Automating the Process of Preparing Monthly Consolidation Reports as Well as Individual and Consolidated Periodic Reports

MDDP Outsourcing experts had the pleasure to start cooperation with the parent company of a group of a dozen or so entities – both Polish and foreign ones. The scope of services provided by our firm included consulting in the financial reporting process – i.e. consulting in the preparation of monthly consolidation reports as well as individual and consolidated periodic reports – and, furthermore, the automation of this process.

Before our cooperation began, all of the Client’s financial reports had been prepared with the use of Microsoft Excel. Preparation of consolidated data in Excel files, especially in the case of large international groups whose structure is changing, is a time-consuming and problematic solution, which also increases the risk of error.

In the first stage of cooperation, the main task entrusted to the team of MDDP Outsourcing specialists was to assist in the implementation of the FlexiReporting consolidation system and its and customisation to the Client’s needs. This system is designed to automate, streamline and accelerate the process of financial data consolidation.

The FlexiReporting system is a proprietary solution of FlexiSolutions, and it successfully supports the consolidation of financial data of groups regardless of their size – no matter whether they consist of a few, more than a dozen or several dozen companies. Thanks to the built-in currency conversion mechanism, the system also allows us to provide consolidation for international groups.

The tool enables effective preparation of consolidated financial data and helps prepare financial statements in accordance with the International Accounting Standards as well as subject to the Polish Accounting Act.

What is more, the FlexiReporting system successfully supports changes that occur in a group during a year. It is possible, for instance, to include in the data consolidation process entities acquired during a year and to exclude those that are liquidated or intended for sale.

In the course of our cooperation, various changes took place in the structure of our Client’s group, including the sale and liquidation of some companies of the group and the merger of several of its entities. The task entrusted to our team was to provide subject-matter support to the Client at every stage and to adjust the system and financial reports to the changes taking place.

WHAT IS THE PROCESS OF PREPARING CONSOLIDATED FINANCIAL DATA IN THE FLEXIREPORTING SYSTEM BY THE MDDP TEAM?

1. Preparation of individual data

First of all, we prepare unit data of individual entities of the group in the Flexi system. Thanks to the possibilities of integration and connection with accounting systems, a trial balance can be imported to FlexiReporting with one click. In case there is no way of connecting to the accounting system, it is also possible to manually enter data into the Flexi system and to process them. Our specialists helped establish links between the bookkeeping accounts of individual companies of the group and the group chart of accounts, which was then mapped onto the respective balance sheet and profit and loss account items. This solution allows for quick mapping of trial balances.

FlexiReporting also enables local adjustments at the level of a selected entity if it is necessary to make transformations for the purposes of reporting unit statements in line with the Group’s accounting policy.

2. Preparation of consolidated data

In cooperation with our team, we set up mechanisms in the Client’s system which made the preparation of consolidated data faster and simpler. These included such elements as:

• reconciliation and automatic elimination between balances of settlements and turnover of the group’s companies and generation of reports on intra-group transactions, thanks to which our team can easily review and control them;
• currency conversion mechanisms, which allow us to prepare consolidated data for international groups as well as report individual data in the local currencies of the group’s companies. These mechanisms also allow for reporting of capitals at historical exchange rates and calculation of exchange rate differences;
• setting up netting rules, thanks to which the system automatically nets the balances of indicated accounts, e.g. those that, pursuant to the Polish Accounting Act, should be presented in the financial statements as per account balance. Balances are netted at the level of individual and consolidated data.

Furthermore, the tool makes it possible to post manual consolidation adjustments in special journals designed and tailored to meet the needs of a given group, which ensures transparency of the entered data.

3. Providing information to the auditor

FlexiReporting allows our team to quickly and easily prepare complete information for the auditor; the system has a set of audit reports showing the details of account mapping and all adjustments which are reflected in particular balance sheet and profit and loss account items.

4. Preparation of financial statements

The tool also supports the process of preparing complete (unit and consolidated) financial statements, including generation of the document in XML format. Thanks to the fact that our specialists have developed a mechanism for mapping bookkeeping accounts onto detailed items in the notes to the financial statements, a large part of the information in the notes is filled out automatically. What is more, the system enables the creation of automatic rules to calculate the initial version of the cash flow statement and the statement of changes in equity, which helps reduce the time of preparing these calculations for all entities in the group.

Thanks to the implementation of the FlexiReporting system, which was supervised by a team of our specialists, the Client’s financial reporting process has been automated and optimised. Preparation of consolidated financial data and complete financial statements has become much faster and simpler.

Author: Klaudia Lewandowska, Junior Reporting Specialist at MDDP Outsourcing.