NTT DATA Business Solutions
Simplify and Accelerate a Period Close by Automating Calculations and Reclassification Entries
A major roadblock in the quest for a faster monthly close process is that some or many calculations need to be made for accounting reclassifications and then those numbers need to be entered via journals. Of course this has to be done to present accurate consolidated financial statements at various levels of a company’s structure, but this slows the monthly, quarterly or annual financial close.
In my years consulting and within corporate accounting groups, I’ve seen these reclassifications take over valuable time in several ways. The most obvious affect would be the time and manual effort it takes the accounting team to make these calculations. Even when using spreadsheets in excel, the act of opening multiple Excel workbooks, Tabs and ERP screens is frustrating. When this needs to be done for multiple, or in some cases hundreds of companies or subsidiaries, a change or adjustment can turn a small correction into a massive undertaking.
Another consequence of having many of these calculations and reclassifications is when an adjustment should maybe be made??? ….and then management can spend even more time debating how much time it will take to make the adjustment. This creates a wormhole of wasting time and wasting time talking about wasting time. How sad!
An Easier Solution
BusinessObjects Planning and Consolidation (BPC) Script Logic in any version of BPC can make it so these changes can be completed with the push of a button or click of the mouse. Tens of thousands of calculations and entries made in under a minute. How much time could this save your finance department? I’ll explain in a few examples below.
Example 1: Client moves a balance on an asset account to a liability IF it has a credit balance. This might happen when Cash Accounts are negative and possibly need to be reclassified to a Liability “Bank Overdrafts” Account.
Example 2: Client requires value from multiple accounts to be reclassified to a different account if the total of those accounts is less than a certain threshold. An example of this could be multiple accounts for bad debt expense where if the sum of these accounts is under $1 Million for the entire corporation then bad debt expense stays as is and then must be explained in disclosures. If the total value is over $1 Million then they want to move the values all to “Other” because they don’t want to create a footnote to explain.
Example 1 BPC Solution: In the Administrator area for BPC within the script logic area I would add a new script and call it “Reclassifications”. In the Script Area I would write something like the following:
*WHEN ACCOUNT.RECLASS_TO
*IS BANK_OVERDRAFTS
*WHEN SIGNEDDATA
*IS < 0
*REC(FACTOR=1,DATASRC=”OVERDRAFT_RECLASSES”,ACCOUNT=ACCOUNT.RECLASS_TO)
*REC(FACTOR=-1, DATASRC=”OVERDRAFT_RECLASSES”)
*ENDWHEN
*ENDWHEN
*COMMIT
In the code above we said – If the value of these asset accounts a credit balance (is less than zero) we make two entries. First one is to actually move the value to the new account we want the value reclassed to. This is designated by an easy to manage property of our accounts called “RECLASS_TO”. The second entry just backs out the values at the original account. Both entries are made to a separate Data Source so the users can view data with or without these entries and also to keep all these new entries in one place for audit purposes.
Example 2 BPC (for Microsoft) Solution: In the newly created script I would write the following:
//This first piece section will sum the Cash Accounts because in this scenario the client wants to only reclass the
*WHEN ACCOUNT.RECLASS_TO
*IS BAD_DEBT
*REC(ACCOUNT=”#BAD_DEBT”)
*ENDWHEN
*GO
*WHEN GET(ACCOUNT=”#BAD_DEBT”)
*IS < 1000000
*REC(FACTOR=1, DATASRC=”CONSOL_ENTRIES”,ACCOUNT=”BAD_DEBT_EXPENSE”)
*REC(FACTOR=-1,DATASRC=” CONSOL_ENTRIES “)
*ENDWHEN
*COMMIT
The script above is similar to the first example except this time I needed to add the values of many accounts together in order to see if I wanted to make any reclass entries to move bad debt expense to “Other”. To do this I can create a temporary value called #BAD_DEBT that will only be used for the purpose of this logic. Then we use this total value to check – Is it less than $1 Million? If yes than we will reclass to “other”
BusinessObjects Planning & Consolidation
Many companies big and small have many reclassifications they do every close process. From experience I can recall that many closes undertake multiple iterations where things are nearing completion and then, oops – another entry needs to be made and all the calculations and entries need to be re-done. BPC script logic helps clients speed through these iterations with the click of the mouse.
Learn More
To learn more tips and tricks for achieving your faster close, view one of our on-demand videos that highlight other processes that can speed up your financial close process.