Does your enterprise have wholly-owned subsidiaries? If so, your project may be able to leverage a simplistic approach. The primary drivers of a consolidation project’s complexity revolve around ownership in subsidiaries, and not necessarily the number of consolidating companies. 

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Your enterprise may have complex requirements, including:

• Several partially owned subsidiaries with minority interest

• Frequently changing ownership percentages

• Several types of equity postings dependent on company types

• Equity method investments in need of future consolidation

• Organization and ownership percentages that need to be tracked by period

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BPC can support each of these scenarios, constituting a complex consolidation approach.

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Simple and complex scenarios in BPC take two different implementation approaches:

• The US Elimination Business Rule Approach

• The Group Consolidations Approach

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Here are some implementation impacts (from a systems perspective) of the two approaches:

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The US Elimination Business Rule Approach

1. Requires a ‘Finance’ model set-up rather than a ‘Consolidation’ model.

2. Requires an ‘Entity’ and an ‘Interco’ type dimension set up.

3. Uses a ‘lowest common parent’ elimination approach, so eliminations/consolidation execution follows the hierarchies set up in the ‘Entity’ type dimension.

4. Can support several consolidation points within the ‘Entity’ type hierarchy, enabling postings at every ownership point in an enterprise.

5. Consolidation points are defined by consolidation entities which hold elimination postings, providing seamless reporting.

This consolidation approach can be leveraged for most consolidation solutions, even if your enterprise has attributes of a complex consolidation.

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The Group Consolidation Approach

1. Requires a ‘Consolidation’ model set up with a corresponding ‘Ownership’ model referenced.

2. Requires ‘Entity’ ‘Interco’ and ‘Scope’ type dimension setups.

3. The ‘Ownership’ model uses the ‘Scope’ dimension to identify consolidation metrics that can shift over time (i.e. different parents, different ownership percentages, different consolidation postings, etc.).

4. Several consolidation points can be defined in different ‘Scope’ dimension set-ups to facilitate shifting companies.

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This consolidation approach can be leveraged for the most complex consolidation scenarios.  If an enterprise requires a complex consolidation approach, we have found that Group Consolidations in BPC is the best solution on the market.