A proven methodology is critical to the success of a Financial Consolidation project. Having a blueprint and a rough project plan that covers the major steps involved in implementing the chosen software solution goes a long way towards achieving project success. Be sure to build in some contingency for unforeseen issues or delays. Typical delays occur with the development of a Corporate Chart of Accounts (CCOA), development of dimension structures, data mapping, data cleanliness, and in some cases, employee turnover. Especially if you’re working with a smaller organization and they only have a single analyst who works on financial consolidation.
The Corporate Chart of Accounts (CCOA) is one of the backbones of any new Financial Consolidation tool. Designing one that fits the clients’ needs can be a challenge depending on the size and complexity of the organization. Have a few examples ready to show your client. The best designed CCOA is usually one that can produce their annual and quarterly reports – including disclosure statements – without requiring extra work or the gathering of data outside the new system.
One of the major hurdles to almost every Financial consolidation project is data cleanliness. The number one reason for delays is usually data cleanliness. Be prepared to address that with the client.
Have a plan on how to tackle all that data and how to make sure your chosen software is returning the correct results. This usually entails consolidating a certain amount of historical data. Be sure to ask for several months’ worth of historical data and be ready to find Excel spreadsheets with weird formulae and numbers keyed directly into cells that should NOT have manual input. One issue with data cleanliness that could arise relates to historical data that was changed after the fact in the ERP or accounting system but was not reflected in the Financial Consolidation. Or historical data that does not tie between the various excel files the client provides. For example, Fixed Assets continuity doesn’t tie in either Cost or Accumulated depreciation.
Current Depreciation expense might not tie to the income statement. This occurs quite frequently in smaller clients who don’t prepare regular cash flow statements.
Data mapping from local GL’s to the CCOA, and other dimensions (Year, Period, Line of Business, Department, Intercompany Counterparty, etc.) is another pitfall in Financial Consolidation projects. Many clients have several different accounting and financial systems in place, all of which will require mapping to new or existing CCOA and dimensions. One way to ensure that all mapping is done is to prepare a template that includes all the dimensions required for mapping. This is usually done as part of the project and the timing should be built into the plan. Add a few extra weeks in the project timeline for the back and forth to get this exactly right. Some examples of mapping issues that could arise are as follows:
- The chart of accounts where data is coming from has inconsistencies requiring exception mapping based on departments or cost centers. For example. Account 6001 G&A for department 100 (Corporate) maps to Other G&A, but 6001 for Department 200 (Admin) maps to G&A Salaries. In this case, we would create a separate map that contains the exceptions and test for these during import. If it finds an exception, it loads it accordingly and continues.
- Another common issue is import files that contain commas (“,”) in account descriptions which could cause the import process to fail due to it reading the commas as field delimiters. A simple solution to correct this is to remove the descriptions from the import file.
Beyond mapping, have a contingency plan in place. Perhaps a data entry template where subsidiaries can simply enter data into an excel spreadsheet for submission? Or better yet, data entry templates directly in the new consolidation system. Keep them simple enough for users to enter basic data while continuing to work on the mapping process. One thing to note: the contingency plan is not intended to be a long-term solution.
Keep working on mapping!
Brush up on your interpersonal skills and be ready to ask A LOT of questions. You will be spending a lot of time with analysts, managers, and C-level executives, discussing their current issues and future goals for the new software.
Most importantly, know your stuff. Nothing builds confidence more than someone who clearly knows what they’re doing. And, if you don’t know something, don’t be afraid to tell the client. Then, research it, and come back with an answer!
Trust is everything in these types of projects. You build trust by being honest and knowing your subject materials.