Cloud based Statutory Financial Consolidation on S/4HANA Cloud

Welcome back to the next blog in the SAP S/4HANA Cloud 2-tier ERP blog series. 

In this blog, let’s look at cloud based financial consolidation in a 2-tier deployment model.

SAP S/4HANA Cloud provides flexibility in financial processes and fast closure activity. In a 2-Tier approach where the Headquarter (HQ) is running On-Premise (OP) and the subsidiary is running on S/4HANA cloud or non-SAP applications. With S/4HANA Cloud, finance expert can extract online Profit and Loss (P&L) account statements and balance sheet statements anytime and need not wait for a complete period closure to happen at the HQs. S/4HANA on cloud enables subsidiaries to share their financial data with the HQs continuously to perform group consolidation and profitability, enabling local units to handle cash locally with global visibility into financial situation. It also helps manage central payment handling effortlessly and HQ to share centralized planned data with subsidiaries running seamlessly.

The 2-tier approach with SAP S/4 HANA Cloud for Consolidation simplifies the traditional ETL process with a separate consolidation engine.

Business Challenges for Financial Consolidation

• Instant insight: Fast close turns into continuous accounting. Detailed information needs to be available anytime on subsidiary and HQ level.
• Compliance: Accounting principles and statutory requirements are permanently evolving and require substantial staff and project effort to follow-up.
• Efficiency: Efficiency gains expected from any non-differentiating function. Data collection and checks needs to be automated as far as possible.
• Increasing scope: Various stakeholders with additional data requests needs to be served in a consistent way. Increasing significance of non-financial measures.

S/4HANA Cloud for subsidiaries comes with packaged cloud based consolidation

• Handling legal consolidation.
• Transparent overview of group closing status.
• With built-in audit trail, user can trace values from the consolidated report to the document detail in the universal journal in S/4HANA.
• Book closure activity is reduced significantly.

Let us go through 2 scenarios of consolidation process in S/4HANA Cloud.

1. Journal entry scenario

Let us see how a Journal entry upload and consolidation is done in the cloud system.

Log onto the SAP Fiori Launchpad using the General Ledger specialist role.

First download the journal entry test template – sample for US company code. (https://support.sap.com/content/dam/SAAP/Sol_Pack/Library/Others/JournalEntry_Test_Template_normal_1710.xlsx) in xml format and fill in the required details which needs to uploaded. Here we are uploading the financial data which needs to be consolidated in the system for consolidation process:

Journal entry template:

In upload general Journal entry app – browse and upload the template:

Uploaded journal entry view in cloud system:

Once the journal entry is uploaded by the GL accountant user, next to consolidate the data. Login through user having consolidation specialist role assigned.

Open data monitor app:

In CG2 group – can find the 1710 company code details for which journal entry was uploaded in earlier step:

Click on goto -> Database listing of totals record:

Click on execute:

Consolidation specialist here can view – Data coming from FI document. Consolidation ledger is shown as below:

Double-click to drill-down to the document entry level as shown below:

2. Intercompany Elimination Scenario

Let’s see here how an intercompany elimination balance sheet (IC Elim. B/S) is done in cloud system:

Log onto the SAP Fiori Launchpad using the General Ledger specialist role.

First download the journal entry test template in xml format and fill in the required details which needs to be uploaded. The core elimination activities during group closing are also running in the monitor. This entails elimination of the trade receivables against payables, dividends receivables against payables, revenues against expenses, and consolidation of investment, etc. Pre-delivered content with elimination rules is available.

Journal entry template:

In upload, general Journal entry app – browse and upload the template:

Uploaded journal entry view in cloud system:

Once the journal entry is uploaded by the GL accountant user, next to consolidate the data, user must login through consolidation specialist.

Log onto the SAP Fiori launchpad using the Accountant Consolidation specialist role.

In data monitor app:

In CG2 group – can find the 1710 company code details for which journal entry was uploaded in earlier step:

Click on more -> consolidation monitor:

Consolidation specialist here can view – the list of consolidation data activities including Intercompany Balance sheet:

Click on update run(on top), then the intercompany balance sheet elimination is done and the details is shown:

Data integration with SAP S/4HANA Cloud is flexible to upload capability to collect financial data from non-S/4 HANA Cloud subsidiaries and product validation ensures data integrity. Analytics on consolidated financial statements- a comprehensive set of reports is delivered in cloud consolidation on the FIORI Analytics. They serve as analytical or operational reports for different levels of users throughout the closing process with pure web look and feel. Multi-dimensional analysis, hierarchy support, graphics, filtering and drill-down are just among a few of these features.

Key take-aways

• SAP offers a highly standardized solution for Financial Consolidation as a public cloud service.
• The cloud solution makes it easy to integrate (new) subsidiaries and external parties into your group closing process.
• Perfect data integration for subsidiaries on S/4HANA Cloud, easy data collection for all others.

Follow us via @SAP and #S4HANA