Intercompany Eliminations

Hyperion Financial Management Intercompany Eliminations\Matching White Paper Prepared by: Danny Tijerina Advanced Technology group December 23, 2004

Table of Contents 1.

INTRODUCTION: ...................................................................................................................3

2.

SETTING UP I NTERCOMPANY PARTNERS :.............................................................................3

2.1. 2.2.

Account attribute: ............................................................................................................... 4 Entity Attribute:................................................................................................................... 5

3.

CONSOLIDATION AND ELIMINATION:.....................................................................................6

4.

INTERCOMPANY E LIMINATIONS : ...........................................................................................7

4.1. 4.2.

Default................................................................................................................................. 7 Custom ............................................................................................................................. 10

5.

INTERCOMPANY M ATCHING REPORT:.................................................................................12

5.1. 5.2. 5.3.

Intercompany Account Method: ........................................................................................ 12 Intercompany Plug Account Method:................................................................................ 13 Intercompany Account Method: ........................................................................................ 14

1. Introduction: The purpose of this white paper is to describe in detail the setup, processing, elimination and reporting of Intercompany transactions within Hyperion Financial Management. The processing and elimination of Intercompany transactions will be described with various options and variations.

2. Setting Up Intercompany Partners: Intercompany transactions are managed across the Intercompany Partner (ICP) dimension. The Intercompany dimension represents a container for all Intercompany balances that exist for an account. The ICP dimension is reserved and is used in combination with the Account dimension and any custom dimension to track and eliminate Intercompany transaction details. To set up an application for Intercompany transaction, yo u must: ? ?

Indicate which accounts perform Intercompany transactions and indicate a plug account for each Intercompany account (IsICP and PlugAcct attributes in Account metadata) Indicate which entities perform intercompany transactions (IsICP attribute in Entity metadata)

When you create Intercompany transactions, each group must have at least one Intercompany account and a Plug account. You designate an account as Intercompany by selecting the IsICP attribute for the account in the Metadata Manager. When an account is designated as intercompany, and intercompany transactions are entered, eliminating and reversing entries are generated via the consolidation process in the [Elimination] value dimension member.

2.1.

Account attribute: IsICP “Y” and PlugAcct designated

There are three options when designating an Account IsICP: ? ? ?

N – ICP transactions are not allowed for this account Y – ICP transactions are allowed for this account, including self ICP transactions (this is when the Entity and ICP are the same) R – ICP transactions are allowed for this account, but restricted from having ICP transactions with itself

If you would like the reversal entries to be at the ICP level in the PlugAcct you may designate the PlugAcct IsICP “Y”. The designated PlugAcct must be a base member account. Note: If an Account is designated IsICP, but does not have a PlugAcct, the account will be available for the ICP dimension but will not ELIMINATE during consolidation.

2.2.

Entity Attribute: IsICP checked

Flagging the Entity IsICP automatically adds the Entity to the ICP dimension.

3. Consolidation and Elimination: First Common Parent: Intercompany eliminations take place during consolidation and occur at the first common parent of the Intercompany partners.

Transactions between INTERCO1 and INTERCO3 will eliminate at INTPAR1

Transactions between INTERCO1 and INTERCO4 will eliminate at INTERCO

4. Intercompany Eliminations: 4.1.

Default

Default Intercompany eliminations are written to the data base as follows: Point of view for input: ? ? ? ? ? ? ? ? ?

Scenario – Actual Year – 2004 Period – January View – YTD Entity – INTPAR1.INTERCO1 Value – Account – ICREC ICP – INTERCO2 Custom 1 to 4 – [None] (Same customs apply to reversal and offset)

Point of view for reversal: ? ? ? ? ? ? ? ? ?

Scenario – Actual Year – 2004 Period – January View – YTD Entity – INTPAR1.INTERCO1 Value – [Elimination] Account – ICREC ICP – INTERCO2 Custom 1 to 4 – [None] (Uses same custom members from input)

Point of view for offset: ? ? ? ? ? ? ? ? ?

Scenario – Actual Year – 2004 Period – January View – YTD Entity – INTPAR1.INTERCO1 Value – [Elimination] Account – ICPLUG ICP – INTERCO2 Custom 1 to 4 – [None] (Uses same custom members from input)

Note: The Account Type attribute of the Plug Account (i.e., Asset or Liability) will determine whether the offset is positive or negative. In the above example “ICPLUG” has an Account Type of “Liability”.

4.2.

Custom

If ConsolidationRules are flagged all default consolidation and elimination rules are inactive and must be created separately. If the application you are working with uses ConsolidationRules you must create the Intercompany Elimination rules within the Sub Consolidate routine. With custom Intercompany Elimination rules you can designate the destination point of view. For example: a separate Custom member could be created to store elimination values for easier tracking and reporting. Another option is to use the “Nature” function within the HS.Con function to track Intercompany Eliminations.

4.2.1. Default Intercompany Elimination rule: The following rule is the default intercompany elimination. CanEliminate = TRUE If (HS.Account.IsICP(Account ) = FALSE) Then CanEliminate = FALSE ElseIf (StrComp(ICP, "[ICP None]", vbTextCompare ) = 0) Then CanEliminate = FALSE ElseIf (HS.Entity.IsDescendant(Parent,ICP) = False) Then CanEliminate = FALSE Else Plug = HS.Account.PlugAcct(Account) If (Plug = "") Then CanEliminate = FALSE End If ' Plug = "" End if 'end of long string If CanEliminate Then 'Call HS.Con(Destination Custom dimension optional,Parameter, Nature ) first line reverses the source entry the second line creates the offset in the plug account call HS.Con("V#[Elimination]",-1*PCon,"") call HS.Con("V#[Elimination].A#" & Plug,PCon,"”) End if ' CanEliminate The rules test to see if an account is flagged IsICP if FALSE then Do Not Eliminate (DNE) If TRUE it tests to see if the data in the account is in [ICP None] if it is Do Not Eliminate If FALSE it tests to see if the ICP member is a Descendent of the current Parent if FALSE DNE If TRUE it tests to see if the PlugAcct attribute for the account is Blank if it is Do Not Eliminate If TRUE Eliminate to the [Elimination] node of the value dimension

4.2.2. Custom Intercompany Elimination Rule: The following rule places the intercompany elimination into a unique Custom 4 member and writes the results to the database using the Nature function within the HS.Con function. CanEliminate = TRUE If (HS.Account.IsICP(Account ) = FALSE) Then CanEliminate = FALSE ElseIf (StrComp(ICP, "[ICP None]", vbTextCompare ) = 0) Then CanEliminate = FALSE ElseIf (HS.Entity.IsDescendant(Parent,ICP) = False) Then CanEliminate = FALSE Else Plug = HS.Account.PlugAcct(Account) If (Plug = "") Then CanEliminate = FALSE End If ' Plug = "" End if 'end of long string If CanEliminate Then 'Call HS.Con(Destination Custom dimension optional,Parameter, Nature(Used to ‘track elims)) 'first line reverses the source entry the second line creates the offset in the plug account call HS.Con("V#[Elimination].C4#AUTOElim",-1*PCon,"AUTOELIM") call HS.Con("V#[Elimination].C4#AUTOElim.A#" & Plug,PCon,"AUTOELIM") End if ' CanEliminate The rules tests to see if an account is flagged IsICP if FALSE then Do Not Eliminate (DNE) If TRUE it tests to see if the data in the account is in [ICP None] if it is Do Not Eliminate If FALSE it tests to see if the ICP member is a Descendent of the current Parent if FALSE DNE If TRUE it tests to see if the PlugAcct attribute for the account is Blank if it is Do Not Eliminate If TRUE Eliminate to the [Elimination] node of the value dimension in Custom 4 AutoElim. The Nature element of the database “AUTOELIM” is populated. This is a user defined variable.

5. Intercompany Matching Report: There are two different methods to writing intercompany matching reports in Hyperion Financial Management. The intercompany accounts method or the intercompany plug account method.

5.1.

Intercompany Account Method:

The intercompany account method uses the input accounts as offsets for the report

Report results:

5.2.

Intercompany Plug Account Method:

The plug account method uses the plug account as a reference to pull all accounts referencing the same plug account in the Account Attributes. The box next to “These are Plug accounts. Ignore Matching Accounts list below” is checked.

Report result is identical to the account matching method. The difference is a Plug Account is now referenced

5.3.

Intercompany Account Method: Single account

If the same account is being used for both intercompany receivable and intercompany payable the “Suppress Reversed:” option needs to be checked. Also, the account being used needs to be listed in both the “Accounts” and “Matching Accounts” sections.

Report results are similar. The difference here is the Partner Account is a negative value.