Russ Rogers & Jeff Pitts May 8, 2013 - Emtec Inc · PDF fileThings to Consider- Designing Cash Flow Process in HFM Russ Rogers & Jeff Pitts May 8, 2013

Things to Consider- Designing Cash Flow Process in HFM

Russ Rogers & Jeff Pitts May 8, 2013

Emtec, Inc. Proprietary & Confidential. All rights reserved 2013.

Purpose and Definitions

• Purpose

–Provide an overview of everything to consider when automating a statement of cash flows in HFM

–Not teach you all detailed steps surrounding building of metadata, artifacts and business rules. This

would simply take too much time.

–Provide some explanation and thought process behind the metadata, artifacts and rules included in

this presentation

–There is no such thing as a statement of cash flows that is 100% automated. Some manual

intervention will always be required

• Definitions

–Metadata – Members and structures defined in HFM Metadata Manager used for the purpose of

storing data that is both submitted and calculated (i.e. – scenarios, years, accounts and customs 1-4

–Business Rules – A form of Visual Basic defined in HFM Rules Editor used for the purpose of

calculating results

–Artifacts – Data Forms, Data Grids and Reports defined in HFM Web used for submission and

validation of data and reporting of results

2


Metadata Consideration – Create a Custom Dimension Structure for Balance Sheet

• Custom Dimension

–To be used for all Balance Sheet roll forward activity

–Dimension members include: Beg Balance, Additions, Retirements, Transfers

–Top member of Custom Dimension structure is assigned to all Balance Sheet accounts

–Process creates a “valid intersection” of each Balance Sheet account with each roll forward member

3


Business Rule Consideration – Calculate Beg Balance on all Balance Sheet Accounts

• Beginning Balance Rule

–Calculates the Beginning Balance on each Balance Sheet account

–Conditional Statement excludes accounts flagged as IsICP

4


Process (Artifact) Consideration– Collect Supplemental Roll Forward Data by

Location

• Task List of Web Data Forms by Location

–Data forms to capture supplemental information not included in source ERP system

–Data forms include: Beg Balances (calculated), Additions, Retirements, Transfers

–Data forms include: Validation Check (Scalc) to compare roll forward balances entered to GL Load

5


Process Monitor Traffic Light– Validate Supplemental Roll Forward Data in Total

• Task List of Web Data Forms by Location

–Very same validation checks in each data form is contained on report

–Cells in green confirm all supplemental data is properly submitted

–Cells in yellow highlight differences between supplemental data and FDM load

6


Metadata Consideration– Create a “Changes in Balance Sheet” Account Structure

• Account Dimension

–All accounts are defined as “Expense” type

–Purpose is to capture changes on all Balance Sheet accounts

–Total number of accounts in this structure is less than the number of accounts in the Balance Sheet

structure

–Lowest level base accounts only go down as far as changes that need to be captured

–Use naming convention of “CHT_” for parents and “CH_” for base members

7


Metadata Consideration– Create a Custom Dimension Structure to Capture Changes


–Includes members for changes in Beg Balances, changes in End Balances and changes in Activity for

3 key levels of value dimension (<Entity Currency>, <Parent Currency>, [Elimination])

–Assigned as top member for all “Changes in Balance Sheet” accounts

–Can be in same Custom Dimension used to capture Balance Sheet roll forward activity

–Top member assigned to all “CHT_” and “CH_” accounts

8


Business Rule Consideration – Calculate Cash Flow Beginning and Ending Balances

• Rule <Entity Currency>

–Rule populates beginning and ending balances on <Entity Currency>

–Rule populates using proper signage depending on whether account is an asset or liability type

9


Business Rule Consideration – Calculate Cash Flow Beg and End Balances

(Continued)

• Rule [Elimination]

–Rule populates beginning and ending balances on [Elimination]


10


Business Rule Consideration – Calculate Cash Flow Beg and End Balances

(Continued)

• Rule <Parent Currency> is USD

–Rule populates beginning and ending balances on <Parent Currency>


11


Business Rule Consideration – Calculate Cash Flow Activity

• Rule

–Rule calculates on 3 levels of value dimension (<Entity Currency>, [Elimination], <Parent Currency>)

–Rule uses conditional statements to populate ECCH activity, ELCH activity, and PCCH activity

–Rule populates using proper signage based on previous business rule

12


Process (Artifact) Consideration– Create Data Grid to Validate ECCH_Activity Rule

• Data Grid – Confirms <Entity Currency> net to 0

–Displays POV: A#CH_BalanceSheet, V#<Entity Currency>, C2#EC_Cashflow,

–Displays Row: E#[Base Entities]

–Displays Column: P#[Third Generation]

13


Process (Artifact) Consideration– Create Data Grid to Validate PCCH_Activity Rule

• Data Grid - Confirms <Parent Currency> net to 0

–Displays POV: A#CH_BalanceSheet, V#<Parent Currency>, C2#EC_Cashflow,



14


Process (Artifact) Consideration– Create Data Grid to Validate ELCH_Activity Rule

15

•Data Grid - Confirms [Elimination] net to 0

–Displays POV: A#CH_BalanceSheet, V#[Elimination], C2#EC_Cashflow,




Metadata Consideration– Create Cash Flow Statement Reporting Accounts


–Accounts used for “presentation” and

calculation of each line item that appears on

the St. of Cash Flows

–All accounts are defined as “Expense” type

–The hierarchy of the account structure

models how the report should be displayed

(i.e. – Operating, Financing and Investing

sections).

16


Metadata Consideration– Expand “Changes in Balance Sheet” Custom Dimension


–Includes members for CFS_Total, CFS_Calc and CFS_Input

–Assigned as top member for all Cash Flow Statement reporting accounts

–CFS_Calc member used for calculations and CFS_Input used for input adjustments (i.e. – manual

input for off Balance Sheet item)

17


Process (Artifact) Consideration– Create St. of Cash Flow Data Form

• Data Form- St. of Cash Flows

–Column 1 (CFS_Calc) represents the line item calculations (not yet discussed)

–Column 2 (CFS_Input) represents the line item input (i.e. – manual input for off Balance Sheet items)

–Colum 3 (CFS_Total) is the parent member that sums the calculations and inputs to the line items and

is the member to be used for reporting

18


Business Rule Consideration – Calculate Cash Flow Statement Reporting Accounts

• Rules for <Entity Currency>

–Conditional statement used to calculate all reporting accounts prior to currency translation

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• Rules for [Elimination]

–Conditional statement used to calculate reporting accounts that use Intercompany accounts that are

eliminated during consolidation process (i.e. – Automatic Intercompany Elimination accounts)

20



• Rules for Net Income and Dollar Overrides

–Conditional statement is used to calculate Net Income and other reporting accounts that are calculated

using dollar overrides (i.e. – Investment in Subs, Dividends)

–Accounts not subject to translating using YTD Average (discussed next slide)

21


Metadata & Rule Consideration– Create and calculate a YTD EOM AVG rate account


–The St. of Cash Flow reporting line items that do

translate (i.e. – not calculated after currency

translation) will use the EOM_YTDAVG rate

account (or end of month YTD average)

–Rule uses a special Average function that

calculates this rate as the sum of each period’s

EOM rate / number of periods in year (aka – a

straight line average)

22


Business Rule Consideration – Translate Cash Flow Reporting Accounts

• Rules for Translation

–Translate Cash Flow reporting accounts using EOM_YTDAVG exchange rate account

–Calculated in the Sub Translate() subroutine

–Uses HS.Trans function to override application default translation method used for expense type

accounts, which includes cash flow “presentation” reporting accounts

23


Business Rule Consideration – Calculate Beginning and Ending Cash

• Rules for Cash

–Used at bottom of St. of Cash Flows below Financing section

–Calculates beginning and ending cash before and after currency translation

24


Business Rule Consideration – Calculate Cash Proof and FX Effect on Cash

25

•Rules for Cash Flow Proof and FX Effect (Plug)

–Purpose 1: Calculate cash flow proof (before currency translation) is in balance (i.e. = 0)

–Purpose 2: Calculate effect of FX on cash (after currency translation)

–Cash flow proof is: Beg. Cash + Op. Act. + Inv. Act. + Fin. Act. – End. Cash

–FX effect is: (Beg. Cash + Op. Act. + Inv. Act. + Fin. Act. – End. Cash) * -1


Process (Artifact) Consideration– Update St. of Cash Flow Data Form


–Add a section at bottom for FX Proof

26


Metadata Consideration– Prove the FX Plug


–The total FX effect (calculated in previous rule)

could be a fairly large number that is initially

calculated as a “plug”

–Auditors often want to know what makes up this

“plug”

–It is possible to use HFM to prove this “plug”

–Define metadata by expanding the cash flow

structure in custom dimension to include a

FX_Cashflow roll up that includes: FX_BB (FX

effect of beginning balance at <Parent Currency>

and FX_ACT (FX Effect of activity at <Parent

Currency>)

27


Business Rules Consideration –Prove FX Effect “Plug” on Cash

• Rules to Prove FX Effect (Plug)

–Create special translation rules to calculate total FX effect on beginning cash as well as each section

(operating, investing, financing) on statement of cash flows.

–FX effect on beginning cash is calculated as the difference between translating at current EOM rate

vs. prior year P12 EOM rate.

–FX effect on operating activities (in total) is calculated as the difference between translating at current

EOM rate vs. translated balances reported (due to different method used to translate Net Income).

–FX effect on each line making up the investing and financing activities must either be calculated by

taking the difference between translating at EOM rate vs. EOM_YTDAVG rate or by taking the

difference between translating at EOM rate vs. translated balances reported (due to different method

used on items with dollare overrides).

28


Metadata & Rule Consideration– Create and calculate a PR EOM rate account


–Used for cash flow purposes

–Used to copy prior year EOM and AVG rates to

current year

29


Metadata Consideration– Create FX Proof Account roll up


–Used for cash flow purposes

–Used to store calculated FX effect in

specific CFS accounts used on St.

of Cash Flow

30


Business Rules Consideration –Prove FX Effect on Beginning Cash

• Rules to Prove FX Effect (Plug for Beginning Cash)

–FX effect on beginning cash is calculated as the difference between translating at current EOM rate

vs. prior year P12 EOM rate.

–Prior year P12 EOM rate is stored in PR_EOM rate accounts (previous rule)

31


Business Rules Consideration –Prove FX Effect on Operating Activities

• Rules to Prove FX Effect (Plug for Operating Activities)

–FX effect on operating activities cannot be calculated simply by using HS.Trans function in Translate()

subroutine to determine translation difference between EOM rate (used for BS accts) and

EOM_YTDAVG (used for changes on BS accts)

–The actual difference must be calculated by using a combination of Translate() and Calculate()

subroutines

32


Business Rules Consideration –Prove FX Effect on Investing Activities

• Rules to Prove FX Effect (Plug for Investing Activities)

–FX effect on investing activities cannot be calculated simply by using HS.Trans function in Translate()




subroutines

33


Business Rules Consideration –Prove FX Effect on Financing Activities

• Rules to Prove FX Effect (Plug for Financing Activities)

–FX effect on financing activities cannot be calculated simply by using HS.Trans function in Translate()




subroutines

34


Process (Artifact) Consideration– Update St. of Cash Flow Data Form


–Add a section at bottom for FX Proof

35


Summary of Considerations – Metadata, Bus. Rules, Process(Artifacts)

METADATA

• Custom roll up for BS Roll Forwards

• Acct roll up for CH Balance Sheet

• Custom roll up to calc. changes at EC, ELIM & PC

• Acct roll up of CFS reporting accts

• Custom roll up for CFS Calc. and Input

• Custom roll up for BB_FX & ACT_FX

• Acct for EOM YTD AVG

• Acct for PR EOM

• Acct roll up for FX Proof

PROCESS (ARTIFACTS)

BUSINESS RULES

• Calc. Beg. Bal. on Balance Sheet accounts (for RF WDEFs)

• Calc. Beg. And End. Balances on all Assets & Liabilities using

proper signage for EC, ELIM & PC

• Calc. activity on all Assets & Liabilities for EC, ELIM & PC

• CFS “presentation” account rules for EC, ELIM & PC

• Calc. YTD EOM AVG exchange rate

• Calc. PR EOM exchange rate

• Translate CFS “presentation” using EOM YTD AVG

• Calc. Beg. And End. Cash

• Calc. Cash Proof and FX Plug

• Calc. Proof on FX plug for Beginning Cash

• Calc. Proof on FX plug for Operating Activities

• Calc. Proof on FX plug for Investing Activities

• Calc. Proof on FX plug for Financing Activities

36

• Data Forms to collect roll forwards by location

• Process Monitor Traffic Light reports by location

• Data Grids to prove CH Balance Sheet = 0 for EC, ELIM &

PC

• Data Form for CFS “Presentation” accounts

• Addition to CFS Data Form for FX Proof

THANK YOU FOR YOUR TIME

Please visit us online at www.emtecinc.com

37

Presenter Contact Information:

http://www.emtecinc.com/

Documents

Russ Rogers & Jeff Pitts May 8, 2013 - Emtec Inc · PDF fileThings to Consider- Designing Cash Flow Process in HFM Russ Rogers & Jeff Pitts May 8, 2013