Thursday, December 28, 2017

US Accounting Standard ASU 2016-01 - Financial Instruments

Normally my blog posts are about FCCS or HFM tips, features, etc. but this one is about an accounting standard now effective in the USA. But since FCCS and HFM are consolidation products, knowing and understanding the accounting involved is a necessary component of successfully working with the products. Plus this change will have a minor impact on FCCS/HFM usage.

Over the last few years there has been a shift in the accounting community away from historical cost and toward fair value accounting. In that vein, ASU 2016-01 was issued in January 2016 by the FASB. For publicly traded companies it is now effective (technically, effective for fiscal years beginning after December 15, 2017). The changes to GAAP, briefly, affect:

  • accounting for equity investments
  • accounting for financial liabilities under the fair value option
  • presentation and disclosure requirements for financial instruments
  • guidance related to the valuation allowance assessment when recognizing deferred tax assets from available-for-sale debt securities
IFRS 9 is the equivalent within the IFRS standard. I'm not going to go into everything in the ASU - the big accounting firms covered this well when the ASU was released - but I do want to focus on a couple things.

Equity investments need to be valued at fair value, with any change being recorded through earnings on the income statement. This requirement excludes investments that are accounted for by the equity method or those that are consolidated into the owner. So this change does not impact consolidated entities. The grouping of entity investments as trading or available-for-sale goes away as well as recognizing unrealized holding gains/losses for these entities.

A journal entry will be needed to adjust the value of the asset with the offset to the income statement. Companies will probably book this entry in the general ledger but could also book it in FCCS/HFM. The amount of the entry will also need to be used in the preparation of an indirect method cash flow statement as an adjustment to net income, as this is a non-cash item. For companies holding trial balance data for these entities inside their FCCS/HFM application the entities are typically outside of the main company hierarchies and no adjustments there will be needed.

Another change revolves around presentation of financial assets and financial liabilities. These should be presented by measurement category (like fair value) and form (securities, loans, receivables) in either the statement of financial position or in the accompanying notes. If presenting in the statement, then within FCCS/HFM account hierarchy changes and most likely new accounts will be required.

Thursday, November 30, 2017

FCCS - First Look at Advanced Consolidations

The December 2017 update to FCCS will include advanced consolidation, meaning support for multiple types of ownership in the entity hierarchy. This is a first look at the function. For users of HFM and Enterprise, this will look very familiar.

First, when the update rolls out, it has to be enabled in Enable Features. This can be done without rebuilding the application.

There are two main screens that show the feature. The first is Manage Ownerships.

First, use the point of view to select the entity hierarchy, scenario, year, and period. Then you can adjust the ownership percentage, control (yes/no), and consolidation method (more on this below). This does allow organization by period (where an entity may roll into a parent one period but not the next).

The next relevant screen is Manage Methods (selected from the Actions dropdown above). Methods define different types of consolidations.

For each method, ownership ranges can be assigned to determine when a method should be assigned to a relationship. The methods can also be selected manually in the Manage Ownership screen above.

The calculations, target accounts, etc. for each method are seeded, meaning not changeable. This is expected to change soon, where customers can configure what happens.

Looks solid!

Tuesday, November 28, 2017


PSU 206 for HFM came out on Nov 27, 2017. There are no new notable features included in this patch, but there are a whopping 53 defects and enhancements. They run the gamut from journals to task audit to security to infrastructure to IC matching to data grids to everything. There are three framework patches required along with 206 and a FDMEE PSE, so don't forget those. Also, FDMEE and Financial Reporting haven't been patched lately, but if those PSUs aren't up-to-date then now is a good time.

Monday, November 20, 2017

FCCS - what if parent accounts are not populating?

Working on a FCCS project and came across an issue. Built the main income statement hierarchy using the seeded hierarchy and that worked well. Created a second, alternate hierarchy using shared members and the shared members worked well but the parents of those shared members had no data. Using the new simplified dimension editor (which currently doesn't allow you to add a shared member so you have to use the old one but anyway) all of the attributes looked good. Got some help from a friend at Oracle and turns out there is a property that needed changing. And the best place to do it, right now, is the dimension editor in Smart View.

In our case the parent accounts, like 4050000, had no data. You think setting the Default Data Storage (shown twice in columns C and G) as Dynamic Calc would be enough but it's not. If you look at the columns, there is one that doesn't show in the simplified editor called Consol Data Storage - column F. For the parents this needs to be Dynamic Calc as shown. When the hierarchy wasn't working it was Never Share.  So, click the cell, get the dropdown and change to Dynamic Calc (or copy/paste) and then click Submit and refresh the database.

Overall I'm having fun with FCCS but it does remind me of the first year or two of HFM, where Enterprise was so mature and HFM was less so. But I'm also seeing a faster ramp-up of FCCS compared to HFM, so that's good.

Have fun!

Thursday, November 9, 2017

FCCS - Exchange Rate Type for Accounts

Working with FCCS, one of the account properties is Exchange Rate Type. There are multiple choices as shown here from the Simplified Dimension Editor.

Looking at the choices, you might be tempted, as I was, to use Average for income statement accounts and Ending for balance sheet accounts. After all, the two account types usually do currency translation at the respective exchange rates. Or, you may be thinking Average for the balance sheet accounts since the Time Balance property should be Flow (not Balance - and yes, it should be Flow, not Balance) because of the movement dimension information.

But, as it turns out, the correct answer (with one exception) is No Rate. Not exactly sure why, but apparently FCCS already knows what to do.

The exception is if a balance sheet account needs a historical translation. Those three are okay to use. If an override is used, either rate or amount, then pick the appropriate choice. If an account is historical but does not contain an override (the help uses the example of Retained Earnings) then select Historical.

Tuesday, October 3, 2017

FCCS October 2017 Updates and Key Upcoming Changes

Coming to test on Friday, October 6 and production on Friday, October 20 during the specified maintenance window.

Two key notes regarding later releases - not in October but in "the next few months." Advanced consolidation features are on the way and dimensions will be limited on the number of members.

Lastly, this release introduces the "Simplified Dimension Editor," which displays dimension members in a grid. With the February 2018 release, the "Classic Dimension Editor" will no longer be supported.

Monday, June 26, 2017

FCCS - Using a company logo

As I spend more and more time with FCCS I'm seeing where there have been lessons learned from the prior products. One of the simple sounding things to do that wasn't all that easy before is customizing the interface to use a company's logo. In the past with HFM, depending on the version, it usually involved replacing the system delivered files with custom ones and then remembering to replace them after each patch or upgrade. Now, with FCCS, it couldn't be easier.

After logging in, click the Tools card (yes, those icons or tiles or buttons are called cards) and then select Appearance.

The appearance window will appear. Specify a URL for the logo and/or background. The Theme refers to the color used for title bars and the like and Shape refers to the button style.

Here, we're just changing the logo image. There is a reset button if you want to restore to the defaults. After clicking OK, the image is brought in and you're done!