Group Reporting: What is it and is SAP offering a solution?
Group reporting: You say what?
Any company with one or more subsidiaries, has a need to combine all financial results. This combining of results is called financial consolidation or group reporting.
We literally merge all financial statements of all the companies within the group to one consolidated view, eliminating all intercompany bookings. This to get a clear and correct view on the financial situation of the entire group.
In this post, we will look into SAP’s solution for group reporting, more specific: SAP S/4HANA Finance for group reporting.
SAP S/4HANA Finance for group reporting is the solution for integrating local and group closing activities. Is consolidation new for SAP? Of course not! In the past several other solutions were released for aiding in group reporting:
- Enterprise Controlling Consolidation (EC-CS)
- SAP Strategic Enterprise Management’s Business Consolidation (SEM-BCS)
- SAP Financial Consolidation
- SAP Business Planning & Consolidation (BPC)
SAP S/4HANA Finance for group reporting combines the best of earlier tools and is available both in the cloud as on-premise.
Group reporting lets you gather data directly from SAP S/4HANA or indirectly via SAP Group Reporting Data Collection. It has the necessary tools to do the full consolidation. And last but not least, provides also a live data connection with SAP Analytics Cloud enabling analysis without duplication of data.
Fig.1 : SAP S/4HANA Finance for group reporting Integration Source: SAP
What are then the big differences with its predecessors?
First of all, SAP S/4HANA Finance for group reporting is now embedded in the S/4HANA SAP product, instead of being a stand-alone solution. This results for instance in lower maintenance costs.
SAP S/4HANA Finance for group reporting also enables continuous accounting or, in other words, the possibility to perform consolidation activities before period-end closing. Because activities like intercompany eliminations or currency translations are performed already before closing, it leaves more time for analysis during the closing and gives us a more real-time access to the group results.
Another advantage of SAP S/4HANA Finance for group reporting is that it focuses not only on consolidation. It also includes:
- Data Collection for both SAP as non-SAP systems
- Data Preparation
- Multiple reporting options like integration in SAP Analytics Cloud, Analysis for Office, etc.
Fig.2 : SAP S/4HANA Finance for group reporting Source: SAP
In larger groups of companies it is often the case that not all companies are already on SAP. In order to facilitate group reporting, we must use SAP Group Reporting Data Collection or in short GRDC.
GRDC is no more than a group of apps assisting in collecting, transforming and loading data from different sources into SAP S/4HANA Finance for group reporting’s consolidation table (ACDOCU).
These apps reside on the SAP Business Technology Platform (BTP) and use standard API’s to import external ERP data into the group reporting.
Besides an external connection, there is also a direct link between the universal journal of local accounting in S/4HANA (ACDOCA) and the consolidation table (ACDOCU).
When we have all our data, we can start the consolidation. But hold on… Can we just merge all the data?
No, we have some work to do first!
The first issue many companies encounter is having different currencies. In this case, we are in need of a currency translation to a Group Currency, in which the entire group publishes its financial statements.
A second thing to do, is the data validation. There are some rules we need to follow when handling financial statements. For example:
- Debit = Credit (e.g. In the Balance Sheet: Total Assets = Total Equity + Total Liabilities)
- Net income of the P&L = Net income in equity on the Balance Sheet
In some case we have to make some manual postings to adjust data for consolidation.
All these preparation tasks, and more, are performed in the Data Monitor, along side the Data Collection. Only afterwards we can start our real consolidation steps.
As mentioned earlier, consolidation is done to give a correct view of the group’s financial situation.
We do not want double figures in our reporting.
Let me explain with a small and very simple example:
Fig.3 : Intercompany eliminations
Looking at figure 3 without the eliminations, the consolidated figures would not give us the correct view on the performance of the group. E.g Consolidated sales would be 170K, which does not reflect the sales to the external customer.
We need intercompany eliminations to correct this.
These intercompany eliminations are some of the tasks within the Consolidation Monitor in SAP S/4HANA Finance for group reporting.
Other tasks we can perform are:
- Consolidation of investments
Here we eliminate the investment of the parent versus the share in the child, taking into account the non-controlling interests.
- Consolidated Data Validation and Reconciliation
When all previous steps are completed we can view the results using reporting options.
SAP S/4HANA Finance for group reporting offers a range of reporting options, including local and group reports. The local report help us analyse the data before consolidation. Whereas the group reports show us the consolidated views on the financial statements (Balance Sheet, P&L, Cashflow, etc.). These reports are called SAP Fiori analytical applications.
Besides the embedded reports, we can also use SAP Analysis for Office. In this option, we retrieve the results and show them in Microsoft Excel. Now we can use all functionalities of Excel for analysis and reporting.
A third option is using SAP Analytics Cloud where stories help us present, share, … the results. The flexibility we have in this tool is greater as we can include data from different other sources to have more in depth views. Working with dimensions and calculation measures can give us greater insights.
So you see, SAP provides a comprehensive solution on group reporting.
From data collection to final reporting, the solution simplifies the process and delivers accurate insights into the group’s financial performance. By utilizing the integration capabilities of S/4HANA and leveraging various reporting options, businesses can make informed decisions and gain a competitive advantage in the marketplace.
More information can be found on the SAP Help Portal or by contacting us at firstname.lastname@example.org.
Kristin Van der Velde
data & analytics consultant @ Cubis Belgium