Analytics Software

I believe in infinite possibilities and I believe that HFM is infinitely superior to using an excel consolidation so I'm left to believe that the snazzy CTA and dollar override system built up in our excel consolidation can be integrated into our HFM application - which is nearly up and running except for this CTA bit. So here it goes:

Applicable according to LS Accounting Policy, as prescribed by US GAAP.
Arises due to the following:
Investment in Subsidiaries
Share Capital
Current Year Retained Earnings
Prior Year Retained Earnings
Dollar override system is utilized, i.e.
Applies when the base or entity currency differs from the entity’s Parent currency.
Local books are kept in the local base or “entity” currency.
Dollar overrides are set in Parent Currency at the date of the transaction or at the month end, as the case may be.
Dollar overrides applied to base entities and consolidation entities.
[only when the base currency and the parent currency differ]

Tracked according to source, account; i.e.
Investment in Subsidiaries
Share Capital
Current Year Retained Earnings
Prior Year Retained Earnings
Calculated in Consolidation, currently in excel.
Maintenance is simple and only requires changes to local currency amounts.

Calculating the “Dollar Override Amounts”:
+ Prior Period override amount in Parent Currency
+ ((Change in Local Currency amount) x Current pd FX End Rate)
= “Dollar Override” Amount in Parent Currency

Calculating CTA in Parent Currency:
+ Dollar Override Amount in Parent Currency
- (Local Amount x Current pd FX Rate)
= CTA in Parent Currency

Calculating CTA in Parent Currency - For Consolidation entities:
+ Dollar Override Amount in Parent Currency
+ Current Period “Loaded” CTA
- (Local Amount x Current pd FX Rate)
= CTA in Parent Currency


Current Period “Loaded” CTA Arises at consolidation entities when the parent currency is the third (or greater) currency used in the string of consolidation.
Example
New Zealand Base Currency is NZD and Parent Currency is AUD.
CTA is generated when NZD is translated to AUD and appears in consolidation in AUD.
New Zealand rolls into a parent who’s Base Currency is AUD and who’s Parent currency is USD.
When the parent is consolidated,
it is first rolled up in AUD, to include the CTA which was calculated at New Zealand
and then translated to USD, whereagain CTA arises and is layered on top of the CTA which was consolidated with New Zealand’s inclusion.

Benefits of Formulas [existing system]:
Low Maintenance
Accounting is prepared by local subsidiaries in local currencies.
Consolidation calculates Dollar overrides and CTA amounts automatically.
Accounting time is spent on analyzing resulting CTA balances for reasonability.
Manual Rollforward of Retained Earnings required at year end.
Consistent with LivingSocial Accounting Policy
Tested and true
Has survived multiple audits.
Provides transparency throughout consolidation.

HFM System development Recommendations:
Automate “Dollar” Override system in HFM so that the Override figures are automatically calculated and are based on the local currency values provided by the local subsidiaries.
Importance is placed upon Local currency accounting and less on system calculated formulas.
Consistent with existing excel based system
Allow for CTA to be calculated at and within “Consolidation Entities” in HFM.
Eliminates the need for manual, human intervention in the consolidation process.
Provides for a natural flow of CTA calculations within the legal entity structure
Allows for consolidation to occur according to LS Accounting Policy.

Presentation of CTA in HFM COA:
Applies to amounts calculated by HFM
Use control accounts
i.e. restrict activity in these accounts to hold only the numbers that are generated by HFM in the consolidation process.
4 separate accounts should be created and utilized to present CTA calculated by HFM:
CTA – Investment in Subsidiaries
CTA – Share Capital
CTA – Current Year Retained Earnings
CTA – Prior Year Retained Earnings
These 4 control accounts should roll up to a “Total CTA – calculated” account
This account should be a child of “Accum Othr Inc_Loss – Accumulated Othr Income-Loss”
The Account structure requested above would look like:
“Accum Othr Inc_Loss – Accumulated Othr Income-Loss”
“Total CTA – calculated” account
CTA – Investment in Subsidiaries
CTA – Share Capital
CTA – Current Year Retained Earnings
CTA – Prior Year Retained Earnings


CAN THIS BE DONE? Does the earth travel around the sun?