Defining Consolidation Rules

This chapter provides an overview of consolidation rules and discusses how to:

• Define balancing account type rules.

• Define tolerance rules.

• Define close process rules.

• Define ownership rules.

• Define elimination rules.

• Define noncontrolling interest rules.

• Define equitization rules.

• Define flow templates.

• Establish consolidation models.

• Validate consolidation rules.

Understanding Consolidation Rules

Prior to processing consolidations, you need to establish business rules that control how the system eliminates intercompany transactions, investments in subsidiaries, noncontrolling interests, and tracks account movement (data flows) from the consolidated ledger. These rules define a consolidation model, specifying all of the parameters used as input into consolidation processing. To support these rules, you must also define the ownership percentage relationships between your business units, and optionally establish tolerance rules to set limits for out of balance amounts. This diagram shows the supporting data and rules that you define prior to processing consolidations:

Defining consolidation rules

Consolidation Rule Types

There are several types of consolidation rules:

Rules, Rule Sets, and Rule Groups

To enable you to share rules among multiple consolidation models, to facilitate using multiple scenarios, and to reduce ongoing maintenance, there is a hierarchy to many of the various rule definitions used for consolidations. At the lowest level, you define an individual rule, and then combine these rules into rule sets, and finally, one or more rule sets comprise a rule group. The rule groups are associated with the consolidation model:

Hierarchy of rules, rule sets, and rule groups

When you associate a rule set with a rule group, you assign it a use order. During processing, the rule sets are processed in sequence in ascending order based on their use order. Within each rule set, the rules are processed by ownership set and rule ID. When you are defining a new consolidation scenario, you can reuse rule groups that you've already created for a previous consolidation model. You can modify or create a new rule group by using an existing rule group and inserting new rule sets within the rule group that use a lower use order.

Defining Balancing Account Type Rules

This section provides an overview of balancing account type rules and discusses how to establish balancing account type rules.

Understanding Balancing Account Type Rules

Balancing account type rules define which accounts within the consolidation ledger are used to determine if the ledger is balanced. When you define the balancing account type rule, you include a row for each account type that should balance. The balancing account type rule must be set up differently depending on the format of the consolidation ledger template for which it will be used:

• Financial statement format ledger templates typically include only balance forward account types in the balancing account type rule.

• Trial balance format ledger templates typically include both nonbalance forward and balance forward account types in the balancing account type rule.

Note. Memo accounts are not typically included in a balancing account type rule.

Page Used to Define Balancing Account Type Rules

Establishing Balancing Account Type Rules

Access the Balancing Account Type Rule page.

Account Type	Add rows within the Balancing Account Types grid for each account type that should be used to balance the consolidation ledger.
Balance Forward	Indicates whether the account type is a balance forward account. This field is unavailable for entry.

See Also

Defining Account Types and Accounts

Understanding Ledger Templates

Defining Tolerance Rules

This section provides an overview of tolerance rules and discusses how to establish tolerance rules.

Understanding Tolerance Rules

You have the option of assigning tolerance rules to your elimination and equitization rules. Tolerance rules define an acceptable threshold for out of balance amounts for journal generation by the consolidation processes. The system posts journals when the amount by which a transaction is out of balance is less than this threshold. You can define tolerance either as a specific amount or as a percentage of the total transaction amount of the consolidation tree node for the out of balance grouping. (The percentage is calculated based on the total for the particular rule and node combination.) The system creates suspense account entries to record adjustments for out of balance conditions. If the out of balance amount is greater than or equal to the tolerance threshold, the system creates the journal with the out of balance entry without posting the journal. In addition, if you select the Send Tolerance Email check box on the run control request page, the system sends an email to alert a designated person about the discrepancy. Your organization can then investigate the reason for the discrepancy and determine the appropriate corrective action to take. The journal can be force posted, or you can rerun the consolidation process after entering the appropriate adjustments to resolve the out of balance amount.

Pages Used to Define Tolerance Rules

Establishing Tolerance Rules

Access the Tolerance Rule page.

Tolerance By	Select one of these options to specify how the system should determine the tolerance: Percentage: The system determines the tolerance by using a percentage of the total amount of the transactions. Amount: The system determines the tolerance based on an amount that you specify. The amount is calculated based on the greater of either the total debits or total credits within that elimination set, for that rule, node, and group by out of balance amount.
Percentage	Enter the tolerance threshold percentage. Only available for entry when Percentage is selected in theTolerance By group box.
Amount	Enter the tolerance threshold amount. Only available for entry when Amount is selected in the Tolerance By group box.

Defining Ownership Rules

This section provides an overview of ownership rules and discusses how to:

• Establish ownership rules

• Establish ownership percentage

• Establish ownership sets

• Establish ownership groups

Understanding Ownership Rules

The ownership structure within a large organization can be complex and dynamic. The consolidation system these organizations use must enable the management of the ownership structure and their related accounting treatments.

To simplify the ownership structure issues, Global Consolidations introduces the following components:

• Ownership rules.

• Ownership sets and ownership groups.

Ownership Rules

The ownership rules setup enables you to determine accounting methods, equitization thresholds, and ownership levels of a parent for a subsidiary based on the total and voting shares owned by the parent.

The accounting methods available are pooling, proportionate, and purchase. If you use the Pooling of Interests method, the subsidiary must be 100 percent owned by a single parent, eliminating the need for noncontrolling interest calculations, and the equitization threshold percent must be in range from 0 to 100.

The Pooling of Interests method is a similar accounting treatment as the purchase method, except that in order to use the Pooling of Interests method, the parents investment in the subsidiary must be virtually all common stock (at least 90 percent of voting stock). The parent uses the book value of the subsidiary's assets and liabilities. Because the parent uses the subsidiary's book values, goodwill is not recorded on the parents book for this type of ownership setup.

Note. Ownership rules are setup to accommodate different accounting methods. If a business unit is included in the consolidation tree and ownership rules are setup for that business unit, the business unit will be included as part of the consolidation with consolidation entries based on the ownership level.

An ownership rule defines the ownership and control relationships between a subsidiary and parent. Business consolidation rules use ownership rules to equitize changes in subsidiary equity, and to calculate the noncontrolling interest elimination. Ownership does not necessarily imply control. For example, one company may own 60 percent of another subsidiary, but own only 20 percent of the controlling stock. The system uses control percentage to determine whether or not to equitize. The system uses ownership percentage to determine the amount to equitize, and to calculate the amount of noncontrolling interest to eliminate.

Ownership rules identify:

• All of the parents within your consolidation structure that own a part of the subsidiary.

• The percentage of the subsidiary that each parent owns.

• The percentage of control that each parent exerts over the subsidiary.

• The controlling parent.

  Note. A controlling parent is required.

  The controlling parent for a subsidiary must be specified even if that parent is not a direct owner of the subsidiary. If none of the direct owners control more than the percentage required to consolidate, the controlling parent would be the business unit where the total control from the direct parents adds up to the percentage required to consolidate. If this controlling parent does not have direct control, specify zero percent as the control percentage (because the parent has indirect control). If the total control across all parents is lower than the percentage required to consolidate (for example, the subsidiary isn't even in the consolidation tree), then it really doesn't matter which parent is the controlling parent; you can specify any one.

The sum of all of the ownership percentages for a particular subsidiary-parent relationship must be less than or equal to 100. Because there may be other owners of a subsidiary that are external to your organization's consolidation structure, the total ownership and control percentages for a particular subsidiary can be less than 100.

During processing the system creates a flattened tree of the ownership structure in PS_GC_OWN_STR_TBL. The system uses this table to:

• Determine the equitizing parent during equitization processing.

• Determine to which parent to post the parent investment elimination during NCI processing.

Review this record to verify that your ownership structure is set up correctly.

Subsidiary equity is eliminated against the parent investment in the subsidiary depending on the level of ownership.

The following table outline the different accounting treatments and their impact on consolidations:

Ownership Sets and Ownership Groups

Ownership sets are a collection of individual ownership rules. Ownership groups are a collection of ownership sets that you associate with a consolidation model for the consolidation business rules processing. The ownership rules, ownership rule sets, and ownership rule groups are all effective-dated allowing for changes to your organizational structure. The ownership rules enable you to specify the accounting treatment for parent/subsidiary relationships and the ownership rule sets enable you to bring together all of the various accounting treatments that the parent organization establishes for its numerous subsidiary relationships. The ownership group enables you to tie all of these relationships to the consolidation model and to determine how consolidation rule processing impacts these relationships.

The Ownership Group page lets you input globally the consolidation and equitization thresholds. The consolidation threshold defines the level that a subsidiary book requires consolidation to its parent upon reaching the specified level. The equitization threshold defines the threshold that the equity method of accounting goes into effect. The equity method of accounting requires a parent to reflect its ownership percentage of the subsidiary's income in their income statement with an offset to the investment account for the subsidiary.

An ownership group comprises one or more ownership rule sets. You associate an ownership group with a consolidation model. Use orders assign the processing order of the ownership rule sets associated with an ownership group.

Warning! An ownership set can contain ownership rules with multiple subsidiary entities. It is possible for the ownership sets made up of various ownership rules to contain the same subsidiary entities. If this is the case, the ownership rule in the ownership set with the lowest numeric use order value is used during consolidation processing.

Common Elements Used in This Section

Pages Used to Define Ownership Rules

Establishing Ownership Rules

Access the Ownership Rule page.

Subsidiary Entity

Select the subsidiary whose ownership relationships and percentages you are describing. The subsidiary entity identifies the value of the subsidiary depending on the ChartField value you specify for the field name. Typically it is a ledger business unit.

Equitization Threshold Method

Select the equitization threshold method that you want to use for the ownership rule. You can select the Use Ownership Group option which will use the threshold value you specify on the Ownership Group page or you can select the Specify Threshold option, which enables you to specify the equitization threshold value in the Threshold Percent field.

When you run the equitization process, the system uses the selection in the Equitize Parent field on the Ownership Rules - Ownership Percentage page to determine whether to equitize changes in subsidiary equity for each parent-subsidiary relationship. When the Equitize Parent field is set to Use Threshold, the equitization threshold percent of the parent is compared to the control percentage for each subsidiary-parent relationship. When the control percentage is greater than or equal to the equitization threshold percent, changes in subsidiary equity (for example, net income) are equitized, using ownership percentage to determine the amount for each subsidiary-parent relationship. The equitization threshold percentage can be specified both on the Ownership Rules page and on the Ownership Group page. The threshold value entered on the Ownership Group page applies to all entities within the Ownership Group being processed, but you can override it at the main parent level; the threshold for the ultimate parent is the same as the consolidation model.

To specify a threshold for a specific parent, enter the amount in the Equitization Threshold Percent field on the Ownership Group page where that parent is itself a subsidiary, then indicate whether to use the ownership group-level or subsidiary-level by selecting one of these equitization threshold methods:

Accounting Method

Select the accounting method you want to use for the ownership rule. You can select one of three options. Pooling, Proportionate, or Purchase.

The method you select impacts the field edits on the Ownership Percentage page. For example, if you select Pooling, the Subsidiary Entity must be 100 percent owned by a single parent, the Equitization Threshold Percent must range from 0 to 100, and the option to calculate/specify the ownership is not available on ownership percentage page of the ownership rule.

Establishing Ownership Percentage

Access the Ownership Rule - Ownership Percentage page.

Add a row for each parent in the Specify Parents grid, and complete these fields:

Subsidiary Entity Shares

The values you enter in this section determine the ownership level and controlling interest of the parent for the subsidiary.

Specify Parents

The values you enter in this section determine the ownership level and controlling interest of the parent for the subsidiary.

Note. The formula used to calculate Control Percentage = Voting shares of the parent/Total voting shares of sub * 100 %.

The formula used to calculate Ownership Percentage = Total shares of the parent/Total shares of sub * 100 %.

Establishing Ownership Sets

Access the Ownership Set page.

Add Ownership Rules

You have the option to add multiple business units or departments in the Ownership Rules grid by either using either a business unit tree or department tree or by using a wildcard search on business unit names or department names. You can use one option or the other but not in combination with each other.

All business units or departments in a specified tree name are added to the Ownership Rules grid if you do not specify a tree node.

Similarly, if you use the wildcard search mode and click Add Department or in the case of a ledger business unit tree Add Ledger Business Unit, the systems adds all items that match your wildcard designation to the Ownership Rules grid. If you use the wildcard search, then all business units whose name matches the pattern specified are added to the Ownership Rules grid.

Ownership Rules

Add a row for each ownership rule in the Ownership Rules grid that you want to include in the ownership rule set and complete these fields:

Establishing Ownership Groups

Access the Ownership Group page.

Consolidation Threshold	Enter the consolidation threshold percent amount that you want to apply to the ownership group. The consolidation threshold defines the level that a subsidiary book requires consolidation to its parent upon reaching the specified level.
Equity Method Threshold	Enter the equity method threshold percent amount that you want to apply to the ownership group. The equity method threshold defines the threshold that the equity method of accounting goes into effect. The equity method of accounting requires a parent to reflect its ownership percentage of the subsidiary's income in their income statement with an offset to the investment account for the subsidiary.
Create Ownership Rule Set	Click to create a new ownership rule set.

Ownership Rule Set

Add a row for each ownership rule set in the Ownership Rule Set grid that you want to include in the ownership group and complete these fields:

Defining Close Process Rules

This section provides an overview of close process rules and discusses how to:

• Establish close rules.

• Establish roll forward rules.

• Establish closing sets.

• Establish roll forward sets.

• Establish close process groups.

Understanding Close Process Rules

Close process rules give you the ability to close any income statement related entries to retained earnings as well as roll forward account balances generated from adjustments that you record in Global Consolidations. You can also use trial balance based consolidations to roll forward balances to the beginning balance (period zero) for the next year, eliminating the need to load beginning balances for the new fiscal year.

The steps for setting up and viewing close process rules:

1. Set up close rules.

2. Set up roll forward rules.

3. Assign close rules to close rule sets.

4. Assign rollforward rules to rollforward sets.

5. Assign close rule sets and roll forward rule sets (tied to a consolidation dimension, such as ledger business unit) to a close process group.

6. Assign close rule process groups to a consolidation model.

7. Run the close process application engine.

   • Year end processing (trial balance based consolidations).

   • Period end processing (financial statement based consolidations).

   • Period locking available from the run control page.

8. Review the close process status with the consolidation manager.

9. Review close amounts and roll forward balances with reports.

Note. The type of consolidation method (trial balance based or financial based) is determined by your setup of the consolidation model, ledger template, and the consolidation ledger .

See The Consolidation Model.

See Understanding Ledger Templates.

See Understanding Ledgers.

This table is a summary of the setup required for close process rules when using either financial statement or trial balance based consolidations:

Common Elements Used in This Section

See Also

Consolidation Data Source

Pages Used to Define Close Process Rules

Establishing Close Rules

Access the Close Rule page.

Close Rule Input

Close Rule Source Input

The Close Rule Source Input grid is active if you select to Specify Source Process Value as your source process option.

You can identify the source processes you want to use as input for the closing process rule setup. Add a row for each source process you want to add as input for the close rule. For example, you may want to specify Manual Entry as a source process to include as input for any manual journal entries you want to capture in your closing rule.

Close Rule Input

Specify a ChartField value set from the prompt table. If the ChartField value set you want is not available from the prompt table, click the Create ChartField Value Set link to access the ChartField Value Setup page and create the ChartField value set you require for your close rule setup.

The ChartField value set defines the set of accounts you require to define consolidation rules.

Close Rule Output

Specify the field names (ChartField values), the output options, and the value for the selected field names (ChartField values). Click Get ChartFields to populate the Close Rule Output grid with all of the ChartField values available.

Establishing Roll Forward Rules

Access the Rollforward Rule page.

Roll Forward Rule Input

Specify the source process option and the roll forward rule input.

Specify the source processes you want to include for the rule in the RollForward Rule Source Input grid if you use the Specify Source Process Value option.

RollForward Rule Source Input

The RollForward Rule Source Input grid is active if you select Specify Source Process Value as your source process option.

You can identify the source processes you want to use as input for the roll forward process rule setup. Add a row for each source process you want to add as input for the roll forward rule. For example, you may want to specify Manual Entry as a source process to include as input for any manual journal entries you want to capture in your roll forward rule.

Roll Forward Rule Input

Specify a ChartField value set from the prompt table. If the ChartField value set you want is not available from the prompt table, click Create ChartField Value Set to take you to the ChartField Value Set page and create the ChartField value set you require for your roll forward rule setup.

Alternatively, you can click the Description link to edit or view the existing ChartField value set.

Establishing Closing Sets

Access the Closing Set page.

Rules

Use the Rules grid to assign your close rules to the closing set.

Establishing Roll Forward Sets

Access the Roll forward Set page.

Rules

Use the Rules grid to assign your roll forward rules to the roll forward set.

Establishing Close Process Groups

Access the Close Process Group page.

Consolidation Tree

Select a consolidation tree for the close group.

See Guidelines for Consolidation Trees.

Close Process Rules

Use the Close Process Rule grid to assign close rule sets and roll forward rules to a close process group. Insert rows if you need to include multiple close rule sets and/or roll forward rules.

Note. You can only assign one close process group to a consolidation model.

Defining Elimination Rules

This section provides an overview of intercompany eliminations and discusses how to:

• Establish elimination rules.

• Specify elimination lines.

• Define elimination targets.

• Define out of balance options.

• (Optional) Assign tolerance rules.

• Establish elimination rule sets.

• Establish elimination groups.

Understanding Intercompany Eliminations

While there may be situations that require you to report gross consolidations (combining business unit ledger balances without eliminations), in most cases, you want to eliminate or cancel out the effect of intercompany transactions.

To eliminate transactions between entities in your organization, set up individual elimination rules that identify a set of accounts that are used for interunit transactions, and should therefore be eliminated. These rules combine to create an elimination rule set. One or more elimination rule sets comprise an elimination group; a single elimination group is assigned to the consolidation model.

The elimination group that you associate with the consolidation model must include every possible set of transaction partners within your consolidation. A transaction can occur between two or more transaction partners, or from a partner to itself.

In this example, Company B0001 sold services to Company B0002. In this case, the revenue and expense accounts need to be eliminated in addition to the due from and due to accounts:

The way in which you set up elimination rules depends on how your organization records interunit journal entries. Typically, you use one of these methods to record interunit transactions:

• A separate ChartField—typically account—records with which business unit the transaction occurs.

• A single account records all interunit transactions, and the affiliate ChartField specifies with which business unit the transaction occurred.

This example shows activity between business units using different ChartField values—in this case, different accounts—for intercompany transactions:

This example shows the same intercompany payables and receivables among three business units using the affiliate ChartField:

If you use the affiliate ChartField when generating interunit accounting entries, the consolidation engine determines which entries to eliminate by matching the affiliate and amount. If you do not use the affiliate ChartField when generating interunit accounting entries, then you need to identify matching accounts for elimination, as the system is unable to tell which transactions match. To specify the matching accounts, you need to create an elimination rule for each set of accounts that contain transactions with each other. You need to specify both business unit and account number because the account could span multiple business units.

Using the examples above, in the case where the affiliate ChartField is used, only one elimination rule is needed:

In the case where different accounts were used for each transaction instead of the affiliate ChartField, the following elimination rules are needed:

Common Elements Used in This Section

Pages Used To Define Elimination Rules

Establishing Elimination Rules

Access the Elimination Rule page.

The elimination rule defines a related group of intercompany accounts. Once eliminated, the balances of this group of accounts should normally net to zero. Optionally, to maintain a balanced journal entry, the system posts any amounts that remain after the elimination to the ChartField value specified on the Elimination Rule - Out of Balance page.

Matching

The selections within the Matching group box pertain only to the matching report. These fields specify how the report categorizes the journal lines that result from this elimination rule.

See Also

Matching Intercompany Balances

Specifying Elimination Lines

Access the Elimination Rule - Elimination Lines page.

Elimination lines identify which set of ChartField values describe an intercompany transaction. The fields that you include (the rows) in the Values To Eliminate grid differ depending on whether the ChartField structure for your consolidation ledger uses the Affiliate field and whether you have selected the Match Affiliate Value check box on the Elimination Rule page. Typically, you define two or more lines for each elimination rule. These lines identify all of the partners within an intercompany transaction, and should normally net to zero. You must specify the Account field for each value to eliminate. Optionally, you can specify additional fields, such as Department, for example:

• If you are using the affiliate method (that is, Match Affiliate Value is selected on the Elimination Rule page), the consolidation process is able to determine with which business unit the transaction occurred.

  You do not need to specify the consolidation dimension value (for example, the specific ledger business unit) to eliminate.

• If you are not using the affiliate method, the consolidation process is only able to eliminate the transactions identified by the elimination lines.

  In that case, the system generates an elimination journal entry line to offset the transactions specified (debits or credits). You must specify the consolidation dimension value to eliminate (for example, the specific ledger business unit), as well as the account.

For each elimination line, complete these fields:

Values To Eliminate

Add rows within the Values To Eliminate grid to specify additional ChartField values to eliminate, or within Elimination Lines to add additional elimination lines.

Specify the field name and the ChartField value you want to eliminate. You must select Account as one of the field names. Add additional lines within this grid to specify additional ChartField values. Remember, if you are not using affiliate, you need to identify the consolidation dimension field value (such as the ledger business unit value) in addition to the other ChartFields that you are eliminating.

Defining Elimination Targets

Access the Elimination Rule - Elimination Target page.

The default option for each dimension specified is to retain the source value. The system then creates elimination entries that retain the dimension values of the input ledger lines, reversing the amounts, and booking them to the elimination unit. The elimination entry value is blank if you do not specify the dimension (ChartField).

Note. Do not include the consolidation dimension as a target; the consolidation dimension is always booked to the elimination entity during processing and cannot be changed. For example, if you base your consolidation on ledger business unit, then you cannot include Ledger Business Unit as a field within the elimination target grid. If you click the Get ChartFields button to populate the grid, remember to delete the consolidation dimension row, otherwise, you receive an error and the system does not save the page.

Defining Out of Balance Options

Access the Elimination Rule - Out of Balance page.

Calculate Out of Balance

When selected, if the elimination rule does not generate a balanced journal entry during processing, the system generates a journal line that debits or credits the out of balance account that you specify on this page with that amount. Complete the remaining fields to indicate the target used to book any out of balance amounts. Clear this check box to enable the system to create elimination entries that are not required to balance, effectively creating a one-sided elimination of an account. If you choose to do this, keep in mind that in order for the system to create a valid, postable journal, your elimination rules need to use accounts that aren't required to be balanced, as defined in the balancing account type rule. Typically, you would be using a financial statement ledger format if you choose not to calculate out of balance.

If you select the Calculate Out of Balance option, complete the field names and values, as appropriate, for these fields to define the out of balance target:

See Also

Defining Balancing Account Type Rules

Assigning Tolerance Rules

Access the Elimination Rule - Tolerance page.

Tolerance Rule

Select the tolerance rule to use with this elimination rule. If the out of balance amount or percentage is greater than the amount or percentage specified in the tolerance rule, the entire elimination entry does not get posted. Optionally, the user is notified.

See Also

Defining Tolerance Rules

Establishing Elimination Rule Sets

Access the Elimination Rule Set page.

Elimination Rules

Specify all of the elimination rules to include in this elimination set, adding additional rows as needed.

See Also

Rules, Rule Sets, and Rule Groups

Establishing Elimination Groups

Access the Elimination Group page.

Elimination Rule Sets

Specify all of the elimination rule sets to include in this elimination group, adding additional rows as needed. Include all of the rule sets you need to identify every intercompany transaction balance requiring elimination. You assign one elimination group to a consolidation model. Rule sets processing occurs in ascending order based on the value in Use Order field.

Use Order

Enter the use order value. Rule sets processing occurs in ascending order based on the number in this field. If you selected the data processing option, Skip Previously Processed Data, and the same data exists in multiple rule sets, the first data encountered is used. If you selected the data processing option, Process All Data, the data is processed again for the rule in the ruleset appearing in a later sequence order.

Defining Noncontrolling Interest Rules

This section provides an overview of noncontrolling interest eliminations and discusses how to:

• Establish noncontrolling interest rules.

• Establish noncontrolling interest sets.

• Establish noncontrolling interest groups.

Understanding Noncontrolling Interest Eliminations

Use noncontrolling interest (NCI) rules to eliminate subsidiary equity against parent investment and to account for the investment of noncontrolling interests in the subsidiary. In consolidating the books of a subsidiary with those of the parent company, you credit the parent with the portion of the subsidiary that it actually owns and exclude what outside investors own. The system reports value of noncontrolling interests in terms of the aggregate net assets rather than in terms of a fractional equity in each of the assets and liabilities of the subsidiary.

When processing noncontrolling interest eliminations, Global Consolidations generates journal entries that eliminate the parent's investment in subsidiary balance, eliminates the subsidiary's equity balance, and generates a noncontrolling interest entry. The system calculates the amount of the noncontrolling interest entry by multiplying the ownership percentages of noncontrolling interests in the subsidiary by the total equity of the subsidiary.

When processing noncontrolling interest eliminations, the system:

• Eliminates the portion of the subsidiary equity corresponding to the ownership percentage against the parent investment (plus any out of balance required).

• Eliminates the remaining subsidiary equity against NCI Liability.

• Generates noncontrolling interest adjustments, if applicable.

  If noncontrolling parents are either at higher levels in the tree or in branches other than the controlling parent, you get two additional sets of entries. In this case, the first set of entries is the same—eliminating the parent investment against the portion of the subsidiary equity that corresponds to the parent ownership percentage. The second set of entries is similar, but they differ in that they adjust (or unwind) the NCI Liability that was recorded at the controlling parent.

Note. Even if the parent owns 100 percent of its subsidiaries, you must define NCI rules in order for the system to eliminate the parent investment and subsidiary equity balances.

The combined result of the adjustments and elimination entries is to express the value of the parent investment in terms of the assets and liabilities of the subsidiary, offset by a noncontrolling interest liability. The equity ownership for each subsidiary in the consolidation is eliminated, with only the parent company’s equity accounts and noncontrolling interest account remaining. Consolidated capital stock and retained earnings are equal to the balances of the parent.

In this example, Company B1 owns 80 percent of Company B2, and B2's total shareholder equity is 50,000:

Setup for noncontrolling interest for 20 percent of Company B2 (0.2 x 50,000)

* Noncontrolling interest entry to recognize the 20 percent noncontrolling interest owned by other than B1 in B2.

** Elimination of the total equity of B2 versus the investment in Company B2.

The amounts of 35,000 and 15,000 to eliminate Company B equity are recorded in multiple entries. The first set of entries (recorded with a GC_SOURCE of 6A) eliminate the total parent investment of 40,000 and eliminate 80 percent of the subsidiary equity (28,000 to capital stock and 12,000 to retained earnings). Then the second set of entries (recorded with a GC_SOURCE of 6B) deal with the NCI—they eliminate the remaining 20 percent of the subsidiary equity (7,000 and 3,000, respectively) and book the offsetting 10,000 entry to the NCI Liability.

Common Elements Used in This Section

Pages Used to Define Noncontrolling Interest Rules

Establishing Non Controlling Interest Rules

Access the Non Controlling Interest Rule page.

Data Processing Option

Select the data processing option that you want the elimination rule to use. Your options are Skip Previously Processed Data or Process All Data. If you select Skip Previously Processed Data, the system processes the data once for a single rule and skips over previously processed data for any other rules. If you select Process All Data, the system can process the same data again for a different rule.

Account ChartField Value Set

Establishing Non Controlling Interest Rule Eliminations

Access the Non Controlling Interest Rule - Elimination page.

Complete the fields within each grid to identify the target dimension or ChartField values that the system uses to eliminate the parent investment, eliminate the subsidiary equity, book the subsidiary equity for noncontrolling interest, and book the noncontrolling interest liability. Account is required. The default option for each dimension specified is to retain the source value, in which case the system creates elimination entries that retain the dimension values of the input ledger lines, reversing the amounts and booking them to the elimination unit. If a dimension (ChartField) is not included, then its value is left blank on the elimination entry.

Establishing Non Controlling Interest Rule Out of Balance Accounts

Access the Non Controlling Interest Rule - Out of Balance page.

If the noncontrolling interest elimination does not balance, the system directs the remaining amount to the appropriate out of balance account or ChartFields that you specify on this page. You can specify special ChartFields for the out of balance amounts. For example, you can enter a department for both the Debit and Credit ChartFields in addition to an account.

Assigning a Tolerance Rule (Optional)

Access the Non Controlling Interest Rule - Tolerance page, and specify a tolerance rule to use with this noncontrolling interest rule. If the out of balance amount is greater than the amount or percentage specified in the tolerance rule, the entries are not posted. Optionally, the user is notified.

See Defining Tolerance Rules.

Establishing Non-Controlling Interest Sets

Access the Non-Controlling Interest Set page.

Add/Update Subsidiary Entity

This group box is a work area that you can use to help you complete the Non Controlling Interest Rules grid. By specifying a business unit tree name, then clicking Get Subsidiary Entity, you can retrieve and insert all of the ownership sets for the business units with an ownership rule defined in that tree that are not currently in the Non Controlling Interest Rules grid. Similarly, if you select a noncontrolling interest rule, then click Apply the Non-Controlling Rule, the selected rule is associated with the rows in the Non Controlling Interest Rules grid that do not have an assigned noncontrolling interest rule.

Non Controlling Interest Rules

Insert rows to specify each subsidiary's ownership set and its noncontrolling interest rule. The system uses this pairing to compute the noncontrolling interest amount to eliminate. The consolidation process generates one journal for the entire job, composed of journal lines for each noncontrolling interest set and ownership set pair. If there are any out of balance conditions, the out of balance account is debited or credited.

Establishing Non-Controlling Interest Groups

Access the Non-Controlling Interest Group page.

Within the Non-Controlling Interest Set grid, specify all of the noncontrolling interest sets to include in this noncontrolling interest group. Include all of the rule sets you need to identify every subsidiary for eliminating noncontrolling interests. You can only assign one noncontrolling interest group to a consolidation model. The rules are processed in ascending order based on the Use Order value. If the same rule exists in multiple sets, the first rule encountered is used. In other words, only unique rules are used.

Defining Equitization Rules

This section provides an overview of equitization and discusses how to:

• Establish equitization rules for processing equitization.

• Establish noncontrolling interest only equitization rules.

• Establish dividend reclassification equitization rules.

• Establish source elimination equitization rules.

• Establish equitization rule sets.

• Establish equitization groups.

Understanding Equitization

The equitization process records current period changes in a parent's investment in subsidiaries based on the subsidiary’s changes in equity. This process then creates the related eliminations entries and books them to the elimination entity.

You have the option of calculating and accounting for noncontrolling interest or reversing the target amounts that result from equitization; whether you need to do this depends on which accounts you're using as input into the consolidation process. If year-to-date (YTD) elimination for investment is taken care of for equitization processing, you do not want the NCI eliminations (part of processing eliminations) to generate them again; that is why the option to reverse the target amounts from equitization is provided.

When a subsidiary's equity changes during the year, its parents will want to update their books to reflect those changes. This is important because it gives an accurate depiction of those parent statements on a standalone basis if these companies are reporting separately to regulatory agencies. When the organization as a whole presents its consolidated financial statements, this change in value requires elimination. The only impact that equitization should have on the consolidated reports is to show the portion of the subsidiary’s change in equity for the current period or year that belongs to outside owners (noncontrolling interest), if applicable.

The following example using a trial balance format consolidation ledger shows the results of the equitization.

The parent owns 70 percent of the subsidiary. Net income for the subsidiary is $100; therefore, the parent’s portion is 70 percent of this amount. The equitization process will create journals to debit $70 to the parent’s investment account and credit $70 to the equity income account for this period:

When producing consolidated financial statements, you need to eliminate your equitization entries and create noncontrolling interest entries related to the equity generated by the subsidiary during the period. These are both options with the equitization process. If specified, the equitization process creates the elimination entries that “back out” the equitization entries and sends them to the proper elimination entity as indicated in the consolidation tree. It also calculates the noncontrolling interest expense and liability for the subsidiary’s equity for the period. This example shows these entries:

Notice that the effect of the equitization to the parent’s account (b) has been removed by eliminating the equitization entry (a). The noncontrolling owner’s claims on the subsidiary’s net income for the period has also been taken into account by increasing the noncontrolling interest liability and noncontrolling interest expense (c).

Equitization Threshold

When you run the equitization process, the system uses the selection in the Equitize field of the Ownership Percentage page to determine whether to equitize changes in subsidiary equity for each parent-subsidiary relationship. When the Equitize field is set to Use Threshold, the equitization threshold percent is compared to the control percentage for each subsidiary and parent relationship. When the cumulative control percentage is greater than or equal to the equitization threshold percent, subsidiary equity is equitized, using ownership percentage to determine the amount for each subsidiary and parent relationship. The equitization threshold percentage can be specified on both the Ownership Group page and the Ownership Rule page. The threshold value that you enter on the Ownership Group page applies to all entities within the scenario. You can override this value at the parent level on the Ownership Rule page, by completing the Threshold Percent and Specify Thresholdfields on the Ownership Rule page.

See Establishing Ownership Rules.

See Establishing Ownership Groups.

Equitization Method

The method by which you account for changes in subsidiary equity varies depending on the control percentage of the parent. This table outlines the general guidelines that apply:

Equitization Processing Option

The processing options that you can select for an equitization rule are:

• Equitization.

  Use when you are employing the equity method to account for changes in subsidiary equity.

• Noncontrolling interest only.

  Use when you are employing consolidation accounting method for a subsidiary to generate the NCI expense for subsidiary equity.

• Dividend reclassification.

  Use to redistribute dividends received from subsidiaries and the associated tax withholding accounts. Applicable in cases where dividends that were recorded as income at lower levels of an organization need to be reclassified at higher levels of an organization where ownership percentages dictate the use of the equity method.

• Source elimination.

  Valid only for financial-statement-based consolidation ledgers. Use to eliminate the balances of the equitization source accounts that you identify.

The processing option that you select dictates which pages appear in the equitization rule component. Once you define and save an equitization rule, you cannot change the processing option. The following sections describe how to define a rule for each type of processing option. By defining multiple rules using different processing options, as needed, you can process all of these situations at one time within your consolidation model.

Common Elements Used in This Section

Pages Used to Define Equitization Rules

Establishing Equitization Rules for Processing Equitization

Access the Equitization Rule page.

Processing Option

Select Equitization.

Specifying Equitization Sources

Access the Equitization Rule - Source page.

Data Processing Option

Select the data processing option that you want the elimination rule to use. Your options are Skip Previously Processed Data or Process All Data. If you select Skip Previously Processed Data, the system processes the data once for a single rule and skips over previously processed data for any other rules. If you select Process All Data, the system can process the same data again for a different rule.

Equitization Source

Select one or more ChartField value sets containing the accounts to equitize. Typically these are the accounts that store current income (or earnings).

Specifying Equitization Targets

Access the Equitization Rule - Target page.

This page's contents differ depending on the consolidation ledger format. The example shown is for a financial statement format.

Specify the accounts to which the change in subsidiary equity is recorded by completing the fields within the Parent Investment and Investment Offset group boxes.

For financial-statement-based consolidation ledgers only, complete the fields within the Offset Balancing grid to credit the equitization of the source.

Note. For financial statement format consolidations, the parent investment and offset balance must be balance forward account types and the investment offset must be a nonbalance forward account type. You can set up a three-sided entry (all three accounts) or a one-sided entry (just the investment offset account).

Eliminating Noncontrolling Interest for Subsidiary Equity (Optional)

Access the Equitization Rule - Non-Controlling Interest page.

This page's contents differ depending on the consolidation ledger format. The example shown is for a financial statement format.

By completing this page, the system calculates the amount of the current period or YTD subsidiary equity accounts (subsidiary income) that is attributed to outside owners. The amount due to noncontrolling interest is booked to the elimination entity. The system increases the noncontrolling interest liability and noncontrolling interest expense accounts for trial balance format consolidation ledgers. For financial statement format consolidation ledgers, this affects only the noncontrolling interest expense account.

For the account ChartField, you must select Constant, and specify the ChartField value for the appropriate account. To specify additional ChartFields, such as department, insert an additional row.

Subsidiary Offset (Optional)

Access the Equitization Rule - Subsidiary Offset page.

Complete this page if you want to offset the total equitized source amount (which is booked against an elimination entity) to a specified account. This enables you to move the amount to a separate account, for reporting purposes.

Identify the ChartFields to use for the equitization offset and equitization summary. This offsets the total equitized source amount to the equitization summary account specified in the rule by debiting the equitization offset account for the subsidiary and crediting the equitization summary. These entries are booked against the elimination entity.

Establishing Noncontrolling Interest Only Equitization Rules

Access the Equitization Rule page.

Select Non-Controlling Interest Only for the processing option.

Specifying the Source

Access the Equitization Rule - Source page.

Equitization Source

Select one or more ChartField value sets containing the accounts for processing noncontrolling interest only. Typically these are the accounts that store current income (or earnings).

Specifying the Target

Access the Equitization Rule - Target page.

Use the Investment Offset - Target grid to specify the accounts to use when computing amounts due to noncontrolling interest. The system uses the accounts to temporarily store the information that it needs to compute noncontrolling interest. Even though you are not using this rule to equitize, the system must use this to compute amounts for cases of indirect ownership with multiple levels.

Eliminating Noncontrolling Interest for Subsidiary Equity

Access the Equitization Rule - Non-Controlling Interest page.

This page's contents differ depending on the consolidation ledger format. The example shown is for a trial balance format.

By completing this page, when you process equitization the system calculates the amount of the current period or YTD subsidiary equity accounts (subsidiary income) that is attributed to outside owners. The amount due to noncontrolling interest is booked to the elimination entity. The system increases the noncontrolling interest liability and noncontrolling interest expense accounts for trial balance format consolidation ledgers. For financial statement format consolidation ledgers, this affects only the noncontrolling interest expense account.

For the account ChartField, you must select Constant, and specify the ChartField value for the appropriate account. To specify additional ChartFields, such as department, insert an additional row.

Establishing Dividend Reclassification Equitization Rules

Access the Equitization Rule page.

Select Dividend Reclassification as the processing option.

Specifying the Dividend Reclassification Source

Access the Equitization Rule - Dividend Reclassification page.

Specify the ChartFields to use for dividend reclassification by completing the fields within the Dividend/Tax Reclassification Source group box.

Dividend reclassifications need to occur when you have a situation in which there is a subsidiary that is owned by multiple parents where, in total for all parents, there is enough control held to require equitization, but for some individual parents, the level of control is below the threshold. For the parents whose control is below the equitization threshold, dividend is recorded as income; this needs to be reclassified when you reach the appropriate level of the tree at which the equitization threshold is met. To properly reclassify the dividends, it is necessary to make two sets of entries. The first set of entries is made against the equitizing parent. This adjusts the data for the equitizing parent, but does not totally correct the overall consolidated results. So, a second set of entries is made to the common elimination unit between the direct parent and the equitizing parent. These are not true elimination entries in the respect that they are directly eliminating the entries made against the parent. Rather they are an independent set of reclassification entries that need to be made to the elimination unit to adjust the overall consolidation.

The equitizing parent and the entries for the elimination unit are independent of one another. In both cases, the process reads the source, and makes the appropriate entries to each business unit to constitute a balanced set of entries. The reverse sign is used the same way in each case. Some entries read the source amount and keep the same sign while others reverse the sign to make the balanced entry. This flag is always in reference to the source.

Establishing Source Elimination Equitization Rules

Access the Equitization Rule page.

Select Source Elimination as the processing option.

Note. Source elimination rules can be defined only for financial-statement-based consolidation ledgers.

Specifying the Source for Source Elimination

Access the Equitization Rule - Source page.

Equitization Source	Specify one or more ChartField value sets containing the accounts to use for source elimination.
Eliminate Source	Specify the ChartField values to which the system eliminates the source.

Specifying the Noncontrolling Interest Accounts for Source Elimination (Optional)

Access the Equitization Rule - Non-Controlling Interest page.

Complete this page to enable the system to eliminate the portion of the source equity that is not owned.

Establishing Equitization Rule Sets

Access the Equitization Rule Set page.

Equitization Rules	Insert rows to specify each subsidiary's ownership set and its associated equitization rule.
Add/Update Subsidiary Entity	Select the consolidation tree name and click Get Subsidiary Entity to get new subsidiary entities not already a part of the equitization rule set in the Equitization Rules grid. Select the equitization rule and click the Apply the Equitization Rule to add the selected subsidiary entities. This region is a work area that you can use to help you complete the Equitization Rules grid.

Establishing Equitization Groups

Access the Equitization Group page.

Within the Equitization Rules grid, specify all of the equitization rule sets to include in this equitization group, adding additional rows as needed. Include all of the equitization rule sets needed to identify every subsidiary for which equitization should be processed, as only one equitization group is assigned to a consolidation model.

Enter the use order value. Rule sets processing occurs in ascending order based on the number in this field. If you selected the data processing option, Skip Previously Processed Data, and the same data exists in multiple rule sets, the first data encountered is used. If you selected the data processing option, Process All Data, the data is processed again for the rule in the ruleset appearing in a later sequence order.

Defining Flow Templates

This section provides an overview of data flows and discusses how to:

• Turn on Flow Processing.

• Use System Flow Codes.

• Use Manual Flow Codes.

• Set Up Manual Flow Templates.

• Insert Flow Codes in a Manual Template.

• Insert Account Set in a Manual Template.

• Preview the Manual Template.

• Set Up System Activity Flow Templates.

• Insert Flow Codes in a System Activity Template.

• Insert Account Set in a System Activity Template.

• Preview the System Activity Template.

• Define Flow Groups.

• Insert Flow Codes into Consolidation Rules.

Understanding Data Flows

PeopleSoft Enterprise Global Consolidations enables you to perform consolidations using flows. By considering the different type of flows affecting the net balance of an account, you can reconcile account variation with different types of account activities that traditional ledger mapping of accounts was insufficient in capturing.

Using data flows for consolidations involves tracking and reconciliation of gross variation. Gross variation is the difference between opening and closing balances of an account. For example, the gross variation of fixed asset accounts can be distinguished by additions, disposals, , asset impairment, currency translation and reclasses. Data flow of specific accounts are required as part of regulatory reporting.

To track flow amounts you must establish flow codes. Before using flow codes, you need to specify the use of flow processing on the Ledger Template setup page.

Here are the basic procedures for using flow processing:

1. Turn on and setup flow processing on the Ledger Template.

   See Defining Consolidation Ledger Templates.

2. Modify descriptions for system delivered flow codes and select those system flow codes you want to appear on your flow templates to suit your reporting purposes.

3. Set up manual flow codes that you want to use for your flow templates.

   Some manual codes are delivered as sample data.

4. Assign flow codes and accounts to your flow templates.

   You have two types of templates to select from:

   • Manual Flow Template .

   • System Flow Template.

5. Assign flow templates to a flow group.

6. Assign your flow group to a consolidation model.

7. Enter Source flow inputs for Source Balances.

8. Run the source flow update engine to update and translate source flow inputs.

9. Review ledger enrichment manager for status of source flows

10. For journal flow activity, add flow codes to your journal lines or enter journal flows on the Journal Flow Input page.

11. Run the journal flow update engine to update journal flows.

12. Review consolidation manager for status of journal flows

13. Review data flows with the Flow Inquiry page.

Flow Templates

There are two different types of flow templates: manual and system.

• The manual flow input template represents a template in which the user will enter flows. It can combine system flow codes and manual flow codes.

• The system activity template is used to capture accounts that will be used in the cash flow and simply capture the account activity. The system activity template only allows certain system flow codes and no manual flow codes.

  The flow templates are designed so that users can enter information for financial statement footnotes and cash flow analysis. If the user has multi-currency business units, then all flow information must be translated at a closing rate and at a cash flow rate. To illustrate this concept, the following example is presented.

  Suppose that a Fixed Asset opening, closing, change and flow activity amounts (Acquisitions & Disposals) are the following in a foreign currency.

  Account	Open	Close	Change		FXAJ1	FXAJ2	ACQ	DISP
  Fixed Assets	100	200	100		0	0	200	-100

  FXAJ1 and FXAJ2 represent foreign currency translation flow codes and are calculated by the system. ACQ and DISP represent manual flow codes to track acquisitions and disposals, respectively.

  Note that the flow codes of FXAJ1, FXAJ2, ACQ and DISP add up to the Change amount. Assume the following exchange rates.

  Rate Type	Rate
  Opening Rate:	2
  Closing Rate:	4
  Average Rate:	3

  When the amounts/balances are translated at the Closing Rate you would see the following.

  					Sum = Change Amount
  Account	Open	Close	Change		FXAJ1	FXAJ2	ACQ	DISP
  Fixed Assets	200	800	600		200	0	800	-400

  Open balance of 100 is translated at opening rate of 2, which equals 200.

  Close balance of 200 is translated at closing rate of 4, which equals 800.

  Change amount is 600.

  ACQ amount is translated at closing rate of 4 multiplied by 200, which equals 800.

  DISP amount is translated at closing rate of 4 multiplied by -100, which equals -400.

  FXAJ1 represents the difference between the closing rate of 4 multiplied by the opening balance (4 X 100=400) and the opening rate of 2 multiplied by the opening balance (2 X 100=200), which equals 200.

  	A	B	A x C
  FXAJ1	Open Bal	Rate	Total
  Close	100	4	400
  Less: Open	100	2	200
  Total:			200

  When the amounts/balances are translated at the Cash Flow Rate or average rate, you would see the following:

  					Sum = Change Amount
  Account	Open	Close	Change		FXAJ1	FXAJ2	ACQ	DISP
  Fixed Assets	200	800	600		200	100	600	-300

  Open and close balances as well as the change amount are still the same as above.

  ACQ amount is translated at average rate of 3 multiplied by 200, which equals 600.

  DISP amount is translated at closing rate of 3 multiplied by -100, which equals -300.

  FXAJ1 is the same as above.

  FXAJ2 represents the difference between the closing rate of 4 multiplied by the flow amounts (4 X (200-100)=400) and the average rate of 3 multiplied by the flow amounts (3 X (200-100)=300), which equals 100.

  	A	B	A + B		C	(A+B)xC
  FXAJ2	ACQ	DISP	Flow Amt		Rate	Total
  Close	200	-100	100		4	400
  Less: Average	200	-100	100		3	300
  Total:						100

  Combining FXAJ1 and FXAJ2 flow codes with the cash accounts will produce the net affect of currency translation line item on the cash flow statement.

Pages Used to Define Flows

Turning on Flow Processing

Access the Ledger Template, Consolidation Variables page to find the Flow Processing level at the bottom.

The user will specify if Flow Processing is to be used by checking the check box as well as defining the flow records used. The Flow Activity record represents the table in which the final flow amounts are stored. This table is used in conjunction with the consolidation ledger to develop reports for flow reporting. The Flow Input Record represents the table where the user inputs the flow amounts. The Flow Activity Work Records are used as temp tables for the flow update engines.

Using System Flow Codes

Access the System Flow Codes page.

System flow codes are predefined by the system and are used to track system-generated amounts. When the user logs into this page the first time, the user will see the system data already delivered as per above. Note that the flow codes are fixed and are five-character fields. The short and long descriptions are also system data. The “Default in Template” check box indicates whether or not the system flow code will automatically be loaded when a new flow template is created. The user has the option of changing the short and long descriptions and the default settings, but not the flow code.

The following table lists the seven system flow codes and their definition.

Using Manual Flow Codes

Access the Manual Flow Code page.

Manual flow codes are defined by the user to track account activity and are used as input into flow templates. The user must take into consideration the nature of the account when creating manual flow codes. The following is a list of manual flow codes delivered as sample data.

Setting Up Manual Flow Input Templates

Access the Flow Template Setup page

The flow templates are keyed by setID. Note that the user must select the ledger template and template type. The manual flow input template represents a template in which the user will enter flows. It can combine system flow codes and manual flow codes. The system activity template is used to capture accounts that will be used in the cash flow and simply capture the account activity. The system activity template only allows certain system flow codes and no manual flow codes. The example above represents a flow template for equity accounts and will be used as an example of how the template is setup for a manual flow input template.

Inserting Flow Codes in a Manual Template

Access the Flow Code page

Add the flow codes that you require for your flow template and place them in the display order that you desire. To aid the user in ease of flow code entry, the flow code page will be automatically populated with the system flow codes that have a check box checked on the “Default in Template” column of the System Flow Code page. The user can then change the display order of the system flow codes. Note that the user cannot delete the Open, Close and Change system flow codes, as they are required on every template. Only 30 flow codes are allowed per template. If you need to create a manual flow code, you can click the Create Manual Flow Code link to add the manual flow code you need for your flow template setup. If you want to view or edit a flow code, you can click the flow code description link to display the definition of that particular flow code.

• Display Order Enter the display order for the Flow Code. The flow codes are the columns appearing from left to right, based on the value entered for this field; the lowest display order appears first.

• Flow Code Select the flow code value. The values available are based on those defined by the system or manual flow codes you previously defined on the Manual Flow Code page. System flow codes defined as Default In Template automatically populate the Flow Codes grid.

Inserting Account Set in a Manual Template

Access the Account Set page

Display Order	Enter the display order for the account. The accounts are the rows appearing in ascending order, based on the value entered for this field; the lowest display order appears first.
Account Option	Select the account option. Your choices are Tree Node or Detail. When using the Tree Node option, specify the tree (trees with a structure of account only), the specific tree node, and the validation type. When using the Detail option, specify the detail value of the account.
Account	Select the account from the prompt table.
Tree ID	Select the tree ID. This option is active if you select Tree Node as the Account Option. You must select an account structure tree.
Tree Node	Select the tree node based on the Tree ID you selected. Opens the tree viewer so you can select a tree node.
Validate	If a tree node is selected, select the validation type. Your choices are Node or Detail. If the user selects the validate option of detail, then the accounts from the tree node are listed on the template. This option is used to facilitate easier maintenance of entering multiple accounts at a time. If the user specifies the validation type of node, then the node is simply displayed and the user keys the flow amount by tree node and the system stores the flow amount by tree node.
Exchange Rate Type	Select an exchange rate type. This field is active if you select Tree Node for the account option and validate at the node level. In this situation you are validating the flows at the node level so you must define an exchange rate for the node level results.
Rate Type for Cash Flows	Select the rate type you want to use for cash flows. This field is active if you select Tree Node for the account option and validate at the node level. In this situation you are validating the flows at the node level so you must define an exchange rate for the node level.

The rate type selections enable you to track flows for both cash flow reporting and footnote disclosures. For example, you might record fixed asset acquisitions at a current rate for footnote disclosure purposes and at an average rate for cash flow. Global Consolidations records the flow amount at both rates for reporting purposes.

Note. Currency conversion rules define which exchange rate type to use to convert specified account balances to those of the consolidation base currency. There is no setup for node level currency conversion rules except on the Flow Template Account Set page. If detail account or node with validate set to detail is selected on the account set page, then the currency conversion refers to the currency group set at the consolidation model level.

Preview the Manual Template

Access the Template Preview page

The Template Preview page provides the user with a snapshot of what the flow template will look like. If the user changes the parameters of flow codes and/or account set on the previous pages and then navigates to the Template Preview page, the template will be updated by clicking the View/Refresh template button.

Note the last column that has been added by the system. This column will be a default and is added at the end of each template. It represents the “Difference to be Reconciled” column. It is the difference between column 99990 Change and the sum of the input columns and 99980 FXAJ1, 99985 FXAJ2 and 99988 FXTGL, in this example. It aids the user in reconciling the input flow entries with the change column. Fields that are calculated by the application are signified by a #####.

Setting Up System Activity Templates

Access the Flow Template– General page

If the user is producing a cash flow statement using the indirect method, then other changes in activity from balance sheet accounts need to be translated at the cash flow average rate such as AR or AP. Thus, a separate system activity flow template must be setup to capture the change in activity as follows.

You specify the system flow template type as well as the description and ledger template.

Note. The system activity template only needs to be used if the user is consolidating business units in a foreign currency.

Inserting Flow Codes in a System Template

Access the Flow Template - Flow Codes page

When the user selects a system template, the flow code page will pre-populate with the system flow codes that are specified as “Default in Template” from the System Flow Code page. The user can then change the display order. Note that an open, close, change and activity flow code is required for a system activity template. No manual flow codes are allowed on this page.

Inserting Account Set in a System Template

Access the Flow Template - Account Set page

Specify the display order and accounts or tree nodes. If you specify an account that is also listed on a manual template within the flow group it will be excluded in the flow processing

Previewing the System Template

Access the Template Preview page

As seen for the Manual Flow Template, the system activity template preview will list the accounts specified on the account set page. It also details the system flow codes from the flow code page used in calculating the account activity and foreign currency translation amounts. Since this template is system derived, the user can only access this template from the Flow Inquiry in the consolidated currency.

Defining Flow Groups

Access the Flow Group page

Once the flow templates have been completed, it is necessary to associate such templates with a flow group and consolidation model. The flow group page allows the user to associate the manual flow templates with a group, which is tied to a consolidation model, as well as indicate whether the group will include system activity templates.

List the flow templates used by the group. Specify whether the group will include system activity templates. If so, populate the system template grid and indicate the system templates. You only need to use system activity templates if the consolidation BU has foreign subsidiaries.

When combining the flow templates into one group, it is critical that no overlapping of accounts within the manual flow input templates occur.

Inserting Manual Flow Codes into Consolidation Rules and Journal Lines

Once the flow setup is complete, you can use manual flow codes as targets within the consolidation rules setup as well as attach manual flow codes to journal lines.

By attaching manual flow codes to consolidation rules, the system will generate flow amounts when the consolidation engine is run with the “Update Flow Amounts” check box selected.

Refer to Define Consolidation Rules, Setup Equitization Rules or Setup Elimination Rules or Setup NCI rules for further information on setting up targets on the rule.

You can also create flow amounts from journals by assigning a manual flow code to a journal line and running the Journal Flow Update program.

Refer to Managing Journals for further information on assigning manual flow codes to journal lines.

Note. Since the target flow codes are manual, manual flow templates must be created with the target accounts you want to track flows.

Establishing Consolidation Models

This section discusses how to define consolidation models.

The consolidation model defines the rules you use for processing a consolidation.

Pages Used to Establish Consolidation Models

Defining Consolidation Models

Access the Consolidation Model page.

Complete these fields to define your consolidation model:

Validating Consolidation Rules

To check that your consolidation setup is complete and valid, PeopleSoft recommends that you run the Consolidation Validation application engine to verify that the consolidation rules are correctly set up.

See Validating Consolidation Rules.