Legal Consolidation - A comparision between Indian AS, IFRS and US GAAP

Hi Experts,
Can any one shed light on the above subject? My Client is based out of India and has business spread across US and Europe. Are there any significant variations between these standards?
Thanks in Advance.
Points will be given.

Hello Harikrishnan,
To start with, there is nothing like legal when it comes to consolidation. We prepare Group accounts to take into account the increase/decrease in the shareholders funds of the parent company. In doing so we follow rules which are generally accepted at local country level also known as GAAP or at an international level also known as IAS/IFRS.
Companies own companies and the parent company is required to pay taxes on the global profits and parent company's country of incorporation is used as tax base.
My understanding of Indian Standards are limited and therefore providing information only for US GAAP and IFRSs.
Accounting rules in the US is heavily controlled especially post-Enron collapse. The have legislation to govern and investigate anything that is not correct. While US GAAP is pretty much in line with overall impression of standards, some rules vary like treating the value of inventory and recognition and derecognition of property, plant & equipment also known as Tangile Non-Current Assets. It is not possible to give you full explanation but some rules varies.
With the full comprehensive development of International Standards, more and more countries are following IFRSs to local GAAPs. In many countries like Australia and New Zealand, they just added country names before the IFRSs and made that their local GAAP to avoid confusion and differential treatments.
Hope the above would be helpful.
CONMJI

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Financial statements to comply with IFRS and US GAAP.

Hi everyone,
We need to start reporting our external financial statements to comply with IFRS and US GAAP.
There are some primary differences in the 2 accounting principles relates to PPE (Fixed Assets/Capital Expenditure) and therefore multiple/different valuations of the assets, they need to be provided for.
Do you know how we can comply with both the IFRS and US GAAP reporting requirements in general using the tools in SAP ?
Thanks in advance and best regards.
Dago

Hi,
A few tips: Asset Area 1 should be mapped to IFRS and linked to leading ledger. Area 20 is mapped to GAAP and liked to non-leading ledger. Area 1 should be 100% depreciated to capital expenditure in the very first depreciation run, which will allow you to report capital expenditure at the end of the month. Area 20 is for depreciation over the life (the regular GAAP stuff).
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Ming
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Hi
We created assets with difference useful life between Groups and Stats of which the asset depreciation difference between two dep areas is posted in to seperate GL account starts with "S" used for local stats purpose. Any idea how to avoid this difference getting posted to other stats GL account.
We also tried to have same useful life between dep areas. But still i can see depreciation difference is getting posted in dep area 30.
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Hi Hari
Welcome to SDN.. This is standard behaviour....
If you have 2 dep areas posting to FI, then you need to create a 3rd depre area as Delta Dep Area which manages the differential posting between Dep Area 01 and Parallel Dep area
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P.S. please reply at [email protected]
& [email protected]

Hi Friends,
No replies at all , any pointers.
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Ashutosh

Dual Reporting IFRS and US GAAP

Hi,
anyone here who have implemented dual reporting US GAAP and IFRS at the same time? Hope you could share on how to implement this. Is implementing parallel ledgers enough?
Thanks.

We just implemented IFRS accounting without effecting GAAP accounting. No parallel ledgers were required. Our strategy was to start with GAAP chart of accounts and identify all accounts as follows:
o   Common u2013 Both U.S. GAAP and IFRS standards are the same. No adjustments to U.S GAAP
     accounting are necessary to meet IFRS.
o   Re-class u2013 U.S. GAAP costs are classified differently under IFRS. Costs must be u201Cmovedu201D to
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o   Elimination u2013 U.S. GAAP costs are not applicable in IFRS reporting and are eliminated from the
     IFRS financial statements.
o   Valuation u2013 U.S. GAAP Costs are applicable in IFRS but must be revalued from a U.S. GAAP basis
     to IFRS basis in the IFRS financial statements.
We then created new accounts preceded with an u2018Iu2019 concatenated with the original account. Any adjustment required to meet IFRS is booked to the u2018Iu2019 accounts only. Our GAAP financial statements include only the original accounts (i.e. no accounts that begins with u2019Iu2019). Our IFRS statements include all the GAAP accounts plus the IFRS accounts.
The naming convention was carried through to all modules in SAP.   In CO, we also had a naming convention to segregate IFRS related objects.
Works slick and the external orders are happy.

IFRS VS US GAAP

Hi,
Can some one throw some information related to IFRS Vs US GAAP.
I get some information but it is in general i am not able to understand.
Thanks in advance.
Regards,
Sankar

HI Durgashankar
Your Question is an open ended one......
pl follow this link: http://wiki.ifrs.com/
Home > Overview > Small and Medium-Sized Entities > IFRS for SMEs - U.S. GAAP Wiki > Wiki Home
to have more understanding about the comparison between IFRS and US GAAP, as on today.
If necessary Register in this site, which is free and get more insight about all standards.
I hope this will help you some extent... Please let me know if you need any more on IFRS & USGAAP.
Thanks & Regards
ukraghu

Difference Between Legal Consolidation and Management Consolidation

Dear Experts,
Kindly help me to know
1) To Differenciate between Legal Consolidation and Management Consolidation Theoritically?
2) To Differenciate between Legal Consolidation and Management Consolidation Technically in BPC?
3) What is impact on /Difference on Business Process Flow in BPC in case of Legal Consolidation or Management Consolidation? (What should be done in Management COnsolidation and Legal COnsolidation in BPF in BPC)
Thanks in Advance
Ritesh

True accounting/legal consolidations encompasses the three following elements:
1. the general ledgers of the entities
2. elimination entries between entities (inter entity transactions such as sales/cost of sales, a/r and a/p etc.)
3. adjustments for partially owned entities
Using the legal app, rate and ownership apps, and the proper configuration, outlooksoft achieves a legal/accounting consolidation. Accounting consolidations also link to a legal hierarchy of entities.
Any consolidation that is referred to as management or financial consolidation etc. can have differing connotations. In Outooksoft software, management consolidations does not include item 3.
However, when the terms are used by the client they can have different meanings. They could mean either :
A true legal consolidation BUT tied to the Management hierarchy of entities (as opposed to a legal hierarchy) OR An aggregation without item 3 above and tied to the Management hierarchy of entities.
9 times out of 10, clients usually want the first rather than the second alternative. Financial statements
rolled up using legal consol should equal that using management consol.
However, when clients do planning, they may have their entities plan as if they were fully owned. They could also have their entities provide actals for less than 100% in the case of partially owned entities. In these cases, you have to adjust appropriately.
From an Outlooksoft config point of view, you need the legal, rate and ownership app and the related configuration for a legal consolidation. Management consol depends on client definition and client practice in the data that they collect from the entities.
In the area of BPFs, the key difference between legal and management COULD be the steps (1-3) and the maintenance of the different hierarchies and ownership values.
Hope the above helps.

Legal Consolidation VS Management Consolidation

Hi Gurus,
In the reporting application types
" Financial type allows to perform Management consolidation function and in Consolidation type allows to perform Legal consolidation function. "
What is the difference between Management consolidation and legal consolidation ?
I am bit confused can some one explain me what exactly it mean with an example??

Hi,
For the consolidation purpose,the data record contains at least the following fields:
company
company-partner
Profit Centre
Profit Centre-partner.
For legal consolidation, only company-related data matters. Because Profit centre data will be taken from the other source.For management consolidation, only Profit centre-related data matters.
There will be 2 initial data sets, should be created as Consolidation Areas to meet the business requirements , for example ASML -Legal Consolidation,ASMM-Management Consolidation.This is as according to the best in practice approach to have different sets of data for legal and management reporting. Management is focused on per segment, per product reporting and statutory focused on the legal entity view.
Each consolidation area will only hold the relevant consolidation unit. That is, the statutory consolidation area will only hold company codes and will not post/process to profit centres at all. The management view will hold Company codes/profit centres (sub assignment object) and the users will post only to the relevant company codes/profit centres
Also Pls check these links...
http://help.sap.com/printdocu/core/Print46c/en/data/pdf/FILC/FILC.pdf
http://help.sap.com/printdocu/core/Print46c/en/data/pdf/ECCS/ECCS.pdf
http://help.sap.com/saphelp_sem40bw/helpdata/en/67/f7e73ac6e7ec28e10000000a114084/frameset.htm
Re: Synchronize Master Data between BCS and BW within the same SEM system
/message/1508507#1508507 [original link is broken]
http://sap.ittoolbox.com/groups/technical-functional/sap-sem/dataflow-from-r3-to-sem-bcs-950671
https://www.sdn.sap.com/irj/sdn/go/portal/prtroot/docs/webcontent/uuid/6e01a04e-0a01-0010-dfbe-951c2c39d169
http://help.sap.com/saphelp_nw2004s/helpdata/en/c4/9057475ca611d4b2e30050dadfb23f/frameset.htm
http://www.sapprofessionals.org/?q=sem_bcs_key_design_considerations_for_integration_points
http://sapnewbie.blogspot.com/2006/03/sap-sem-bcs.html
http://www.pragmatek.com/news/BW%20Reprint%20Jun%202004.pdf
https://forums.sdn.sap.com/click.jspa?searchID=329906&messageID=549616.
Follow this link.
https://websmp103.sap-ag.de/sem
Pls chk under for more detils: Forums -> SAP Solutions-> SEM-BCS.
media library -> presentations -> SEM-BCS. Here u can find the relative document.
Hope this helps.
Regards,
CSM Reddy

Legal Consolidation

Dear all,
Does ECC 6.0 support Legal Consolidation or do I have to use SEM and BW?

Hi,
Legal consolidation is a term to represent the form of consolidation that is normally by company.
This term is used by SAP as a general terminology. In terms of the SAP product, SAP offer 4 version of product to perform the legal consolidation.
First product called FILC - Financial Legal Consolidation. This is refer to the first SAP consoldiation product which is curently outdated.
Second, it's ECCS. The development of this product has been stopped I believe. But in terms of completeness, I would say that this is the very mature product. You still can use this product if you're at maximum R/3 Enterprise version (4.7).
Third one, is the transition product between ECCS and the 4th product (SEM BCS). This transition product called R/3 based consolidation. You can use this product when you're in 4.7 and above.
Fourth product is SEM BCS. This product is purely built on top of BW instance. I would prefer that you use this consolidation product when you are using at least ECC5.
So, in your case, if you're using ECC6, then I would recommend you to use SEM BCS.
Hope it helps.
regards,

How to handle exchange of Shares in Legal Consolidations

Forum,
I'm looking for a solution to capture the exchange of shares between entities for a third entity.
So the question is, what is the recommended approach to handle these transactions in a legal consolidation application?
For example:
Entity A acquired shares (value of $100K) of Entity C from Entity B
Entity B disposed of shares (value of $100K) of Entity C to Entity A
These transactions need to be eliminated and will affect multiple accounts (ie. acq of disposals, gain/loss, proceeds from sale of shares, etc...)
This leads us to the question of how do you see that the shares amount was related to Entity C without a shares dimension? Or alternatively is this handled using the PShares account in the OwnAccount dim?
Edited by: Michael Hutchins on Mar 20, 2009 10:03 PM
Edited by: Michael Hutchins on Mar 31, 2009 7:56 PM

Hi Michael,
While getting the Trail Balance from your source system the transactions relating to interccompany shares dealing already been recorded.
Now in legal consolidation you have to eliminate these posting for this you can use normal Interunit elimination rules to eliminate the balances.
This should be executed before executing final consolidation eliminations ie Investment and share capital eliminations.
Regards
Naveen.KV

Currency and Groups Dimensions in Legal Consolidation, BPC 7.5

Dear BPC Experts:
          I am using BPC 7.5 NW SP03, and building Legal Consolidation now. According to the SAP Library,http://help.sap.com/saphelp_bpc75_nw/helpdata/en/bpc_nw_index.htm, it says in 7.5, the currency and groups dimension are required and should hold currency members and consolidation members seperately. I have couple of questions about this design.
1. Are GROUPS and CURRENCY dimensions both included in Legal Consolidation Application at the same time?
2. How to move data in currency diemnsion into corresponding members in GROUPS dimension?
    For example: THe GROUPS member, CG1(its currency is USD). How to let data in currency USD move to CG1.
3. In Legal Consolidation data package, should I modify the prompt dimension from CURRENCY_DIM into GROUP_Dim?? cause 7.5 has CURRENCY dim in its package setting at default. However, the consolidation package is based on GROUP perspectives.
    Does anyone give me any idea in it? I really appreciate your help.
Best Regards,
Fred Cheng

Hi Collet,
Thanks for such a quick response. Based on your answer,
The group-type dimension is used for storing the group component of legal consolidation. The group-type dimension represents the relationship of entities for a given consolidation result. This group is consolidated in a single currency, so there is no need to have another dimension. As of Planning and Consolidation 7.5, you can continue to use the currency-type dimension for this purpose, or you can split it into a group-type dimension (type G) and use a pure currency-type dimension (type R) to allow reporting in multiple group currencies.
If at all I go by that will that be sufficient to have only Group Dimension and ignore RptCurrency field in BPC 7.5?
As of now I am having my Group Dimension looks like this.
Member ID          EVDESCRIPTION        GROUP_CURRENCY        PARENT_GROUP      ENTITY
G_CG1                XXXX                          USD                                                                 E_CG1
G_CG2                XXX                            USD                                   G_CG1                   E_CG2
G_CG3                XXXX                          USD                                   G_CG2                   E_CG3
So now do I need to enter any RptCurrency Members under Group Member ID column to have RptCurrency ignored once for all. By the way our RptCurrency and Group Currency is USD only.
Please advise as right now we are not able to have Currency Conversion Functioning properly. I mean when I executed FXTRANSLGF, I am able to my DM status as Successful but saying 0 Submitted   0 Success   0 Fail
I am unable to crack this. I tired playing Groups and RptCurrency but same result. Successful but no records. We have maintained all Exchange Rates corrctly.

BPC 5 - Best practices - Sample data file for Legal Consolidation

Hi,
we are following the steps indicated in the SAP BPC Business Practice: http://help.sap.com/bp_bpcv151/html/bpc.htm
A Legal Consolidation prerequisit is to have the sample data file that we do not have: "Consolidation Finance Data.xls"
Does anybody have this file or know where to find it?
Thanks for your time!
Regards,
Santiago

Hi,
From [https://websmp230.sap-ag.de/sap/bc/bsp/spn/download_basket/download.htm?objid=012002523100012218702007E&action=DL_DIRECT] this address you can obtain .zip file for Best Practice including all scenarios and csv files under misc directory used in these scenarios.
Consolidation Finance Data.txt is in there also..
Regards,
ergin ozturk

Problem with Legal Consolidation for Journal

Hi BPC Friends
I have the application icmatching with data and I have written other values with Journal.
I have run the package legal consolidation.
I have this problem:
for the value that I have loaded into the application, the logic consolidation works correctly, indeed it writes a new record with different datasource
but for the value that I have written into the application using the Journal the logic doesn't work correctly, indeed it writes into the database a new record like the original but with contrary value so I lose also the value that I wrote with the journal
Could you please help me?
thanks
regards
Michele Medaglia

Hello Michele,
Basically what ever data that you input in journal as long as the selection on xdim is fulfilled the script will run normally.
If its write in reverse and deleted your original data, it must be something wrong in your script, you can check at first.
If the problem still you can't found, can you share us a little about the script?
hope helps

Intercompany Elimination is doubling after running Legal consolidation

Hi BPC Guru's
Intercompany Elimination is doubling after running Legal consolidation Data Manager Package 2nd time tripples when run 3rd time and so on..Only change is that for resolving an issue with balance carry forward, we had changed the datasource type property for the audit trail members that store the eliminated amounts ealier this was A (Automatic) we changed that to (Manual) M and this is causing the doubling to start because if i change it back to A then there is no doubling..but the eliminated values are incorrect.
Would be great somebody provides with their expertise.

Hi Arnold,
This issue is related to another issue that was discussed on the http://scn.sap.com/thread/3247090
Till December all was well. Come January, after I run the consolidation package, the rule takes into account the balance from December for each month’s calculation:
There were 2 suggestions from the above post that i tried:
Check if “COPYOPENING” property in the Audit Trail dimension should not be “Y” -> It was Y for me but changing it to “N” did not solve my issue.
Opening Flow should be assigned “FLOW_TYPE” property with the value of “OPENING”
Both these are done in my system. But still the above issue exists. I also tried to change the rule to “Periodic” type but did not help.
What I basically want is for BPC to ignore the values from previous year and run the calculation based on only the current month’s data.
When we first faced this issue during January closing, as a temporary fix, we changed the “DATASOURCE_TYPE” property of the audit members used in Eliminations from A to M. This made the rule not consider December balances in the calculation.
But doing this gave rise to the doubling issue.
Any suggestions?
Regards,
Shruti

Legal Consolidation - A comparision between Indian AS, IFRS and US GAAP

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