Financial Reporting System (FRS), Multi-National Financial Services Company
A global financial services company approximately with 200 million customer accounts in more than 100 countries. This company is largely organized into four groups: Global Consumer Group, Corporate and Investment Banking, Global Investment Management, and Global Wealth Management and Alternative Investments and Insurance. A business that delivers a broad offering of alternative investments, including hedge funds, credit structures, private equity, real estate, and other private placement and special investment opportunities, is distinct from the other businesses and managed through the Corporate Center.
The financial reporting system for the holding company, consisted of four major systems – FDR (Financial Data Repository), GAAP (for US GAAP reporting), GARS (Inter-company Accounting system), and MRS (Management Reporting System).
- Integrate all financial reporting systems at the corporate level using PeopleSoft EPM.
- EPM’s data warehouse architecture is built to support large volumes of data and accepts data from any source.
- Create applications using EPM’s rich tool set to meet the stringent data acquisition (Compliance of Internal accounting guidelines) and data validation requirements of the company.
- EPM has a delivered financial module that can perform Global Consolidations of financial statements.
- EPM includes data transformation tools to convert financial accounting into management accounting.
- New, tightly integrated legal, regulatory and management reporting,
- Other Benefits include:
leveraging use of up-to-date technology
Improved MIS process
Highly automated reporting tools
Greater linkage between management and financial reporting
Global product reporting across management structures
Cross-business analytics (expenses and other)
Greater linkage with Business Franchise Databases
- Inbound Stream – This group designed bolt-on custom programs to meet operational and audit requirements for data acquisition, data validation, and data preparation. Financial statements were received from more that 100 countries.
- Processing based on the business calendar
- Dimension and Dimension Group resolution
- Edit checks and Quality checks
- Derived Account calculations for memo other Tax calculations
- Net Impact Reporting and Workflow
- Ledger Stream – This stream was responsible for the financial consolidations and the management reporting.
Some of the key features of the inbound stream were:
Financial Consolidations – The consolidation was based on financial statements therefore the system had to have the ability to generate one-sided and three-sided entries. Both Legal and Management hierarchies were defined using native Peoplesoft trees. The important steps in any financial consolidation are:
- Ledger Preparation – The three important steps in this process are Chart of account mapping, Currency mapping, and Calendar mapping. If the data preparation has already been done, the system can be configured to move the data from the Pre-Consolidation Ledger to the Consolidation Ledger using the ‘No Preparation’ mode.
- Equitization - This process handles the pick up of the profit from the subsidiary to the parent. It does so through the use of the equitization rules, the ownership sets and the Consolidation tree for business units. Elimination of the equitization entries is also handled through this process. This requires the set up of elimination entities.
- Inter-Company Eliminations – Inter- Company transactions need to be eliminated for financial consolidations. This is achieved through the set up of Inter-Company Elimination rules, Elimination Entities, and the Consolidation tree for business units.
- Non-Controlling Interest – This process handles the elimination entries for non-controlling interest. Non-controlling elimination rules along with the ownership sets, elimination entities, and the consolidation tree make this possible. The process of offsetting and eliminating the parent's investments in subsidiaries and the subsidiaries' equity is also handled at this stage.
Management Reporting – The Management Accounting system was constructed within the EPM system. The main components of the management ledger were as follows:
- Conversion of financial data to management data – This was achieved through the use of the delivered Allocation Manger tool. The legacy system and the business rules were analyzed and then converted into allocation manager rules.
- Calculation of Management Tax – This was performed by data manager rules. An entry is passed into the management ledger for the difference between the management tax provision and the actual amount calculated.
- Management Adjustments – Managers can use the Net Impact reporting feature to see the impact of the management adjustment before approving them. This process also accommodated the approval process between the sender and the receiver.
- Reconciliation between Financial and Management Ledger – The delivered reconciliation process was used with minor modifications to perform the reconciliation. Data Manager rules were added to the process to post these reconciling entries into the Management Ledger.
This was achieved through the use of the following tools:
- Pre-formatted reports using Crystal reports.
- Multi-dimensional cubes were created for the financial ledger, the management ledger, the inter-company matching.
- Hyperion reports were created from the multi-dimensional cubes.