how fitch ratings leverages epm 10 for global financial consolidations

Ranjit Prithviraj

How Fitch leverages EPM 10 for global

financial consolidations

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www.fitchratings.com

Fitch Ratings At-A-Glance

• Fitch is the 3rd largest rating agency

• Dual-headquartered in New York and London

• Global Headcount: 2,000+ professionals

• Location: 50+ offices globally

• Reports in both IFRS and US GAAP

• Maintains two reporting currencies

(USD and GBP)

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Legacy Pain Points – Bottlenecks in the close process

• Non-standard chart of accounts

across the Group

• Manual processes and process

issues

• Reporting - Requirement to

produce management reports

quickly

• Data Load

Consolidation Facts:

• Utilizes leading ledger (IFRS)

and parallel ledger (US

GAAP)

• Consolidates 77 companies

in 33 currencies

• Split ownership percentages

of 5-100% at various sub-

consolidation levels

• 9 levels of consolidation

• Automatic ICO and COI to

speed up the close

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Business Requirements

General: • Shorten close cycle

• Decrease load times to under 15

minutes.

• Flexible user friendly and intuitive

reports

• Role based security access

• Better system integration

Data Integration: • Global chart of accounts

• One point of entry - all source data

in ECC

• Automated retrieval of data from

ECC BW EPM10

• Centralized master data creation

for shared dimensions

• Hierarchy maintenance in EPM10

and reload to BW

Feature Functionality: • Capture translation adjustment by

account (account roll-forward and

cash flow)

• Automate ICO and COI

• Alerts required for process chains

• Multiple reporting currencies

• Multiple GAAP requirements

Information Delivery: • Scheduled and ad-hoc data loads

during the work day

• Reconciliation from ECC to EPM10

• LFL and actuals available at same

time (management and GAAP

reporting)

• Drill-through and drill-down back to

ECC data (journal level detail)

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ERP Landscape Diagram

7/26/12

ECC

0L ledger - IFRS Transactional ledger

L1 Ledger - US GAAP

L2 Ledger - Local GAAP

BW LFL

calculation

SUBS Billing and Revenue data

BEX Reportin

g

EPM 10

CONSOLIDATION MODEL

Statutory reporting Consolidation entries & eliminations CTA - translation of BS (non equity) to month end spot

MANAGEMENT MODEL Management Reporting Management only adjustments

ICMATCHING MODEL Intercompany Reconcilaition Memo data only, no data entry

IFRS (0L) US GAAP (L1)

LC, GBP, USD

IFRS (0L)

TC, LC, GBP, USD

IFRS (0L)

TC, LC, USD, LFL USD

P&L and BS P&L ICO GL accounts

All data - GL, COPA, subledgers,

FX rates

Consol entries

and elims

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Data Conversion – Migration from legacy environment

Old structure

• One ledger in ECC (multiple Local GAAPs)

• Consolidation companies with many currencies

• Many manual group consolidations

• Manual corrections to errors in CTA

New structure

• 2- ledgers in ECC - (IFRS and US GAAP)

• Deconsolidate and reposition consolidation company balances

• Convert only opening balance

- Sync fixed assets and other system generated sub ledger accounts

- Sync intercompany by transactions

• Clean up of history took many months

- Reconfigure old data to look like new (UAT and data conversion)

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Data Conversion – Migration from legacy environment

Old structure

• One ledger in ECC (multiple

Local GAAPs)

• Consolidation companies with

many currencies

• Many manual group

consolidations

• Manual corrections to errors in

CTA

New structure • 2- ledgers in ECC - (IFRS and US GAAP)

• Deconsolidate and reposition consolidation

company balances

• Convert only opening balance • Sync fixed assets and other system generated

sub ledger accounts

• Sync intercompany by transactions

Clean up of history took many

months

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Key Objectives for a faster close

Building a full data flow for management, legal, US GAAP, IFRS

reporting within BPC NW 10

Automation of key consolidation processes with drill through and

other performance improvement to expedite close process

Offering flexibility w/o comprising usability

Solution which not only supports but also enables business

decisions and incremental improvements

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Return on Investment

Better integration with system of record – SAP - ECC

Central repository of all data in BW – Single Source of Truth

Quick turnaround : Huge reduction in time spend collecting

information for close.

One common solution alleviates inconsistencies in reporting

Reduction in down time of system and reduction in data load times

Improvement in reconciliation & close cycle time

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Best Practices and Lessons Learned

Prototype approach

Build a process based solution

Leverage a common data model across the Organization.

Make data available from different systems as and when needed

Focusing on usability is key.

Create a user controlled process for more accountability

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