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Hfm Plug account query

User_HQ77C
User_HQ77C Member Posts: 2 Green Ribbon
edited Jun 8, 2021 7:51PM in Financial Consolidation

I have a following structure in entity and transactions between Childs of B and E will eliminate at common top parent "A"

A --->Top Parent

--->B

------->D

---->C

-------->E

In my case , Transactions within Childs of Parent B are eliminating at <Entity currency> of parent B itself because B is the common parent for them , B also shows some amounts under [Elimination] value member for the plug account is it because child of B has ICP transactions outside other hierarchies like C ? due to this for the plug account Proportion (which is eliminated amount within B Childs) + [Elimination] = Contribution Total giving large amount is it normal behaviour of HFM?

Please advise on the same.

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Answers

  • Jeo123
    Jeo123 Member Posts: 513 Gold Badge

    If I understand your examples, then yes, that is in line with the expected behavior.

    When an ICP account is tagged with a Plug account, that is what triggers the auto elimination logic. Let's use an account IC_Rec as an example tagged with IC_RecElim as a plug account.

    I'm going to modify your example hierarchy a bit as well.

    A --->Top Parent

    ---->B

    ------->C

    ------->D

    ---->E

    -------->F

    -------->G

    If C records IC_Rec with D as a partner, the balance will be in <Entity Currency> IC_Rec on C. In C's [Elimination] value, you will see a reversing amount that will eliminate the balance in IC_Rec and the offset will be on IC_RecElim. The net of the original amount plus the elimination will be in the [Contribution Total] on C which rolls up to become part of B's <Entity Currency>.

    At the same time, if C had an IC partner of F, that would not be eliminated while consolidating up to B. In that case, the balance would be on B's IC_Rec in <entity currency> and would only eliminate to IC_RecElim in B's Elimination value.

    Please be aware though, that the default elimination logic can be overridden if you have a customized consolidation rule build.

    User_HQ77C
  • User_HQ77C
    User_HQ77C Member Posts: 2 Green Ribbon
    edited Jun 9, 2021 6:11PM

    H Joe, Thanks for the wonderful explanation , Just last thing, if i understand correctly from your second paragraph, If there is Intercompany transaction between C and F , I will see Balances @[Elimination] member of B for Plug IC_RecElim and differences will sit on the top level parent which A at <Entity currency> level. Please let me know i understood it correctly

  • Jeo123
    Jeo123 Member Posts: 513 Gold Badge

    Correct. Technically if C has the IC_Rec you will see the elimination moving the value from IC_Rec to IC_RecElim. If F recorded data to an account IC_Pay that also has a plug account of IC_RecElim, then you would see the balance on E moving from IC_Pay to IC_RecElim.

    A would calculate it's <Entity Currency> but adding up the [Contribution Total] of the two children, and any difference between the IC_RecPay on B and E would be shown in A's IC_RecElim.