Changeover in Consolidation (SAP Library - European Monetary Union: Euro (CA-EUR))

Changeover in Consolidation

Purpose

This component changes over the data in Consolidation to the euro currency (euros).

Implementation Considerations

You need this component if you use the Consolidation component FI-LC or EC-CS in your R/3 System. The standard package in the central R/3 changeover component does not cover the Consolidation data. Instead, additional changeover packages are available for Consolidation.

The separate treatment of Consolidation is necessary because the changeover of Consolidation differs from that of the other R/3 components with respect to the following:

Consolidation must be changed over after the year-end consolidated statements have been created.
Consolidation can require a changeover of the data in stages in the sense that the local currencies of the companies and the ledger currencies might have to be changed over one step at a time.

Integration

Bear in mind the following when considering the timing of the Consolidation changeover with respect to the central changeover:

The local currencies of the companies or consolidation units that are integrated with transaction-processing SAP applications must only be changed over in the Consolidation system after the central changeover.
The local currencies of the companies or consolidation units that are not integrated can be changed over in the Consolidation system at any time.
The reporting currencies of the Consolidation ledgers can be changed over as follows:

At any time before, after or at the same as the changeover of the local currencies of the companies or consolidation units
At any time before, after or at the same as the central changeover

In most cases, the Consolidation component is changed over at a date subsequent to the central changeover. This staggered approach has the following advantages and disadvantages when compared to the simultaneous approach:

Advantages of a Staggered Changeover

The effort involved for the central changeover increases in proportion to the time elapsed since the end of the fiscal year of the company’s financial statement. This is due to the volume of documents posted in the original currency in the new (or current) year, which need to be converted.

Therefore, the central changeover should be started as soon as possible after the creation of the group’s annual consolidated statements, or it can even take place prior to the creation of the said statements, that is, before the Consolidation changeover.

A staggered Consolidation changeover has a shorter "down-time" as the central changeover of the rest of the R/3 System. However, this advantage is not very relevant because Consolidation has a relatively small volume of data.

Disadvantages of a Staggered Changeover

A staggered changeover of Consolidation has the following disadvantage: If you use the realtime update transfer method, any G/L-related documents, which have been posted after the changeover-relevant carrying forward of balances in Consolidation, need to be re-posted during the postprocessing part of the Consolidation changeover is done. During such a subsequent posting to Consolidation, the postings in all other R/3 applications must be stopped.

A staggered changeover of Consolidation also has the disadvantage that it spreads the unavoidable, minimal inaccuracies that are part of the euro changeover over additional time periods, or possibly even additional fiscal years. Then these inaccuracies become harder to distinguish from other errors.

Features

The system supports a changeover of consolidation data in multiple stages:

Changing over the reporting currency for consolidated financial statements

Some corporate groups may prefer to disclose their external consolidated statements in euros as soon as possible. To do this, you must change over the reporting currency prior to the changeover of the reported financial data of the group parent company and its subsidiaries.

You change over the reporting currency by changing over the relevant ledgers to euros. This changeover only concerns the ledger currency.

Changing over the reporting currency of individual companies

This changeover focuses on the requirements and capability of individual companies to change over their accounting systems to the euro. Each company can be changed over individually. This changeover concerns the local currency of the companies.

The timeframe for changing over all companies can exceed one year.

If the changeover of the reporting currency and the reported financial data does not need to be done in stages, you can also change over the entire data of Consolidation in a single step.

You control the changeover of the data by assigning the ledgers (for the ledger currency changeover) and the companies or consolidation units (for the local currency changeover) to the Consolidation changeover package.

The changeover of consolidation data must occur after the closing of the fiscal year of the group. The balances are still carried forward in the previous currency. Then, the data is converted for all of the years. Finally, the carried-forward balances are reconciled within Consolidation as well as against other SAP components, with which Consolidation is integrated.

Only in rare cases do the first (interim) consolidated statements of the new year need to be disclosed before the completion of the annual statements of the prior year. If this is indeed necessary, the statements will reflect a pure income statement consolidation because the balance sheet has not yet been carried forward. This is why the changeover does not take into consideration any data, which you still have reported in the previous currency for the new year, or which has even already been consolidated. Instead, the system deletes this data in the totals database and the journal entry database, and requires that you once again report (collect) the data, this time in euros, and consolidate the data. An exception are the journal entries of the prior year entries made by automatic reversals. Instead of being deleted, these entries are used to reconstruct the totals records after the changeover.

Constraints

See Constraints for the Changeover and Cleanup in the Next Closing.