One of the main aims of the consolidation system is to ensure up-to-date and timely consolidated reporting by efficiently and reliably transferring data from the individual financial statements of the subsidiaries. For this reason, the FI-LC system makes it possible for you to prepare consolidated financial statements not only at the end of a fiscal year, but periodically, for example, every month or every quarter.

You have to assign a consolidation frequency to every subgroup in the subgroup master record. The consolidation frequency determines the number of consolidated financial statements to be prepared during the year and the relevant period interval per consolidation. You can, for instance, define consolidation frequencies for monthly, semi-annual, trimesterly, quarterly or yearly consolidation. The consolidation frequency you require for a subgroup is assigned within Subgroup Maintenance.

Defining the consolidation frequency in this way has the following effects

• You can only run the programs for carrying out the consolidation functions in the last period of each period interval (for example in period 6 and 12 in the case of semi-annual consolidation).

• When the financial reporting data from tables or from the totals database are processed, only the period values for the relevant interval are selected.

A consolidation frequency is considered to be periodic when at least two period intervals have been assigned to it.

Many of the control tables in the FI-LC System are dependent on the accounting period. You may, therefore, use different valuation methods, in justified cases, for different reporting periods. Although the system is highly flexible, it does require responsible handling on the part of the user. The reason is that the system is generally unable to decide whether a change in valuation methods from one reporting period to the next is permitted in a particular case or whether it is prohibited by the system. Here too, you need to keep a complete record of the changes you make to these control tables for auditing purposes.

When defining consolidation frequencies, therefore, note the following: The Intercompany Elimination and the Reclassification programs do not access the control tables using the period entered as the parameter on the request screen. This period is, in fact, used to read the period table. The period indicator entered for the period interval in the definition of the consolidation frequency determines which control tables are selected. For each period indicator, you have to make an entry in the control table. The number of entries in the control tables can hereby be reduced to a minimum.

You must note the following when translating currencies for periodic consolidation:
If you choose translation key 1, a problem arises when monthly or quarterly figures are evaluated. The system uses the exchange rate table to translate the values in local currency into the group currency. If the exchange rate changes from the previous period, the system enters not only the actual period value in the totals table for the current period. The system also makes an adjustment of the previous period values on the basis of the changed exchange rate, which is also entered in the table. This adjustment posting means that the total value of all accumulated periods is adjusted to the new exchange rate. As a result, monthly or quarterly figures may be distorted.
If you use translation key 5, the system does not make this kind of adjustment posting. In this case, the figures are translated at the monthly rate via the exchange rate table.

Therefore, you need to take care to check which translation keys are to be used for period consolidation.

The consolidation frequency is an attribute of a subgroup and not of a company. So you may, in principle, include one and the same company in subgroups with different consolidation frequencies. This has the following consequences:

• You have to perform data entry for the company as frequently as is required by the subgroup with the highest consolidation frequency.

• You need to carry out currency translation as frequently as you perform data entry for the company.

• You may carry out postings for intercompany elimination and capital consolidation as described in earlier topics.

• You should carry out postings for the elimination of IC profit/loss in inventory using document types of posting level 3, instead of 2, which you would normally use. Posting level 3 creates the subgroup reference which is necessary for subgroups with different consolidation frequencies in order to avoid incorrect postings for the elimination of IC profit/loss.
  You should post entries for the elimination of IC profit/loss in transferred assets using document types with posting level 2. It is difficult to manage asset transfers in several subgroups with different consolidation frequencies, because the system is currently unable to reference the subgroup when posting.

You may want to spend as much time and effort when preparing financial statements during the year as you would for annual financial statements, since the resulting data is only needed for internal purposes. At the same time, they should reflect the situation as accurately as possible, while the time and effort involved and the actual benefit must still be in proportion to each other.

Given that the data from the individual financial statements are fed more or less automatically by various methods into the system, the only really time-consuming activity is actually making the consolidation entries. In most cases, you will probably be unable to avoid temporal posting differences when eliminating IC payables and receivables and when eliminating IC sales. It may be necessary to work with higher tolerance levels during periodic consolidations than for annual financial statements.

You can control this using the period indicator described in the section "Tables dependent on accounting periods".