Subsidiaries may have different ownership percentages that are reflected upon roll-up

Description

The system supports multiple consolidation methods that are shown and disclosed in financial reports and statements. This includes situations where the parent owns 100%, less than 100% but more than 50%, less than 50% and so on.

Example Use Case

Scenario: An international corporation, with a diverse portfolio of subsidiaries each held at varying ownership percentages, utilizes CPM software to consolidate financial data. Some subsidiaries are wholly owned (100%) while others may only be partially owned (e.g., 51%, 75%).

Solution: The consolidation software must have functionality that allows the corporation to input different ownership percentages for each subsidiary. When consolidating financial performance, the software should accurately reflect these ownership percentages. For instance, if Subsidiary A is 75% owned, its financial contribution on the consolidated report should be 75% of its total.

Considerations

There are more complexities to this process than indicated in the requirements. What about rolling up subsidiaries with different charts of accounts? Which consolidation method will be used? Full, equity, cost? These must be determined before determining how to roll-up subsidiaries.

That considered, many organizations have subsidiaries that are all on the same chart of accounts for ease of use. In that case, it should be a matter of selecting the percentage of ownership, the method, and allow the application to product the reports and disclosures.

Questions to Ask a Vendor

• Configurability: Can ownership percentages for each subsidiary be easily configured in your software? Can they be updated as these percentages change? If we change a percentage, how does that affect historical reporting?
• Complex Org Structure: Can your system accurately reflect variable ownership percentages in the consolidation of financial data? How does it handle complex subsidiary structures?
• Audit Trail: Does the software maintain an audit trail showing changes in ownership percentages over time for compliance purposes?
• Methods: Which consolidation methods are supported out of the box?