Net Income-Balancing 100 -40 -60 0

Debts 100 400 100 600

B/S-Balancing 200 -300 100 0

700 100 200 1000

Income Statement 0

Net Income of the period 40 60 100


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3. Consolidation Principles

3.1. Foreign Currency Conversion

The Income Statement accounts are converted using the average rate of the reporting period.

Accounts in the Statement of Financial Position are converted using the period-end rate, excepted investments and equity accounts which are maintained at their historical acquisition value. BS movements are translated using average rate.

For equity accounts, the currency translation differences are recorded in a dedicated account in the reserves.

As some transaction values need to be converted at a specific rate, such as dividends distribution and the balance sheet position of incoming units, the definition of currency rate per company is required.

All values are translated “cumulated”, meaning that the “year to date” value for the closing period is translated using the rate of the same closing period.

The above currency conversion rules also apply to accounts for additional analyses.

Rates Definition and Rate Input form

The following RATES are defined and must be entered in the RATES model:

AVG: average rate

END: closing rate

DIV: dividends rate

The RATES model includes the RATEENTITY dimension which allows the consolidation manager to input specific currency rates for a given company. This dimension is initialized in the Rate web input form. It contains the following members:

GLOBAL member, against which the default rates by input currency must be input; it is therefore initialized in the context of the input form.

Members that correspond to entities to which a specific rate must be applied and which therefore have identical identifiers (IDs). These members can be inserted as appropriate by the central user in the input form.

The currency conversion rules apply the specific rate for one entity if such a rate exists. If not, it will default to the general currency rate input on the GLOBAL member.


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Reminder: Entering Specific Rates by Entity

In order for the conversion engine to apply specific rates by entity, it is necessary to input the specific rate for the entity (RATEENTITY dimension) not only against its respective local currency (INPUTCURRENCY dimension) but also against the consolidation currency, for example EUR or USD (INPUTCURRENCY dimension). This is because the conversion engine will not refer to the default rate stored on the GLOBAL RATEENTITY member in the case of a specific rate for one entity.

Example:

Rule definition

The currency conversion rules are configured by using the RATETYPE property of the ACCOUNT dimension in order to associate groups of accounts to identical conversion behaviors.

Accounts General translation rule RATETYPE Property

IS accounts Average rate (AVG) AVER

BS accounts (closing balance) translated using the closing rate

Closing balance: closing rate (END)

Movements: average rate (AVG)

CTA calculation on flow F80 account by account

AVNEND

Equity accounts Maintained at their historical value: opening balance is not changed (AS_IS formula), other movements are translated using their respective rate (AVG, DIV, END, OPEND).

The “ForceClosing” Option is used so that the converted closing position equals the sum of converted flows.

CTA calculation on flow F80 of the currency conversion reserve account E1560.

HIST_EQ1


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Currency translation account (E1560)

The opening balance is maintained at the converted value of the prior year end (AS_IS formula)

HIST_EQ6

Investment accounts Closing balance: closing rate (END)


CTA calculation on flow F80

Consequently, the general principle applied to investments is identical to the one used for other BS accounts. In addition, this conversion rule populates the YA1810C off balance account which stores the cumulated value of the currency translation effect on investments over time.

HIST_INV

Off balance Goodwill declaration accounts:

Bargain purchase

Closing balance: closing rate (END)


HIST_GW

Off balance Goodwill declaration accounts:

- Goodwill Gross Value

- Goodwill Impairment

(Partial and Full Goodwill)

The same principle as the one defined for the investment accounts is applied to the goodwill.

HIST_GWGV

HIST_GWGVN

HIST_GWIM

HIST_GWIMN

The FLOW dimension DIMLIST_CONV_SEL property is also leveraged in the currency conversion rules in order to dynamically associate groups of flows to one given conversion behavior within one account set associated with one RATETYPE property.

Flows Property SUBTABLES_ORIG

Flows translated using the closing rate of the previous period S_CONV_OP

Flows translated using the average rate S_CONV_AV

Flows translated using the dividends rate S_CONV_DIV

Flows translated using the closing rate S_CONV_END

Currency Translation Differences

For equity accounts, the currency difference resulting from the translation of movements at specific rate (historical, average, opening) is recorded in a dedicated equity account E1560 on flow F80-Foreign exchange gain/loss.

For other BS accounts, the currency difference resulting from the translation of movements at average rate, and the translation of closing balance at closing rate, is recorded in the original account on flow F80-Foreign exchange gain/loss.


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Audit ID behavior Regarding Conversion

The currency translation process applies only to audit IDs identified by the ‟Y‟ value of the IS_CONVERTED property. Consequently this value has been assigned to audit IDs intended for input and adjustments in the starter kit.

Technical Accounts for CTA Cumulative Value

For investment and goodwill accounts, technical accounts are used to store the cumulated conversion differences as a source amount to be subsequently reclassified from consolidation reserves to conversion reserves as part of the CTA automatic entry. (See § A. 4.3.6, Currency Translation Adjustment (CTA))

First consolidation: conversion and cumulative CTA

As explained above, equity accounts are translated using the historical value method (AS_IS formula). When running the consolidation for one given consolidation scope for the first time in the application, the historical values of these accounts must be recorded as well as the cumulated amount of the conversion reserves as part of the preparatory tasks. This can be done in either following ways:

By importing the converted opening balance on the opening flow directly at converted level on a technical prior year-end time period used for opening data, and defining entity-specific exchange rates for this technical consolidation; the opening rate, the average rate and the closing rate should be identical so that no currency conversion difference is computed on this time period;

By posting a journal entry to return to the historical translation amount.

The detailed procedure is available in the starter kit operating guide and in appendix (see 10.2, Equity Conversion and CTA on page 65).

3.2. Consolidation Type

The starter kit follows the direct consolidation approach where entities are attached directly to the main parent company of the consolidation perimeter.

A sub-consolidation input framework is defined for entities consolidated with the equity method.

In the CONSOLIDATION model, consolidation accounts (such as Goodwill, or Non-controlling interests), and consolidation flows (such as Change in consolidation method, Change in consolidation rate) are not available in input forms associated with the standard data entry BPF intended for standard reporting entities.

Consolidation accounts are filtered by using the UPROFILE property in the Member selector: accounts having the value 2CONSO for the UPROFILE property will not be available in input forms.

Consolidation flows are assigned with the EQM value for the FLOW_DOC property. This value is not initialized in forms intended for standard reporting entities.


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Sub-scope Management

The Planning and Consolidation consolidation engine natively handles sub-consolidations, that is consolidations of groups hierarchically organized into scopes and sub-scopes. The prerequisites are as follows:

Consolidation perimeters organized hierarchically via the PARENT_GROUP property

Entities attached to sub-scopes or directly to the top scope in the Ownership Manager

The following options must be activated so that the aggregated amounts of possible sub-consolidations are stored in the fact table:

STORE_ENTITY property set to „Y‟ (Yes)

ENTITY property set to a dedicated entity ID which the aggregated value of the scope and sub-scopes should be recorded onto

An example is given in the starter kit with the ALL_ZONES top consolidation perimeter. However no consolidation was executed and validated for this perimeter.

3.3. Consolidation Methods and Rates

The following consolidation methods are supported in the starter kit:

Full method (purchase method)

Proportional method

Equity method

The consolidation process uses the following rates:

Consolidation rate

Ownership rate

The consolidation perimeter is entered manually. The starter kit does not include any process for determining the consolidation method by entity automatically, nor calculating the consolidation rate and financial interest rate.

OWNERSHIP Model

Consolidation methods and perimeter rates are stored in the OWNERSHIP Model. They are used to define the consolidation perimeter via the Ownership Manage.

The list of available consolidation perimeters is maintained in the group-type dimension named ConsoScope.

Methods

The consolidation methods defined in the starter kit are the following:

Holding (Main Parent). [Method ID=111]

This method must be assigned to the consolidating company for which no equity elimination is booked.

Full (Purchase method) [Method ID = 100]

Proportional [Method ID = 50]

Equity [Method ID = 20]


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Rates

The rates used correspond to the following ownership accounts (OWNACCOUNT) in the OWNERSHIP model:

PCON Consolidation rate

POWN Financial interest rate (group share)

These rates are defined with the property IS_INPUT=Y.

Proportional Method

All amounts reported by companies consolidated using the proportional method are reduced to correspond to the consolidation rate.

Example:

A company reports “Revenues” for 1000 €. This company is consolidated using proportional method and a consolidation rate of 40%.

Amount Audit ID

Reported value 1000 INPUT

Apportionment -600 MTH_PRO

Apportioned value 400 PROPORT

The MTH_PROP Method-based Multiplier is defined to proportionate the reported values by cancelling the “non-group” amount (formula: 1-PCON). This apportionment is identified by the MTH_PROP audit ID which is populated by the MTH_PROP Elimination and adjustments rule associated with the “Proportional” adjustment type. As a consequence no rule detail is required and the consolidation engine applies this apportionment to all accounts for entities consolidated with the proportional method.

Equity Method

All amounts reported by companies consolidated with the equity method must be cancelled at group level. The case of equity accounts is explained in § 4.3.5 below, Consolidated Equity Calculation.

The MTH_EQ consolidation rule is defined to cancel out all of the reported values (factor 1 used as formula). This cancellation is identified by the MTH_EQU audit ID which is populated by the MTH_EQUITY Elimination and Adjustment rule associated with the “Equity” adjustment type. As a consequence no rule detail is required and the consolidation engine applies this cancellation to all accounts for entities consolidated with the equity method.

Example:

Amount Audit ID

Reported value 1000 INPUT

Elim. Equity method -1000 MTH_EQU

Apportioned value 0 PROPORT


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3.4. Perimeter Changes

To produce the Statement of Cash Flows and the Statement of Changes in Equity, the impacts of status changes for entities in the scope such as incoming and leaving companies, and internal merger are tracked separately from other changes.

Defining dedicated Flows and Audit IDs

With an adapted configuration, the consolidation engine is able to automatically populate distinct flows with the amount of scope change effects, depending on the changes in the entity‟s and/or the Interco‟s status in the consolidation scope. These flows are identified using the FLOW_TYPE property.

This process is triggered on automatic-type audit IDs.

As for the incoming unit flow and outgoing unit flow, 2 dedicated audit IDs, SCO_INC and SCO_OUT, are created and associated with 2 specific Elimination and Adjustment rules with identical IDs. These rules are associated with the New and Leaving Adjustment type in order for the consolidation engine to be able to identify the audit ID to populate depending on the scope change

As for changes in consolidation method, the difference is posted on the audit ID that is used for the apportionment explained in 3.3 above

As for changes in consolidation rate, the difference is posted on the audit ID populated by the automatic consolidation entry rule (Eliminations, NCI,…)

The connection between the specific Flows and the specific Audit IDs defined to identify and distinguish between effects of scope change is summarized in the following table:

Flow FLOW_TYPE Property

Audit ID Adjustment type

Entity Identification process by the consolidation engine

F01-Incoming units

VARSCPNEW SCO_INC New Entity not included in the prior scope

F03-Change in consolidation method

VARSCPMETH MTH_PRO

MTH_EQU

No dedicated rule

Current consolidation method is different from prior scope

F92-Change in interest / consolidation rate

VARSCPPERC Audit ID of the corresponding automatic consolidation entry

No dedicated rule

Current consolidation rate / interest rate is different from prior scope

F98-Outgoing units

VARSCPLEAV SCO_OUT Leaving Appropriate leaving method assigned to the entity (see below)


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Outgoing units – General Case

For all outgoing units, the reversal of the closing position is identified to show and calculate the impact of outgoing balance sheet items. For entities leaving the consolidation scope at the beginning of the period, possible reported balance sheet movements and income statement items have no impact on the financial statements.

The following consolidation methods are created in the Business Rule and associated with the appropriate Method type in order to trigger the built-in process :

800 – Divested last year end

888 – Leaving during current year

These methods are associated with the Leaving method type. Thus the closing position of all outgoing units is cancelled out from flow F99 and reversed via flow F98. In addition for entities leaving the consolidation scope at the beginning of the period, the “800-divested last year end” method cancels out balance sheet flows and income statement items.

Product Warning

In the early 10.0 release of the software, the native consolidation engine‟s behaviors corresponding to the Leaving (During the Year) Method type and the Leaving (End of Year) Method type are inverted. As a consequence the method “800” - Divested last year end is in fact associated with the Leaving (During the Year) Method type. The same applies to method “700” – Acquired last year.

Internal merger

Acquiring entities are able to report the increase in assets, liabilities and equity resulting from the internal merger.

The starter kit allows the consolidation manager to match the transfer of assets, liabilities and equity items from the acquired entity into the acquiring entity.

The F70-Internal Mergers flow is created for the acquiring entities to record the increase in assets, liabilities and equity resulting from the internal merger.

Moreover at the acquired company, the SCO_OUT specific elimination and adjustment rule reclassifies the reversal of the closing position, which is triggered by default on F98 for outgoing entities associated with one of both Leaving-Method types, onto F70.

The following consolidation methods are created for that purpose:

700 – Acquired last year end

777 – Acquired during current year

These methods are used in the AM_99_X1 Consolidation Rule which is in turn used in the SCO_OUT adjustment rule.


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Distinguishing the Original Method for Divested / Merged Entities During the Year

Consolidation entries booked in entities leaving the consolidation scope or against group partner leaving the consolidation scope must be reversed in a consistent way with the reversal of input data.

For entities leaving the scope during the period, the balance sheet movements are maintained and the closing position must be reversed.

The status as leaving entity in the scope is the second criteria, combined with the “business” consolidation method, which makes it possible to book relevant automatic entries on the appropriate scope changes flows.

The following consolidation methods are consequently created:

850 – Proportional leaving during current year

820 – Equity leaving during current year

750 - Proportional acquired during current year (internal merger)

720 – Equity acquired during current year (internal merger)

These methods are used in Method-based Multipliers used in turn in several elimination and adjustment rules when needed. Thus the closing position is reversed onto the appropriate flow by automatic entry type.

4. Journal Entries

4.1. Best Practices

4.1.1. Balance Carry Forward

The starter kit allows the user to populate the opening balance of the current period from the prior year-end closing balance in order to ensure the flow consistency over time periods. This applies to the various amount types: Input data, manual journal entries (MJE) and automatic journal entries (AJE).

Opening balances of the current year result from the carry forward of closing balances from the previous year. This calculation is defined and executed in the following steps:

Balance Carry Forward of Manual Entries

For all audit IDs with the property DATASRC_TYPE = M, opening balances are calculated using the data manager package “CopyOpening” with the carry forward rules defined as follow:

Source account: TBS (all BS accounts)

Source flow: F99-Closing balance

Destination flow: F00-Opening balance

DataSource type: All (meaning “input” and “manual”, but not “automatic”)


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Calculation of the Consolidated Opening Balances (Automatic Entries)

The carry forward rules do not apply to automatic entries (audit IDs with property DATASRC_TYPE = A). Instead, the consolidation engine calculates the consolidated opening balances (flow F00) of the current year by copying the closing balance (flow F99) of the previous year.

4.1.2. Flow-Based Consolidation

For manual and automatic journal entries, the closing position is always calculated from movements. This contributes to the consistency of the closing position and movements over time periods, notably for the calculation accuracy of the Statement of Cash Flows and the Statement of Changes in Equity.

Automatic and Manual Journal Entries

Automatic and manual journal entries must be booked on movement flows. The impact on the closing balance (flow F99) is calculated automatically.

This calculation is defined in one of three places:

In the elimination and automatic adjustments rules (“Force closing” option) for all automatic entries that impact BS movement flows

In the journal.lgf logic script for manual journal entries (see Appendix 4)

In the copyopening.lgf logic script for manual journal entries from the previous year (see Appendix 5)

Manual Journal Entries and the F99 closing flow

Because the impact on the closing balance is automatically calculated, the closing flow (flow F99) should not be booked in manual journal entries.

Reminder: Opening Data in Input forms

A different logic applies to data input in forms since the closing balance is not calculated. Instead it is used to calculate the variation flow (F15) as described in § 1.3.1.2 page 7 in this context.

4.1.3. Balanced Entries

In the consolidation, manual and automatic journal entries are booked by ENTITY according to a contributive approach, not in adjustment or elimination entities. This is because it must be possible to retrieve the net contribution to the group consolidated figures by entity. This principle also facilitates the audit trail since the origin entity of the elimination is identified.


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Manual and automatic journal entries must be balanced by Entity and Audit ID.

Elimination accounts are created in the Balance Sheet and the Income Statement. They are used as off-setting accounts to balance elimination postings by entity. Automatic journal entries will populate these elimination accounts as defined in the elimination and adjustment rules. It is also possible to use these elimination accounts for manual entries.

4.1.4. Using the Breakdown by Partner

The accounts for which intercompany values are possible (property ISINTERCO = Y) are used as follow:

Company data is reported globally (Interco = I_NONE) and broken down by partner in dedicated input forms

Elimination entries are booked both by partner and globally (Interco = I_NONE). This is done by using the „Force intco member‟ option in the elimination and adjustments rules

As a consequence the detail of eliminations by partner is available for audit trail purposes. This logic is illustrated in the table below.

Automatic adjustment rules are based on Method-based Mulipliers rules in which the Interco method, in addition to the entity method is checked.

As a consequence, no elimination will occur when the INTERCO member corresponds to a non-consolidated entity.

Intercompany accounts are collected by Group partner so that it is possible to test the consolidation perimeter status of the partner in the elimination rules to trigger the elimination accordingly. The breakdown by partner is maintained in elimination entries for audit trail purposes, since it is then possible to explain the total amount eliminated.


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Elimination by partner and on the grand total

Account total

-Input data-Ent 1 Revenues F99 I_NONE INPUT 50

Partner breakdown (1)

-Input data-Ent 1 Revenues F99 I_Ent 2 INPUT 40

Partner breakdown 2

-Input data-Ent 1 Revenues F99 I_Ent 3 INPUT 10

… …

Elimination by partner Ent 1 Revenues F99 I_Ent2 ELIM10 -40

Elimination by partner Ent 1 Revenues F99 I_Ent3 ELIM10 -10

Total EliminationEnt 1 Revenues F99 I_NONE ELIM10 -50

Comment ENTITY ACCOUNT FLOW AmountINTERCO AUDIT ID …

4.1.5. Analysis of Changes from Local to Consolidated Value

The preparation and validation of consolidated figures, including analysis of changes from local to consolidated values, is facilitated thanks to a business classification of all consolidation steps and calculations (manual entries, apportionments, automatic eliminations…).

A dedicated audit-type dimension called audit ID is defined to classify data from local to consolidated figures. This dimension is defined with a hierarchy in order to distinguish the different main transformation steps of amounts in the consolidation process and to retrieve these steps in reports.

4.1.6. Leveraging the Built-in Scope Change Calculation

Effect of perimeter changes on consolidated statements must be disclosed on specific flows depending on the type of the scope change (incoming, rate or method change,…).

For Balance Sheet accounts, Elimination and Adjustment Rules based on the current perimeter rates (financial interest rate and consolidation rate) apply not only to movement flows but also to the opening balance F00. This is because the consolidation engine is able to automatically identify and calculate the effect due to changes in the perimeter by the difference between the carry forward of the automatic entry from the prior year-end period on the one hand, and the newly calculated automatic entry elimination for the opening balance F00 on the other hand.


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Example:

December, Prior Year

Current Time Period

POWN 0.8 0.9

Audit IDs … F99-Closing

F00-Opening

Scope

variation* F99-

Closing

INPUT – Input data … 100 100 100

AJ_xxx – Automatic adjustment based on POWN … 80 80 10 90

* The scope variation flow member populated by the consolidation engine depends on the status of the entity and/or the partner (Interco) in the consolidation perimeter: incoming, leaving, change in consolidation rate or change in consolidation method.

4.2. Manual Journal Entries

Several elimination entries or consolidation entries are booked via manual journal entries in the starter kit: elimination of internal provisions, elimination of internal gain / loss on disposal of assets, reclassification of the incoming position of Other Comprehensive Income components in retained earnings for incoming entities.

Moreover it is possible to adjust the automatic entries with manual journal entries if needed.

Manual Journal Entry Audit IDs

Manual journal entries can be manually booked using predefined audit IDs with property DATASRC_TYPE = M. Some audit IDs have been created to allow the consolidation manager to book entries which are not automated in the starter kit. Other audit IDs are also available to complement automatic entries. For instance, the manual journal entry-type audit IDs DIV11 and DIV21 are available in addition to the automatic audit IDs DIV10 and DIV20.

Manual Journal Entry Related Calculations

The journal.lgf script logic calculates the following possible impacts related to manual journal entries:

BS flows carry over to the F99-Closing balance flow

Carry over of the P&L impact to the retained earnings (F10)

The Journal.lgf script is described in § 4 page 60.


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Account Total and Interco Breakdown in Manual Journal Entries

If a manual journal entry should impact both the account total and one or several group partners, one journal row must be defined to record the impact on I_NONE in addition to the journal row(s) recording the impact on the group partner(s).

Account Property for the Elimination of Provisions

The PROV-xx values have been created for the TYPELIM property and assigned to the appropriate accounts to facilitate the setup of additional rules for the elimination of internal provisions. However, these rules are not implemented in the current release of the starter kit.


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4.3. Automatic Entries

4.3.1. Reciprocal Account Eliminations

Intercompany Accounts

Within the chart of accounts, only some accounts are open for recording intercompany transactions. However, these accounts are not dedicated solely to intercompany operations, transactions with third parties may also be recorded.

Several groups of reciprocal accounts are defined.

In the Balance Sheet:

Receivables and payables, non-current

Financial assets and liabilities, non-current

Receivables and payables, current

Financial assets and liabilities, current

In the Income Statement:

Gross profit (Revenues / Cost of sales)

Operating profit (Other income / Other operating expenses)

Financial result (Interests and other financial income/expenses)

Eliminations

The following automatic intercompany eliminations are defined:

Revenues / Cost of sales

Other income / Other expenses

Finance income / Finance expenses

Trade & other receivables / payables

Non-current receivables / payables

Financial assets / liabilities

Intercompany reciprocal accounts are eliminated against dedicated elimination accounts (clearing accounts). As a consequence, these elimination accounts show the intercompany mismatch at group level.

Intercompany amounts are eliminated between entities consolidated using full or proportional methods, weighted with the lowest consolidation rate between both companies.


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Intercompany Accounts

To facilitate the maintenance of the chart of accounts and business rules, intercompany eliminations are defined using the following account dimension properties:

ISINTERCO: property used to show in input forms that one account can be used in the intercompany input form. This “IC” indicator is displayed in the Balance input form for P&L accounts, and in the flow analysis input forms for B/S accounts.

TYPELIM: property used to select accounts in the consolidation rules

Example: The accounts “Revenues” and “Cost of sales” have the property TYPELIM = S_ICIS

ELIMACC: property used to define the respective elimination account to be populated as counterpart of the journal entry (see 4.1.3).

Example: The account “P119CL” is defined in the property ELIMACC for the accounts “Revenues” and “Cost of sales”

The elimination accounts are part of the account hierarchy and consequently included in consolidated statements.

At group level, elimination accounts show the intercompany differences, resulting from a mismatch in the intercompany amount reported by entities

At entity level, elimination accounts balance the elimination postings

Business Rules

Intercompany eliminations are performed using the Consolidation Monitor, which triggers the Eliminations and Adjustments rules combined with the Method-based Multipliers.

For intercompany eliminations, several Method-based Multipliers are defined:

BA1_BA1_M1: consolidation methods for the ENTITY and INTERCO dimensions are: Holding (111), Full (100), Proportional (50), Leaving companies (888, 850), and Merged companies (777, 750)

BA1_SM1_M1 and SM1_BA1_M1: rules defining when the company or the interco is merged

BA1_SD1_M1 and SD1_BA1_M1: rules defining when the company or the interco is leaving

These consolidation rules are defined with consolidation formula which refers to the lowest rate between the entity‟s consolidation rate and the partner‟s consolidation rate at closing.

Explanations regarding the naming convention of the Method-based multipliers are available in appendix (see C.8 - Naming Convention for Method-based Multipliers for Consolidation Rules)

The ICELIM Eliminations and Adjustment rule records intercompany eliminations on the audit ID ELIM10.

The corresponding processing rows of the ICELIM Elimination and Adjustment rules define the following eliminations:


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Source account

Source flow

Destination flow

Rule Id Applies to

S_ICBS All flow included in END

Same as the source flow

BA1_BA1_M1 Full and proportional methods

S_ICBS F99-Closing F98-Outgoing units

BA1_SD1_M1 and SD1_BA1_M1

Divested companies

S_ICBS F99-Closing F70-Internal mergers

BA1_SM1_M1 and SM1_BA1_M1

Merged companies

S_ICIS PL99 BA1_BA1_M1 IS

Formula for the Lowest Consolidation Rate

The formula used in the starter kit for returning the lowest consolidation rate between the Entity and the Intercompany defined in the consolidation perimeter is MIN(PCON,I_PCON) .

Automatic Interco Elimination: Example for Trade Receivables and Payables1

SELLER Company (S)

A2210 Trade receivables (Assets) L239CL Elimination account

Interco B 130 Interco B 130 Interco B 130

BUYER Company (B)

BUYER

L2310 Current trade payables (Liabilities) L239CL Elimination account

Interco S 120 Interco S 120 Interco S 120

Input amounts

Elimination at the seller

Elimination at the buyer

1 To keep the example easy to understand, only the journal entry by group partner is shown ( and ). As explained in A.4.1.4, the automatic journal entry is also posted against the I_NONE member.


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4.3.2. Elimination of Dividends

Dividends paid and received are automatically eliminated based on the payer‟s declaration. The elimination journal entry is posted in the receiver‟s accounts (P&L and equity).

The impact on reserves / net income is shared between the group and non-controlling interests, based on the ownership rate of the receiver company.

In case of differences (for instance due to exchange rates), an automatic journal entry reclassifies this difference to flow F80 of the receiver‟s equity (account E1610-Retained earnings).

A manual adjustment journal entry can be posted if the difference is other than an exchange rate difference (if for instance declarations from the payer and the receiver do not match).

Dividends are eliminated based on the detail reported by the paying company. An additional detail, however, is collected in the receiver‟s package to allow reconciliation of dividends.

In the equity, dividends paid can be reported by the subsidiary on accounts Share premium and Retained Earnings (with no partner detail) on flow F06-Dividends. An additional input by partner is required on a single statistical account – XE1610 - on flow F06.

The impact in group reserves or non-controlling reserves (accounts E1610 and E2010 respectively) is recorded by the DIV Elimination and adjustment Rule. The net result impact is therefore also posted in the Income Statement (P2140). Since the income of the period and the retained earnings are recorded on the same account (E1610), the elimination of dividends results in a reclassification from flow F06-Dividends to F10-Net Profit of the period.

Foreign Currency Conversion

On the payer‟s side, the flow F06 is converted using the dedicated rate type, DIVR (see Rate dimension in the RATES model). This rate can be populated in the rate table, and should be equal to the payer‟s currency exchange rate at the date when the dividend was agreed by at the annual general meeting.

Using this rate will make the reconciliation of dividends paid/received easier, especially when the receiver‟s reporting currency is the same as the consolidation currency.

Dedicated audit IDs, DIV20 (auto) and DIV21 (manual journal entry), have been created to post any possible conversion difference. The DIV20 audit ID is automatically populated at the receivers by the DIVCTA Elimination and Adjustment rule. The posted difference is calculated by using both the receiver‟s and the payer‟s converted declarations and using the “Swap entity-Intco” option for the payer so that the amount is populated at the receivers as well.

Dividends Paid by an Incoming Entity

Dividends paid by an incoming entity are reclassified from the dividend impact to the scope change effect in order to provide the consolidation manager with an accurate value of the incoming equity.


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In order to reclassify dividends paid by incoming entities during the consolidation process, the following Elimination and Adjustment Rules have been created:

FVA10: in case of incoming payers, this rule reclassifies the total dividend distribution impact reported on flow F06 onto flow F01. The counterpart on the asset side is the account A2610–Cash on hand, whose movements are reclassified from F15 to F01. Consequently the incoming flow F01 remains balanced.

In order to select data only from incoming entities, the Ownership filter column is used to test that the prior period consolidation rate equals 0 (PPCON = 0). Moreover only the account total is selected so that the reclassification is not performed for the breakdown by group intercompany (INTERCO = I_NONE).

DIV_INCP: in case of incoming payers, this rule reclassifies the dividend elimination that the DIV rule triggers by default for all payers on flow F06 onto flow F01, whatever the scope status. The destination audit ID is therefore the same as with the DIV rule, namely DIV10. In order to select data only from incoming entities, the Ownership filter column is used to test that the prior period consolidation rate equals 0 (PPCON = 0).

4.3.3. Elimination of Investments

The internal investments are automatically eliminated against equity during the consolidation.

The starter kit supports the automatic calculation of non-controlling interests in the investments when the owner entity is not 100% owned by the group.

Investments in consolidated subsidiaries, joint ventures or associates are collected and detailed by owned entities, using the Interco dimension.

The automatic elimination of group investments is triggered by the INV Elimination and Adjustment Rule. It is posted on a dedicated audit ID, INV10- Elimination of investments.

Distinguishing the Impact on Flows by Operation Type

The case of purchase or disposal of investments is dealt with specifically by selecting F20 and F30 respectively and defining F00 as the destination flow. As a consequence, F01, F92 or F98 is impacted depending on whether the held entity enters the scope, remains in the scope or leaves the scope

For other flows the destination is identical to the source (F40, F50, F70, F15)

Processing rows are also defined on the opening flow F00 in order to calculate possible changes in the consolidation rates or financial interest rates (cf. 4.1.6 page 23).

Balanced Entries at Both the Owner Company and the Held Company

The elimination journal entry impacts both the owner and the held companies:

Owner company (parent): the investment values are eliminated against the elimination account A181OC (owner company) at the consolidation rate (PCON).


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Held company (subsidiary): the rule for elimination of investments triggers an entry on the group retained earnings against the elimination account A181HC (held company). In case there are indirect non-controlling interests in the owner company, the impact on the retained earnings is split between group and non-controlling interest, based on the group‟s share of the owner, and therefore calculated respectively with the POWN and PCON-POWN formula used in the AY_AY_E2 Method-based Multipliers.

Automatic Elimination of Investments

Owner Company (O)

(owned at 80% by the group)

A1810 Investment in subs., JV & Assoc. A1810C Elim of investments - Owner comp

Flow=F20 Flow=F20

Interco H 100 100 Interco H 100

Held Company (H)

(incoming, owned at 100% by O)

E1610 Retained earnings (Group)

Flow=F01

Interco O 80

A181HC Elim of investment - Held comp (shares)

Flow=F01

E2010 NCI - Reserves & Ret. earnings Interco O 100

Flow=F01

Interco O 20

Input amounts

Elimination of the H investment at O

Counterpart of the H investment elimination at H


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4.3.4. Goodwill Recognition

Goodwill values are declared centrally via a one-sided journal entry posted on an off-balance account at the held company.

Based on this information, an automatic journal entry impacts the goodwill (assets) against the equity. If needed, the impact on the equity is split between the group and non-controlling interests based on the group‟s share in the owner company.

It is possible to apply the full goodwill method.

In the event of a bargain purchase, the off-balance journal entry triggers an automatic posting of the gain to the P&L.

Goodwill Conversion

In accordance with IFRS, the goodwill is accounted for using the held company‟s currency. Due to this principle, the value of the goodwill may vary over time for subsidiaries reporting in a foreign currency. This variation of the goodwill‟s converted value, however, should never impact the retained earnings but the foreign currency translation reserve.

Using Off-Balance Accounts

Goodwill (or bargain purchase) is declared by a manual journal entry posted on one of the following accounts:

XA1300 - Declared bargain purchase analyzed by owner

XA1300NCI - Declared bargain purchase attributable to NCI

XA1310 - Declared Goodwill analyzed by owner (Gross)

XA1310NCI - Declared goodwill attributable to NCI, Gross

XA1312- Declared Goodwill analyzed by owner (Impairment)

XA1312NCI - Declared goodwill attributable to NCI, Impair.

This single-sided journal entry is posted on a dedicated audit ID, GW01-Disclosure of goodwill and bargain purchase – Man.

Owner and held company are identified as follows:

o The off-balance journal entry is posted in the account of the held company, identified by the Entity dimension

o The intercompany detail provided using the Interco dimension corresponds to the owner company

The journal entry must be booked in local currency, LC.

When applying the full goodwill method, a journal entry should be posted on one of the 3 accounts with the “NCI” suffix listed above in order to book the share of bargain purchase, gross goodwill, or goodwill impairment attributable to the non-controlling interests.

Automatic Journal Entries

Based on the information entered in the technical accounts, automatic journal entries are posted at the held company using the GW10 and FGW10 audit IDs. Two types of Elimination and adjustment Rules are triggered for one consolidation event:


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GW: Goodwill booking – Owner company‟s share

This is the common case for subsidiaries consolidated using the full or proportionate method. The goodwill is booked on the account A1310-Goodwill against the account E1610-Retained earnings. If there are non-controlling interests in the owner company, the impact on the equity is shared between group (account: E1610) and non-controlling interests (account: E2010).

Some of the processing rows handle the case of entities consolidated with the equity method. In that case, the goodwill is not posted to the account A1310-Goodwill, but to the account A1500-Investments accounted for using equity method.

The Method-based Multipliers used in the goodwill adjustment rules refer to the closing consolidation rates of the Interco company (I_PCON and I_POWN formula) which represents the owner company in this case, in accordance with the requirements.

FGW: Goodwill booking – Non-controlling interests (full goodwill method)

This automatic entry is triggered if you have declared goodwill in the XA1310NCI account with a breakdown by Interco (owner company). It impacts the goodwill (account: A1310) against the non-controlling interests (account: E2010).

The Method-based Multipliers used in the full goodwill adjustment rules simply apply factor 1 to the selected amount since the amount declared in the journal entry is fully attributable to the non-controlling interests in this case.

Goodwill Conversion

To comply with the requirement regarding goodwill conversion, the GWCTA and FGWCTA Elimination and Adjustment Rules book the currency translation adjustment by selecting the F80-Currency translation adjustment flow of the off-balance accounts XA1310, XA1310NCI, XA1312, and XA1312NCI. Note that the amounts stored on these accounts are recorded in the held company‟s currency, so the flow F80 is automatically posted by the conversion rules.

Two dedicated audit IDs, GW20-Currency translation adjust. on goodwill – Auto and FGW20 -Currency translation adjust. on NCI goodwill -Auto have been created for the purpose of handling goodwill conversion.

Bargain Purchase

If a business combination causes a bargain purchase, the dedicated account XA1300-Declared bargain purchase analyzed by owner must be used to declare the corresponding gain.

The automatic journal entry impacts the P&L on account P1640-Gain on bargain purchase or P3000-Share of profit (loss) of assoc. & JV in case the held company is consolidated using the equity method.

It is possible to check that the F01-Incoming units flow balances for this entry, by retrieving the A139CL-Clearing account-Bargain purchase account (flow F25 balances flow F01).


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Goodwill Recognition

Held Company (H) Owner entity O is owned at 80% by the group

(owned by O)

Held entity H is owned at less than 100% by the group:

the full goodwill method can therefore be applied

XA1310 Declared GW XA1310NCI Declared GW attrib. NCI

Flow = F01 Flow = F01

Interco O 100 Interco O 50

A1310 Goodwill E1610 Retained earnings

Flow = F01 Flow = F01

100 80

50

E2010 NCI - Reserves & Ret. Earnings

Flow = F01

20

50

Amounts from manual entries on the off-balance accounts

Automatic journal entry, including split group/NCI

Automatic journal entry, goodwill attributable to NCI

4.3.5. Consolidated Equity Calculation

The equity of consolidated companies are split between the group and non-controlling interests according to the following principle:

The accounts E1110-Issued capital and E1210-Share premium are transferred to the group retained earnings and retained earnings of non-controlling interests for any entity except the parent company of the group

For other equity accounts, the group share is maintained on the original account, and the non-controlling interest share is calculated on the related non-controlling interests account.

The relationship between source equity accounts and non-controlling interests equity accounts is summarized in the table below:


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Group equity account (selection) NCI equity account (destination)

E1110 Issued capital E2010 NCI - reserves and retained earnings

E1210 Share premium E2010 NCI - reserves and retained earnings

E1310 Treasury shares E2070 NCI - Treasury shares

E1510 Revaluation surplus, before tax

E2020 NCI - Revaluation surplus before tax

E1511 Income tax on revaluation surplus

E2021 NCI - Income tax on revaluation surplus

E1520 Actuarial gains and losses, before tax (suspense account)

E2030 NCI - Actuarial gains and losses, before tax (suspense acc)

E1521 Income tax on actuarial gains and losses (suspense acc.)

E2031 NCI - Income tax on actuarial gains and losses (suspense acc.)

E1540 Hedging reserve, before tax E2040 NCI - Hedging reserve, before tax

E1541 Income tax on hedging reserve E2041 NCI - Income tax on hedging reserve

E1550 Fair value reserve, before tax E2050 NCI - Fair value reserve, before tax

E1551 Income tax on fair value reserve E2051 NCI - Income tax on fair value reserve

E1560 Foreign currency translation reserve, before tax

E2060 NCI - Foreign currency translation reserve, before tax

E1561 Income tax on foreign currency translation reserve

E2061 NCI - Income tax on foreign currency translation reserve

E1570 Equity component of compound financial instruments

E2080 NCI - compound financ. instruments

E1610 Retained earnings E2010 NCI - reserves and retained earnings

Equity consolidation postings mentioned above are triggered by the following Eliminations and Adjustments rules:

CONS_EQ adjustment rule

o This rule selects both the issued capital and share premium accounts via the S_EQU-G01 TYPELIM account property. These accounts are cancelled out (see Destination “ALL” account) against the group retained earnings and non-controlling interests retained earnings, accounts E1610 and E2010 used as destination in the Destination group account and Destination minority account columns.

o For that purpose the S[x]1_99_E2 Method-based Multipliers are used here so that the original account is completely cancelled out (PCON formula) and the group retained earnings and non-controlling interests retained earnings populated with the group share (POWN) and non-controlling interests share (PCON-POWN) respectively.

o This entry is booked on the CONS10 audit ID.


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NCI_INPUTxx / NCI_ADJxx adjustment rules

o These eliminations and adjustments rules select equity accounts other than issued capital and share premium via the S_EQU-G02/3/4/9 TYPELIM property values. These property values are kept distinct in order to distinguish between equity accounts that are part of the Other Comprehensive Income (OCI) (see NCI_FVA, OCI for Incoming Entities below), retained earnings, and other equity account excluded from OCI.

o Here the non-controlling interests share is subtracted from the original account against the respective non-controlling interests account, by using the SA1_99_E3 Method-based Multiplier which applies the PCON-POWN formula - that is, the non-controlling interests share - both to the original account defined in the Destination “ALL” account column (default factor = -1) and to the Destination minority account column (default factor = +1).

o Each respective non-controlling interests account is dynamically populated depending on the source equity account by using the PROP() keyword applied to the ELIMACC property in the Destination minority account column. This is because each equity account has been associated with its respective non-controlling interests account via this account property.

o The NCI_INPUTxx and NCI_ADJxx are built on the same principle and include the same detail rows. They simply populate distinct destination audit IDs depending on the source audit ID, hence the audit ID restriction via the Source data source column in the automatic adjustment rule.

These entries apply to all consolidation methods except the holding (main company), that is not only to full and proportionate but also to the equity method (see below).

Equity Method

Equity values trigger an update of the investment value against the consolidated reserves. The net income of the period also updates the investment values against a dedicated account, P3000-Share of profit (loss) of assoc. & JV accounted for using EM, in the P&L.

Following the cancellation of all accounts for entities consolidated with the equity method by the MTH_EQUITY elimination and adjustment rule, the equity value equals 0 (see 3.3 - Consolidation Methods and Rates).

The purpose of the MTH_EQUITY22 Elimination and Adjustment rule is twofold:

Restore the converted value of equity accounts against the account A1500-Investments accounted for using equity method, therefore the MTH_EQUITY2 automatic adjustment rule selects all leaf-level accounts under the parent account E199T-Equity attributable to owners of parent.

Book the net result of the entity consolidated with the equity method in the P&L on the account P3000. This is done by selecting the flow F10 of the retained earnings account (TYPELIM = S_EQU-G09).


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The EA_99_E4 method-based multiplier applies the PCON formula to the Destination “ALL” account column in order both for the equity accounts to be restored and the P&L account to be booked at the entity‟s consolidation rate.

Since the value of the equity accounts is restored, the group equity and the calculation of the non-controlling interests for entities consolidated with the equity accounts can follow the general principle explained here above.

Equity of Incoming Units

For entities entering the consolidation scope, the incoming value of the Other Comprehensive Income components are reclassified in group and non-controlling interests retained earnings according to the financial interest rate.

The reclassification of OCI accounts is booked by impacting the F01 flow via a manual journal entry on the FVA11 audit ID for relevant entities on a 100% basis.

The NCI_FVA elimination and a adjustment rule books possible non-controlling interests on the MJE reclassification amount by subtracting the non-controlling interests amount calculated via the PCON-POWN formula of the SA1_99_E3 method-based multiplier. As a consequence this calculation principle of the non-controlling interests is consistent with the non-controlling interests calculation principle of the NCI_INPUTxx and NCI_ADJxx adjustment rules, and both non-controlling interests calculations are symmetrical, as illustrated below:

Reclassification of OCI for Incoming Entities

Input data Ent 1

E1510 -

Revaluation

surplus, before

tax

F01 I_NONE INPUT 100

AJE : NCI on Input data Ent 1 E1510 F01 I_NONE NCI_INPUT -20

MJE: OCI reclassification Ent 1 E1510 F01 I_NONE FVA11 -100

AJE : NCI on OCI

reclassification via MJEEnt1 E1510 F01 I_NONE NCI_INPUT 20

Comment ENTITY ACCOUNT FLOW AmountINTERCO AUDIT ID …

In order to automate the reclassification entry in the starter kit, it would be necessary to identify not only the entities which are entering the consolidation scope, but also the entities that have entered the consolidation scope in the past on a prior time period. This is notably because the automatic entry must be booked on the opening position to calculate the effect of scope changes consistently as explained in § 4.1.6, Leveraging the Built-in Scope Change Calculation.

However, there is no easy way to dynamically keep track of an entity which enters the consolidation scope in a prior time period. As a consequence this reclassification is booked manually.


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4.3.6. Currency Translation Adjustment (CTA)

Equity and Net Income

The currency translation differences resulting from the currency conversion of equity accounts must be adjusted to show group interests and non-controlling interests.

Investments

The currency translation difference on investments is transferred to the conversion reserves of the held company.

CTA on Equity

Following the conversion process, the first part of the currency translation adjustments (CTA) related to equity accounts has been processed since conversion reserves have been recorded on a 100% basis on the original input and local level adjustment audit IDs (see A. 3.1 - Foreign Currency Conversion).

Therefore the second part of the CTA process is triggered by the NCI-prefixed elimination and adjustments rules which are more generally intended to calculate non-controlling interests for equity accounts: NCI_INPUT, NCI_INPUT10, NCI_ADJ90…. (see. A. 4.3.5 - Consolidated Equity Calculation)

As with other equity accounts, the E1560 is selected dynamically by these rules via the TYPELIM account property (S_EQU-G03 value). However only the F00-Opening flow and the F80-Foreign exchange gain/loss flow are relevant for this account.

Source accounts Destination Group accounts Non-controlling interest account

E1560: Foreign currency translation reserve, before tax (TYPELIM = S_EQU-G03)

Same account: E1560 NCI are subtracted from this account

E2060: NCI - Foreign currency translation res. before tax

CTA on Investments

The conversion difference of the current period between each movement on investment accounts and the closing position is stored on flow F80. Consequently this amount is eliminated against the conversion reserves at the held company by the INVCTA elimination and adjustment rules. The entry is balanced by using the same clearing accounts as for the investment elimination. In this rule, group conversion reserves and non-controlling interests conversion reserves are defined as the destination group accounts and destination minority accounts.

According to the built-in scope variation calculation principle explained in § 4.1.6, it is necessary to be able to select the cumulative CTA amount at opening to record the adjustment on the opening flow and so to prevent any wrong scope change calculations by the consolidation engine. Consequently, as explained in § 3.1, the cumulative amount of currency differences between historical rate and closing rates over time periods is stored in a dedicated off-balance account (also referred to as a “technical” account): YA11810C.

To complement the investment elimination entry, which impacts the consolidation reserves, these currency differences are reclassified from consolidation reserves to conversion reserves at opening. This entry is also recorded by the INVCTA elimination and adjustment rule on the INV20 audit ID.


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Source accounts

Destination Group accounts

Non-controlling interests account

Current period CTA: A1810: Investments in subsidiaries, JV and associates Cumulated CTA at opening YA1810C: Technical - CTA on Investments

E1560: Foreign currency translation reserve, before tax ( A1810 Investments A181OC Investments clearing account

E2060: NCI - Foreign currency translation res. before tax

The investment currency difference is adjusted on the owned company (“swap entity / interco” option), using the consolidation rates of the owner company defined in the AY_AY_E2 method-based multiplier.

CTA on Goodwill

The principle is identical to the one explained above for investments and is applied by using distinct configuration objects:

Technical accounts: YA13xxC and YA13xxCNCI

Elimination and adjustment rule: GWCTA and FGWCTA

Audit ID: GW20 and FGW20

5. Periodic Figures Management

Year to date data is collected and processed in the starter kit. The retrieval of periodic figures is possible. However, periodic figures are not translated following a periodic conversion. They result from the difference between the “year to date” amounts of the current period and the prior period.

Periodic amounts are shown in the Income Statement and the Statement of Cash Flows.

The models are defined with the “Year To Date” data entry mode.

The built-in MEASURE amount type is initialized in the Income Statement and the Statement of Cash Flows to distinguish between periodic and year to date amounts in columns.

The Statement of Financial Position (BS) is always defined with the YTD “year to date” MEASURE.


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6. Financial Statements for Statutory Publication

6.1. Calculation of Financial Statement Items

The expression “financial statements for statutory publication” refers to the 3 following financial statements whose items are calculated from Balance Sheet movements and Income Statement items:

Statement of Cash Flows (SCF)

Statement of Changes in Equity (SCE)

Statement of (Other) Comprehensive Income (SCI)

The Statement of Cash Flows, which is retrieved according to the indirect method, derives from the Balance Sheet flows and the Income Statement accounts. It discloses cash effects from operating, investing and financing activities as required by the IAS 7.

The Statement of Changes in Equity discloses an analysis of the variation of the total equity (group and non-controlling interests) over the current period.

The Statement of Other Comprehensive Income takes its starting point in the net income for the period and then provides a detailed view of the other components.

The total comprehensive income is split between group and non-controlling interests.

Note:

According to IAS 1 revised, the comprehensive income items can also be disclosed in the Statement of Comprehensive Income, which gives detail on the main Income Statement items and a summary of the other components of comprehensive income. However, this report has not been created in the starter kit.

Considering the large volume of data required to produce these 3 statements, the following Excel workbooks are defined:

SCF.XLSM: Statement of Cash Flows. This workbook includes all accounts and flows necessary to compute the cash flow items, without breakdown by entity.

SCI & SCE.XLSM for both the Statement of Other Comprehensive Income and the Statement of Changes in Equity. This workbook includes the required accounts and flows, and the breakdown by entity, as needed for the statement of Other Comprehensive Income.

Financial statement items are calculated with standard Excel formulas and therefore, are not stored as application data. The first set of these formulas essentially aim at distributing figures of all required indicators into financial statement items according to a mapping table. The second set of formulas is meant to actually produce financial statements by aggregating the data distributed in all items and present it in reports.

The Excel workbooks are structured with the following tabs:

Data: retrieves all indicators from the consolidation that contribute to financial statement items. Figures are obtained with a standard EPM report that expands indicators in rows and periods in columns. For the Statement of Changes in Equity and the Statement of Other comprehensive Income, the entities are also expanded in the columns. The consolidation method, stored in the Ownership model is also retrieved thanks to the EPMRetrieveData formula (this formula requires the connection name to be input in cell B2).


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Account: lists all members of the Account dimension with their properties. They are used as the source of the mapping between indicators and financial statement items. This tab is also populated by an EPM report that expands all Account dimension members in rows. Member properties are retrieved by EPMMemberProperty functions.

Item: contains all financial statement items used for the production of the Statement of Cash Flows, the Statement of Changes in Equity and the Statement of Other Comprehensive Income. They are defined within a hierarchy named Parent. For instance, the SCF account hierarchy notably includes the following nodes: Net Cash Flows from Operating activities, Net Cash Flows from Investing activities and Net Cash Flows from Financing activities. None of these items are part of any dimension declared in the consolidation models: they all must be created and maintained manually in the spreadsheet.

Mapping: specifies cross-references between source accounts and flows on the one hand and financial statement items on the other hand. Like financial statement items, these cross-references are not either part of any dimension declared in the consolidation model: they also must be created and maintained manually in the spreadsheet. A more detailed description of the Mapping worksheet is provided hereafter.

Matrix: contains only formulas. Some read into the Mapping spreadsheet to find which elementary pair of {account x flow} to assign with appropriate financial statement items. Other formulas fetch figures from the Data worksheet and assign them with a destination item on the basis of the related {account x flow} pair. A more detailed description of this worksheet is provided hereafter.

SCI, SCF, SCE: contains financial statements, built with conditional sum formulas that aggregate data calculated on financial statement items in the Matrix worksheet.

In the Mapping worksheet, each cross reference, also called a mapping, has the following properties:

Method: for specifying how to select source accounts. Possible values are Class or Mapping, to indicate which account property is referred to in the mapping.

Value: for specifying which value of the previously chosen property is used to select source accounts. The specified value must exist in the set of values of the property chosen to select source accounts.

Flow: for selecting source flows.

Item: for specifying the destination financial statement item depending on the source accounts and the source flow. The item must exist in the set of items declared in the Item worksheet.

Sign: for specifying if the account / flow combination must be positively or negatively copied to the item. Values must be 1 or -1.

Rows: formulas calculating the cumulative number of rows required to expand all accounts for the specified selection method and value. These formulas should not be changed because their results are used in the Matrix worksheet.

Mappings can be added or removed by inserting or deleting rows within the existing range.


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The Matrix worksheet contains only formulas that recalculate elementary pairs of {account, flow} and determine to which related financial statement items their figures from the Data worksheet should be aggregated.

To make sure that all financial statement items are correctly calculated, a sufficient number of formulas must exist in the range. For instance, if a new mapping is created in the Mapping worksheet, additional rows within this range with appropriate formulas will have to be created, using a standard copy/paste of cells.

To help maintain this range, a control formula has been created in the first cell of its rightmost column. This formula shows a message indicating if the matrix has enough rows. If not, an error message is displayed that calculates how many additional rows are needed. These rows must be inserted and then formulas from an existing row can be copied and pasted to new rows.

The Mapping and Matrix worksheets are at the heart of financial statement items calculation in the Starter Kit. Therefore, they deserve particular attention if changes should be made to their content. In particular, it is strongly recommended not to make any changes to the way these formulas are designed, in order to preserve the correct calculation of all financial statement items.

The control formula message is displayed in all three financial statements: if an error is detected in the Matrix worksheet, all report titles are replaced by the error message.

6.2. Audit of Financial Statement Items

It is possible to understand how each financial statement item has been calculated. The end user can drill down from one item of one of the financial statements for statutory publication (SCF, SCE, or SCI) through to the respective breakdown by original account and original flow.

This audit functionality of the statements is implemented via a VBA macro, named FilterMatrix which shows up the Matrix worksheet with rows filtered according to the financial statement item currently selected.

Thus, during operation, the end user can do the following:

Right-click on one line of the Statement of Cash Flows, the Statement of Changes in Equity or the Statement of Other Comprehensive Income.

Execute the Audit command at the end of the shortcut menu. The breakdown by source account and flow shows up in the Matrix worksheet.


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7. Data Consistency Controls

To secure the correctness of consolidated statements, including the Statement of Cash Flows and the Statement of Changes in Equity, the quality of reported data is checked at local level (entity by entity) and at central level for all entities.

The following groups of controls are performed:

Balance Sheet: balance of the opening and closing position, consistency of the gross value / amortization and impairment, net income in equity versus IS

Flows: authorized flows, allowance and write-back versus IS, balancing flows

Elimination accounts (central-level control)

7.1. Local Level Controls

Four types of controls are provided in the starter kit.

Controls for balance analysis (named Axxxx), such as balance sheet balance and gross value versus depreciation. These controls check both opening balance and closing balance.

The control of the balance sheet balance is broken down by Audit ID to ensure the consistency of each input level.

Controls for flow analysis (named Bxxxx). For each account for which a flow analysis is required, these controls check that the Net variation flow (F15) is equal to zero.

Some controls also check that the total value of some specific flows is balanced (“F50-Transfer”, “F09-Change in accounting policies”, “F70-Change in the restructuring”).

These controls are broken down by Audit ID to ensure the consistency of each input level.

Controls for interco analysis (named Cxxxx, Dxxxx, Exxxx). Some of these controls check the gross value versus the depreciation by partner, for both the opening balance and the closing balance. For each interco account for which a flow analysis is required, other controls check that the Net variation flow (F15) is equal to zero, by partner. Lastly for all interco accounts (B/S and P&L), other controls check that the sum of interco amounts (ALL_INTERCO) is lower that the total amount (I_NONE).

Lastly the T_00 control checks that for each B/S account, the closing balance (flow=F99) equals the sum of opening balance and the movements (calculated in the END parent member). This control is broken down by account and audit ID.

This control was designed for the following purpose: the starter kit calculations ensure that the F99 flow equals the END flow. However, when importing a file, the user can still deactivate the default logic which triggers the calculation of the Net Variation flow (F15): this would result in a mismatch of the F99 flow and the END flow.

All these controls are assigned the “Blocking” type. Therefore the control status is checked when the work status is changed in the Consolidation Monitor.

These controls are defined using the standard Controls rules. Controls are executed using the Controls Monitor.


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7.2. Central Level Controls

The validation of data at central level is performed via control reports located in the CONTROL REPORTS folder available in the CONSOLIDATION model.

Data Consistency Dashboard.xlsx

The rows of this report allow the user to check the following for the aggregated value of all group entities:

the Balance Sheet is balanced for all flows defined as flows to be balanced via the BALANCED property (set to Y): Opening, Closing, Incoming entities, Transfer…

the reported closing balance (F99) is consistent with the calculated closing balance (parent member END) for assets and liabilities.

the net income in the equity (F10-Net profit/loss for the period) is consistent with the net income/loss calculated from the income statement (P999T).

both A181HC and A181OC investment elimination accounts compensate, the first one being the counterpart of the second one (sum = 0).

Lastly the bottom part of this report focuses on reciprocal intercompany clearing accounts (i.e. intercompany elimination accounts) by highlighting intercompany mismatches by account category: if one clearing account does not equal 0 for the sum of all entities, different amounts were eliminated for each entity and so the intercompany input data does not match. Clearing accounts are dynamically selected using the ISINTERCO property (value =“E”).

These different sections are defined using different reports that share the same page axis and rows axis.

The control results (“OK” flag, or difference amount) is defined using an Excel formula inserted in specific local members defined in each report.

Opening balance.xlsx

This report checks that the Balance Sheet opening balance equals the closing balance of the previous year for each Balance Sheet account. It is configured dynamically by defining hierarchy-based selection that returns all members of assets, liabilities and equity accounts.

The columns are defined by two separates reports (sharing the page axis and the row axis) with a dynamic selection of the previous year using the offset function in the member selector.

The difference between both columns calculated using local members.

FLBL by AuditID.xlsx

This report checks the following by AuditID:

o assets equal the sum of liabilities and equity at opening and closing, o net income in the equity equals the net income/loss calculated from the

income statement, o flows defined as to be balanced actually balance

For each of these controls, AuditID are broken down in rows, and local members display the control results.


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FLBL by Entity.xlsx

This report is similar to “FLBL by AuditID.xlsx, but it shows a breakdown by entity in rows.

8. XBRL Publishing

The starter kit allows the central user to generate XBRL instances from the consolidated data produced with the starter kit.

An IFRS-based Discoverable Taxonomy Set (DTS) has been created. The corresponding XML files are embedded in the tagging file (see below) and thus delivered with the starter kit. This DTS mainly includes IFRS taxonomy concepts and it is based on the IFRS taxonomy presentation and calculations. It can be modified to reflect the customization performed in the starter kit and the specificity of your application compared to IFRS. In this respect, a few extension concepts have been created for the Statement of Comprehensive Income.

The starter kit also includes a specific Excel tagging workbook IFRS2010-BPC-FORM-20F.xls in which the starter kit‟s indicators (account and flow combinations) have been pre-mapped with items from the IFRS-based DTS. This file is located in the XBRL reports folder of the CONSOLIDATION model.

This workbook includes the following worksheets, the cells of which have been tagged to the DTS items by using the Report Builder Excel Add-In of the SAP® BusinessObjects™ XBRL Publishing solution by UBmatrix:

statement of financial position and income statement: the tagged cells of these worksheets are initialized with the EPMRetrieveData function of the SAP Business Objects EPM Excel client because the related data is stored and dimensionally identified in the data base;

statement of cash flows, statement of comprehensive income and statement of changes in equity: the tagged cells have been linked via external formula to the 13 SCF.xlsm workbook or the 14 SCI & SCE.xlsm workbook because the related data is computed in these files.

Links to the 13 SCF.xlsm file and the 14 SCI & SCE.xlsm file

Formulas referencing the relative path to the 13 SCF.xlsm workbook and the 14 SCI & SCE.xlsm workbook have been used in the IFRS2010-BPC-FORM-20F.xls Excel mapping workbook. For these formulas to work properly, both reports must be located in the same directory. This implies making a copy of these 3 files in the same local directory before creating the XBRL instance. More detailed instructions are available in the Instructions tab of the mapping report.

It is necessary to install the SAP® BusinessObjects™ XBRL Publishing by UBmatrix software to be able to maintain the mapping between the starter kit chart of accounts and the IFRS taxonomy items, then validate and generate XBRL instance documents.


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9. Working Languages

The starter kit handles English as unique language.

10. Security and business workflows

10.1. Security by dimension

User can only enter data on their own entity. The security allows differentiating data entry and consolidation manager profiles.

Secured dimensions are the following:

Consolidation model: “Entity”, “AuditID”, “Consoscope”

Ownership model: “Entity”

Rates model: “RateEntity”

In the three models, the dimensions that stand for “entity” drive the dimensional security. AuditId and Consoscope have been added for the “Entry Level” data access profile which required additional dimensions for a more restricted access.

10.2. User groups

Typical user roles involved in the consolidation reporting process are defined in the starter kit. Affecting a user to a role sets all his/her rights automatically in terms of accessing product features and data.

In addition to the built-in „Admin‟ team, 3 teams that reflect business roles have been defined in the starter kit:

Consolidation managers team

Data entry users team

Report viewers team

Depending on the team to which a user is affected, an entire security configuration applies automatically (see 9.Security settings by team of users on page 55)

Access to company templates in the Excel Client

In the Task profiles, the task called “ManageTemplate” has been removed from all profiles, except the Admin. As a consequence, the action Open Server Root Folder and Open Server Input Form Folder does not appear in the menu of the Excel client. The user is therefore guided to the appropriate folders (SCHEDULELIBRARY and REPORTLIBRARY).


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10.3. Workflow management

A user managing a group of reporting entities can check if the data entry related tasks have been performed and assign the appropriate level of approbation status: started, submitted, rejected, and approved.

Even though users that are registered as Owner in the Entity dimension are likely to be changed after the starter kit is restored in a new environment, the way they are hierarchically organized illustrates how Work Status and BPF workflows should be designed with the starter kit.

This recommended configuration assigns the same user to both the roles of Work Status manager (Owner of a parent entity (1)) and the role of BPF approver (reviewer of a child entity (2)).

ID DESCRIPTION OWNER REVIEWER

ALL_ENTITY Total All Entities CONSOMNGR

EZONE Euro Zone CONSOMNGR (1) NA

S000 Holding – Germany 1 LOCALUSER CONSOMNGR (2)

S001 Subsidiary – United Kingdom LOCALUSER CONSOMNGR

CONSOMNGR belongs to the CONSOLIDATION MNGR Team LOCAL USER belongs to the DATA ENTRY USERS team

(see 9.Security settings by team of users on page 55)

Mirroring roles (workstatus manager=BPF approver)

This mirroring structure should be replicated with actual users as part of the implementation project to keep BPFs and Workflows settings both consistent and quickly usable. Indeed, the starter kit and especially the BPFs are not configured for distinct reviewers/approvers. (e.g. “CONSOMNGR” is reviewer of “S000” but the Work Status manager of “S000” is “LOCALUSER”).

In terms of Work status, four levels have been defined. By default, the data is always set to the “Started” status. Once the data is entered and controlled, both the owner and the manager are allowed to change the work status to “Submitted”. From this point on, the manager only can change data using journals or input forms. When the status is set to “Approved”, only the manager can set the work status back to “Rejected” or reset it to “Started” if necessary. As long as the status is “Approved”, no data can be modified using input forms, but Journals and Data Manager are still possible for the Manager.

For all work status, creation or modification of comments and documents is possible.


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Work state Data Manager Journals

Manual entry Comments Documents

Controlled By

Started All All Owner All All Both

Submitted Manager Manager Manager

All All Both

Rejected Owner Owner Owner All All Both

Approved Manager Manager Locked All All Manager


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B. Configuration Overview

1. Models

Model Name Use

Reporting Models

CONSOLIDATION Reference Financial data

Non Reporting models

OWNERSHIP Consolidation Scopes: methods and consolidation rates by Entity

RATES Currency Translation Rates

2. Dimensions – Consolidation model

Dimension Type Use

Category C-Category Reporting type / cycle: Actual, Budget, etc.

Time T-Time Time period

Entity E-Entity Reporting entity / (Legal/Management unit)

Account A-Account Financial and Statistical accounts

Flow S-Subtable Positions (Opening/Closing) and detail of movements

AuditId D-Audit Business origin of the data

Interco I-Interco Transaction Partner or held company in the group

ConsoScope G-Group Consolidation Scope

Currency R-Rep. Currency Consolidation Currency


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3. Configuration Specific Dimension Properties

Only the starter kit specific properties and built-in properties used in a particular way in the starter kit are listed below. For clarification regarding the other regular properties delivered in Apshell, please refer to the Planning and Consolidation documentation.

Dimension Property Specific use

Account ACCTYPE This built in BPC property is also used by the cash flow mapping.

CFS Used for the Cash Flow accounts calculation processing (source account selection)

FLOWAN Used in the input forms to highlight allowed flows

GROUP Used in the script Logics to distinguish between Balance Sheet accounts (BSA), Income Statement accounts (ISA).

UPROFILE Used to filter consolidation accounts (2CONSO) in the input forms so that only local level general ledger accounts (1GL) are initialized.

ISINTERCO Used in input forms to display the “IC” indicator as appropriate.

Flow FLOW_DOC Used in the member selector in the input forms to select relevant flows.

BALANCED Used to identify flows for which the total of assets and liabilities and equity must be balanced (see notably the Dashboard control report)

4. Default Script Logic Calculations

The real time calculations triggered by the Default.lgf script logic as and when data is input in forms or imported are the following:

1. Calculation of the income of the period in the balance sheet (E1610 / F10)

2. Calculation of the net variation flow (F15) as the difference between closing and the sum of other Balance Sheet flows

The detailed script logic is available in appendix (see A.1 - Default.lgf Script Logic)

5. Manual Journal Entry script logic: Journal.lgf

The real time calculations triggered by the Journal.lgf script logic when a manual journal entry is booked are the following:

1. Impact from P&L to BS Equity (F10)

2. Carry-over of flows to the closing balance (F99)

The detailed script logic is available in appendix (see 4- Journal.lgf Script Logic Default.lgf Script Logic)


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6. Eliminations and Adjustment Rules

The list of the elimination and adjustment rules of the starter kit and their purpose is presented in the table below:

Rule ID Purpose

CONS_EQ Cancelling issued capital and share premium for subsidiaries

CTA_I_NONE Balancing F80 against net variation cash

DIV Elimination of dividends

DIVCTA CTA - Elimination of dividends

DIV_INCP Dividends - Reclassification for incoming payers

FGW Additional rules for full goodwill recognition

FGWCTA CTA - Full goodwill recognition

FVA10 Dividends - Reclassification to F01 for incoming entities

GW Goodwill recognition

GWCTA CTA - Goodwill recognition

ICELIM Elimination of reciprocal intercompany operations

INV Elimination of investments

INVCTA CTA - Elimination of investments

MTH_EQUITY Cancelling accounts for equity method entities

MTH_EQUITY2 Restoring equity accounts for equity method companies

MTH_EQ_L Managing equity method for outgoing and merged entities during the period

MTH_PROP Proportionating accounts for proportionate entities

MTH_PROP_L Managing proportionate method for outgoing and merged entities during the period

NCI_ADJ90 NCI - Manual journal entries entered with ADJ91

NCI_CTA10 NCI - CTA01 - Manual journal entries on conversion reserves

NCI_FVA NCI - Manual journal entries for OCI reclassification for incoming entities

NCI_INPUT NCI - INPUT

NCI_INPUT10 NCI - INPUT11

NCI_INPUT90 NCI - Manual journal entries entered with INPUT91

NCI_INV30 NCI – Manual journal entries entered with INV31

NCI_INV30_2 NCI – Manual journal entries entered with INV32

SCO_INC Reclassifying F00 to F01 for incoming entities

SCO_OUT Managing leaving companies

SCO_OUT2 Reclassifying F98 to F70 for merged entities

The configuration of the elimination and adjustment rules headers is available in appendix (7 - Elimination and adjustment Rules).


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7. Balance Carry Forward

As described (see § 1.3.1 page 6 and § 4.1.1 page 20), the carry forward of the opening balances is triggered by different processes depending on the audit ID type:

At local level and for manual journal entries, the carry forward is triggered by the CopyOpening Data management package

For automatic entries, the carry forward is triggered by the Consolidation package.

8. Input forms and Reports Configuration Principles

8.1. General Principles

Input forms and Reports are defined by using the EPM Office Add-in Excel. No macro programming is used, except for the Statement of Cash Flows, the Statement of Changes in Equity and the Statement of Comprehensive Income for which the configuration principle is dramatically different (see § 0 on page 40).

8.1.1. List of Input Forms and Reports

Input form name Use

Main files:

11 Balance.xlsx

21 Non-current non-financial assets.xlsx

22 Financial Assets.xlsx

23 Other Assets.xlsx

24 Net Equity.xlsx

25 Net Equity EM.xlsx

26 Liabilities.xlt

27 Specific Operations.xlsx

31 IC Balance Sheet.xlsx

32 IC Profit and Loss.xlsx

33 IC Control Balance.xlsx

These input forms allow the end user to enter BS data (opening and closing balances and details by flow) and IS data.

Intercompany input forms allow the user to input details by interco for one account selected in the EPM context.


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Report name Content

Financial Statements:

11 BS.xlsx

12 IS.xlsx

13 SCF.xlsm

14 SCI & SCE.xlsm

Analysis Reports:

21 BS by Flow.xlsx

22 BS by Flow and AuditID.xlsx

23 BS by AuditID.xlsx

24 BS by Entity.xlsx

25 IS by AuditID.xlsx

26 IS by Entity.xlsx

Accounting Reports:

31 BKD by Entity.xlsx

32 BKD by Partner.xlsx

Control Reports:

41 Data Consistency Dashboard.xlsx

42 FLBL by AuditID.xlsx

42 FLBL by Entity.xlsx

44 Opening Balances.xlsx

XBRL:

IFRS2010-BPC-FORM-20F.XLS

Balance Sheet (standard and short)

Income Statement (standard and short)

Statement of Cash Flows

Statement of Comprehensive Income and Statement of Changes in Equity

These reports provide additional details of the B/S and I/S by Flow, Audit ID, Entity.

These reports provide the details of an account balance by entity or partner. The account is selected in the EPM Context.

These reports provide additional controls, such as clearing accounts, flows that should be balanced, controls by AuditID...

This report retrieves and map the necessary data for XBRL publishing.

8.1.2. Members selection

Dimension members are selected in the input forms and reports using the Member Selector features. The selections are defined using parent members, base members, properties, or a combination of these. To ease the enhancement of the Starter Kit configuration, selections are “dynamic” so that new members will be automatically inserted in the forms and reports provided that these members are assigned the correct parent member and properties.

The tables below list the properties used for the members selection in the Input forms and Reports.


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Input forms

Dimensions Property Examples

Account UPROFILE 1GL, 2CONSO

FLOWAN F25 F30 F35 F00 F99 F09 F50 F70

UPROFILE 1GL, 2CONSO

Flow FLOW_DOC OPE, DEP, PL,…

ISINTERCO Y

Reports

Dimensions Property Examples

Account STYLE H, NH,T3…

ISINTERCO E,S,Y

Flow FLOW_DOC OPE, DEP,PL,…

BALANCED Y

DIMLIST_DEST D_RETEARN_M…

For period comparison, the member selection for the TIME dimension is defined using the Offset function.

8.1.3. Formatting

Formatting of the Input forms and Reports are defined in Formatting Sheets.

For Input Forms dedicated to the flow analysis, Excel conditional formatting is used in the formatting sheet to stripe the cells which correspond to an incorrect Account / Flow combination. This is defined as follow:

In the report, a local member is defined, with the EPMMemberProperty, to fetch the FLOWAN property which contains the list of possible flows for each account. This property is then used in the conditional formatting formula. However, the value of the FLOWAN property is not visible, because of a specific format applied to this local member.

In the Formatting Sheet, an Excel conditional formatting is defined for the “base level” row. This conditional formatting is based on a formula which checks that the flow ID in the column header is included in the FLOWAN property value of the account in the row. When this is not true, the cell is striped.

This conditional formatting works if the following conditions are met:

- The flow ID must be 3 digit long (example: F50)

- The cell named “col_flowan” must contain the column number with the FLOWAN property (column 4 in the delivered input forms)


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- The cell named “row_flow” must contain the row number of the flow (row 9 in the delivered input forms)

Depending on the formatting requirements of the Input form and Reports, several Formatting Sheets have been defined. For instance, the BS.xlsx file contains 2 reports: “Statement of Financial Position”, and “Stat. of Fin. Position – Short”. Each report is assigned to a different Formatting Sheet, respectively “Format STANDARD”, and “Format BY STYLE”.

Empty columns or empty rows are sometimes inserted to make the Input form or Report easier to read. This is done by inserting local members without formulas.

8.2. Specific Settings

INTERCOMPANY Input Form To enable the insertion of new interco members by the user, the EPM function “Activate Member Recognition” is selected in the Sheet Options.

FLOW ANALYSIS Input Forms

When the flow F15 – Net Variation is not enabled for the accounts (i.e. this flow is used as a control), it is renamed as “Control” using the Member Names in the report definition.

Statement of Cash Flow, Statement of Changes in Equity and Statement of Comprehensive Income: these reports contain a VBA macro which enables a special Drill Down from the report to the corresponding detail lines in the Matrix worksheet.

9. Security settings by team of users

Topic Consolidation

Managers Local users Report viewers ADMINS

Task Profiles

“Consolidation Manager”

Key settings: - Extended rights on

“Journals” - Rights to manage

environments, models, and dimensions.

- No rights to manage template

- Access to Reports and Input Forms allowed

“Data Entry” Key settings: - No “Admin” rights - No rights on

“Journals” - No rights to use

template - Access to Reports

and Input Forms allowed

“Viewers” Key settings: - Can run

documents using EPM client and Web reports. (Use of BPF can be added in the security settings)

“FULL_TASK”

Key settings: - All tasks allowed

(latest tasks created in release 10.0 should be added manually in this profile)


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Data access profiles

“ENTRY LEVEL”

READ & WRITE Consolidation model - ENTITY [ALL] - AUDITID: [ALL_INPUT] - CONSOSCOPE:

[G_NONE] READ ONLY Consolidation model - CONSOSCOPE: all

members Ownership model - ENTITY [ALL]

Rates model - RATEENTITY [ALL]

“FULL_MEMBER”

READ & WRITE Consolidation model - ENTITY [ALL] - AUDITID [ALL] - CONSOSCOPE[ALL] Ownership model - ENTITY [ALL] Rates model - RATEENTITY[ALL]


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C. Appendix

1. Default.lgf Script Logic

// The DEFAULT.LGF script includes calculations run when data is entered / imported into the current application.

// WARNING!: for performance reasons, mind the number of COMMIT sections in this script.

//----------------------------------------------------------------------------------------------------------------------------- ---

// Defining the list of audit IDs to which the subsequent calculations should apply: AUDITID_LIST

// In this case: all input audit IDs

//----------------------------------------------------------------------------------------------------------------------------- ---

*XDIM_MEMBERSET MEASURES=YTD *SELECT (%AUDITID_LIST%,"[ID]",AUDITID,"[DATASRC_TYPE]='I'")

*XDIM_MEMBERSET AUDITID=%AUDITID_LIST%

//----------------------------------------------------------------------------------------------------------------------------- ---

// Calculating E1610 - F10: Net income of the period in the balance sheet

//----------------------------------------------------------------------------------------------------------------------------- ---

// Information: [XDIM_MEMBERSET FLOW=<xx>] is mandatory in the default logic

*XDIM_MEMBERSET FLOW=PL99,F10

// F10 must be included in order to enable difference calculation

*XDIM_MEMBERSET INTERCO=I_NONE *XDIM_MEMBERSET CONSOSCOPE=G_NONE *XDIM_MEMBERSET ACCOUNT<>E1610

// Excludes flow F10 and account E1610 from the source data region

*WHEN ACCOUNT.ACCTYPE *IS "INC" *REC(FACTOR=1,ACCOUNT="E1610",FLOW="F10") *ELSE *WHEN ACCOUNT.ACCTYPE *IS "EXP" *REC(FACTOR=-1,ACCOUNT="E1610",FLOW="F10") *ENDWHEN *WHEN ACCOUNT *IS "E2010"


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*REC(FACTOR=-1,ACCOUNT="E1610",FLOW="F10") *ELSE *ENDWHEN *ENDWHEN *COMMIT

//----------------------------------------------------------------------------------------------------------------------------- ---

// Calculating F15 - net variation as the difference between closing and the sum of other balance sheet flows

//----------------------------------------------------------------------------------------------------------------------------- ---

// Information: [XDIM_MEMBERSET FLOW=<all>] is mandatory in the default logic

*XDIM_MEMBERSET MEASURES=YTD *XDIM_MEMBERSET ACCOUNT = <all> *XDIM_MEMBERSET FLOW=<all> *XDIM_MEMBERSET AUDITID=%AUDITID_LIST% *WHEN ACCOUNT.GROUP

*IS "BSA" *WHEN ACCOUNT.ACCTYPE *IS "AST", "LEQ" *WHEN FLOW *IS "F99" *REC(FACTOR=1,FLOW="F15") *ELSE *WHEN FLOW.PARENTH1 *IS "END" *WHEN FLOW *IS "F15" // nothing *ELSE *REC(FACTOR=-1,FLOW="F15") *ENDWHEN *ENDWHEN *ENDWHEN

*ENDWHEN *ENDWHEN *COMMIT


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2. Input form - Example of F15-Net Variation

Control

3. Example of FLOWAN Property Values

ID DESCRIPTION FLOWAN

TBS Balance Sheet

A999T Total assets

A199T Non current assets

A119T Property, plant and equipment

A1110 Lands and buildings F20 F30 F55 F00 F99 F09 F50 F70

A1111 Lands and buildings, Dep. F25 F30 F55 F00 F99 F09 F50 F70

A1112 Lands and buildings, Impair. F25 F30 F35 F00 F99 F09 F50 F70

A1120 Tangible exploration and evaluation assets F20 F30 F55 F00 F99 F09 F50 F70

A1121 Tangible exploration and evaluation assets, Dep. F25 F30 F55 F00 F99 F09 F50 F70

A1122 Tang. exploration and evaluation assets, Impair. F25 F30 F35 F00 F99 F09 F50 F70

A1130 Fixtures and fittings F20 F30 F55 F00 F99 F09 F50 F70

A1131 Fixtures and fittings, Dep. F25 F30 F55 F00 F99 F09 F50 F70

Note: In FLOWAN property values, the flows that are discriminating for the account come first (orange) and common flows that are generally shared between all the accounts of a group come after (green).


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4. Journal.lgf Script Logic

// Measures have to be specified *XDIM_MEMBERSET MEASURES=YTD //-------Impact from P&L to BS Equity-------------------- *XDIM_MEMBERSET FLOW=<ALL> *XDIM_MEMBERSET ACCOUNT=<ALL> *WHEN ACCOUNT.ACCTYPE *IS "INC" *REC(FACTOR=1,ACCOUNT="E1610",FLOW="F10") *REC(FACTOR=1,ACCOUNT="E1610",FLOW="F99") *ELSE *WHEN ACCOUNT.ACCTYPE *IS "EXP" *REC(FACTOR=-1,ACCOUNT="E1610",FLOW="F10") *REC(FACTOR=-1,ACCOUNT="E1610",FLOW="F99") *ENDWHEN *ENDWHEN *COMMIT //-------Carry over on closing balance-------------------- *XDIM_MEMBERSET FLOW=<ALL> *XDIM_MEMBERSET ACCOUNT=<ALL> //This instruction is necessary to force all flows to be included in the execution zone. //This is because, by default, only FLOW members used in the Manual Journal Entry are selected. *WHEN FLOW.PARENTH1 *IS "END" *REC(FACTOR = 1,FLOW = "F99") *ENDWHEN *COMMIT


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5. CopyOpening.lgf logic script

*RUN_PROGRAM COPYOPENING

CATEGORY = %CATEGORY_SET%

CURRENCY = %CURRENCY_SET%

TID_RA = %TIME_SET%

OTHER = [ENTITY = %ENTITY_SET%]

*ENDRUN_PROGRAM

// Carry over on the closing flow for Manual Journal Entries

//----------------------------------------------------------------------------------------------------------------------------- ---

// 1- Defining the list of Audit IDs which the subsequent calculation should apply to: AUDITID_LIST

//--------------------------------------------------------------------------------------------------------------------------------

*SELECT (%AUDITID_LIST%,"[ID]",AUDITID,"[DATASRC_TYPE] = 'M'")

//----------------------------------------------------------------------------------------------------------------------------- ---

// 2- Calculating the closing flow F99 as the sum of opening + movements

//--------------------------------------------------------------------------------------------------------------------------------

*XDIM_MEMBERSET AUDITID = %AUDITID_LIST%

*WHEN FLOW.PARENTH1

*IS "END"

*REC(FACTOR = 1,FLOW = "F99")

*ENDWHEN

*COMMIT

//--------------------------------------------------------------------------------------------------------------------------------

// 3-Calculating F15 - net variation as the difference between closing and the sum of other balance sheet flows

//--------------------------------------------------------------------------------------------------------------------------------

*XDIM_MEMBERSET MEASURES = YTD

*SELECT (%AUDITID_LIST_F15%,"[ID]",AUDITID,"[DATASRC_TYPE] = 'I'")

*XDIM_MEMBERSET AUDITID = %AUDITID_LIST_F15%

*XDIM_MEMBERSET FLOW = <all>

*WHEN ACCOUNT.GROUP

*IS "BSA"

*WHEN ACCOUNT.ACCTYPE

*IS "AST", "LEQ"

*WHEN FLOW

*IS "F99"


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*REC(FACTOR = 1,FLOW = "F15")

*ELSE

*WHEN FLOW.PARENTH1

*IS "END"

*WHEN FLOW

*IS "F15"

// nothing

*ELSE

*REC(FACTOR = -1,FLOW = "F15")

*ENDWHEN

*ENDWHEN

*ENDWHEN

*ENDWHEN

*ENDWHEN

*COMMIT

6. Carry Forward Rules


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7. Elimination and adjustment Rules

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8. Naming Convention for Method-based Multipliers

Digit: 4 5 6 7

Possible

values

Separator :

"_"

Interco:

Status &

Method

Interco:

Change

inscope

Separator :

"_"

Value 1 A All A All 1 With Flows _ Idem Entity Idem Entity _ E Entity 1 Fixed value 1 Current

Value 2 BHolding / Full/

ProportionateD Divested 2 Without Flows I Interco 2

PCON | POWN | PCON-

POWNP Prior

Value 3 C Full/Proportionate M Merged

Value 4 H Holding (111) L Leaving M Mixed 3PCON-POWN |

<empty> | PCON-

POWNValue 5 S

Subsidiaries (100, 50,

20)Y All but outgoing X FiXed 4 PCON | PCON

Value 6 P Proportionate (50,51) 9 No Interco 9 No Interco

Value 7 E Equity (20)

L = D + M 1 With flow: exluding 700 and / or 800

2 Without flow: Including 700 and/or 800

1

Entity: Status & MethodEntity: Change in

scope

Movements / flows

selected for Leaving

companies

2 9

Formula combination Period

103 8

Formula's refers

to entity's or

Interco's rate


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9. UJ_VALIDATION Settings

10. First Consolidation Process

10.1. Running the First Consolidation

When operating the consolidation for a given scope for the first time in the application, it is necessary to populate and process the prior year-end time period for this scope (e.g. 2010.DEC) in addition to the first required consolidation (e.g. 2011.DEC). This is because the flows dedicated to the scope change analysis are properly populated by the consolidation engine provided that at least one automatic journal entry has been detected in the consolidation used as opening consolidation, which by default is the prior year end (December, year -1).

To do so it is recommended that you import all input-level opening data of the first required consolidation (flow F00) into the closing data (F99) of the prior year-end time period, including intercompany breakdowns. Consequently the net variation flow F15 will be calculated as equal to the closing position (since the opening position is 0 for this preparatory time period), in particular the breakdown by intercompany in the balance sheet which triggers automatic eliminations carried over to the closing position. After the consolidation process, the closing data of the prior year end time period will contain the appropriate source data for the opening data of the following consolidation, notably the opening automatic journal entries.

10.2. Equity Conversion and CTA

When running the consolidation for one given consolidation scope for the first time in the application, the cumulated amount of the conversion reserves must be recorded for each foreign entity in the prior year end consolidation. This can be done by either procedure explained below.

Importing the equity amounts converted into the consolidation currency (preferred).

This procedure leverages the fact that a specific conversion process applies to equity accounts: the related converted opening value carried over from the prior period converted value is maintained as such instead of being calculated from amounts in local currency and the exchange rates period as it is the case with the other balance sheet accounts. Consequently, the converted value of equity as well as conversion reserves can be imported into the prior period used for preparing the opening data. The main steps are the following:

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1. Calculate the historical value of each equity account and the corresponding cumulated conversion reserve; calculate also the conversion difference on investments by entity (owner) and interco (held company);

2. Import or input the equity accounts‟ opening flow F00 as equal to the closing position F99 in LC; The net variation flow F15 will therefore equal 0, and will not change the converted closing value by adding up to the converted opening value which is carried over to F99 as part of the conversion process.

3. Import the converted amounts calculated at step 1 into the application on the appropriate dimension members:

• Accounts: Exxx, E1560 and the YA1810C off-balance account for conversion differences on investments

• Time period: preparatory time period for opening data

• Flow: F00

• ConsoScope: G_NONE

• Currency: consolidation currency against which the converted value is calculated

• Audit IDs: INPUT, and possibly other input-type Audit IDs if any local level adjustment

4. Run the corresponding consolidation. The respective opening rate (previous closing rate, i.e. first consolidation time period-2) and average rate should equal the closing rate so that no additional currency conversion difference is calculated by the conversion engine.

The automatic adjustment rules will post the NCI on conversion reserves and the CTA on investments from the imported data.

5. Populate the converted opening data of the first required consolidation by triggering the CopyOpening Data Management Package with the consolidation currency defined as parameter.

This is the preferred option because it allows you to book the historical equity value and conversion reserves in accordance with the set of Audit IDs used for the currency translation adjustments in subsequent consolidation of the following periods.

Manual Journal Entries

The cumulated conversion reserves can also be booked on the preparatory time period via manual journal entry using specific Audit IDs dedicated to CTA on equity and investments. However according to this approach, the CTA cumulated up to the first consolidation on the one hand and the subsequent CTA on the second hand are then stored on different Audit IDs.

Consequently via data import or manual journal entries, the closing balance of the prior period‟s (e.g. 2010.DEC) technical consolidation contains the correct source amounts for the opening values of the first consolidation time period (e.g. 2011.DEC): local currency amounts, converted amounts and automatic adjustments.

PC100NW IFRS Configuration

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