2/1/2020 SAP e-book

Unit 1
Lesson 2
Running Consolidation Tasks

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Discuss the Month-end Closing Process

The Month-End Closing Process

Closing Process - Key Points

● In this lesson, you will see the user interfaces, reports, and logs that are used during the
month-end close.
● In the subsequent lessons, you will configure the solution in an end-to-end scenario.

Figure 10: Group Closing Process

Consolidation
A complete consolidation process typically starts with preparatory steps, such as setting
global parameters, checking the master data of your organizational units and financial
statement (FS) items, and specifying effective exchange rates.
After that, you can proceed with collecting data reported by consolidation units, and
standardizing the data with features available in the Data Monitor. When the data is ready for
consolidation, go to the Consolidation Monitor to perform the consolidation tasks, such as
various interunit eliminations and data validation.
Throughout the process, you can cross check your processed data using interunit
reconciliation reports and currency translation analysis reports, or generate various local
reports or group reports in real time.
Consolidation:

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Lesson: Running Consolidation Tasks

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Overview of Consolidation

● The primary reason corporations need to consolidate their financials at month end is that
they are made up of multiple legal subsidiaries in one or more countries. For example,
there is a corporate holding company C9000 and they are based in the US.
● In our example, a corporation operates in a few different countries in the Americas,
Europe, and Asia Pacific. Therefore, they use a few different local currencies and they may
also use multiple accounting standards such as US GAAP (Generally Accepted Accounting
Principles) and IFRS (International Financial Reporting Standards).
● In addition, subsidiaries can have a variety of ownership relationships, such as a total
ownership like Japan (C9000 owns 100% of Japan) or a UK subsidiary, which has 80% of
its shares owned by Germany. In Europe for example, the financial statements at the group
level must reflect the fact that Germany has an ownership interest in UK’s equity.
● Also, there are usually transactions between the subsidiaries, so each company could have
intercompany sales, Cost Of Goods Sold (COGS), and Intercompany Accounts Payable
(ICAP) and Receivables (AR) on their books.
● Using this example as a backdrop, the goal of the consolidation process is to generate a
set of group financial statements in the group currency with values that reflect the group
accounting standards. Since this corporation is based in the US, the group currency will be
USD and US GAAP will be the set of standards to go by.
● The consolidated financial statements only reflect third-party transactions, and not
intercompany transactions. Thus, eliminate all intercompany sales, COGS, IC AP, IC AR,
and so on.

Set Global Parameters

Before accessing the monitors, users should set their global parameters. These selections will
then act as defaults that are used as the month-end closing tasks are performed.

Figure 11: Global Parameters

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