By Hoa Pham
March 28th, 2012
In my previous blog post, we discussed the EPM consolidations review and summarized what it entails. Now, let’s drill down some more on one of the big facets of the EPM consolidations review – the application design review.
Typically, most companies use Financial Data Quality Management (FDQM) with HFM so we focus on both the FDM and HFM applications during our analysis. In our analysis, an important key to what we do is look at how well the FDM and HFM applications use leading practices. A “leading practice” is something that, more often than not, is the best solution to address a requirement. So while we take into account the differences at companies from industry to industry, well-designed FDM and HFM applications have a commonality in applying leading practices. What are the most applicable leading practices that you should have in your consolidation applications?
From the FDM perspective, here are questions that can determine if your FDM application follows general leading practices:
- In FDM applications where there are many locations by country or legal entity, but many of them share the same G/L chart of accounts, are the FDM locations sharing their mapping tables?
- Do you have a system check to ensure that the source data file from the G/L that is loaded into FDM is in balance?
- When there are new additions to the G/L chart of accounts, do you have FDM validate the new data intersection before you load the file into HFM?
- After FDM completes the data load into HFM, do you run a validation report to confirm that data is still in balance?
- What control do you have to ensure that data loaders have completed the data loading process correctly?
In HFM, here are questions that can determine if your application follows general leading practices:
- When you have multiple entity hierarchies (i.e., Legal vs. Management), do they tie out at the top to one another?
- How do users drill down on data and tell if data is input vs. journals vs. calculations?
- Is there a consistency in your master data naming convention?
- Do you have users validate key accounts throughout the financial statements?
- What hand-off control do you have for the local finance team to sign-off to headquarters/corporate?
Not all these questions may apply to your consolidation solution. And of course, these are just some of the many questions that have to be answered, but it is a good place to start.