Finding the figures; equity elimination and contribution in Oracle HFM

How exactly is a consolidation achieved? And how are equity elimination and contribution triggered? In short, how does the consolidation process find its way within Oracle HFM? In this blog, we take a look at the equity elimination and contribution.

Let’s take a fairly simple organization structure with two subsidiaries (Europe_Sub and USA_Sub), a Holding and the consolidation entity. We’ll have a look at:

• Equity elimination on subsidiary level
• Equity elimination on holding level
• Result on consolidated level
• Where to look if issues occur

Our start situation is shown in the print screen below. For this blog, we’ll focus on the equity accounts and the participation in subsidiary account ‘Financial Fixed Assets’. Good to know: we are using Equity Pick up in HFM, which means that the figures calculated for the Equity Pick Up are stored on the member ‘EPU’ in a custom dimension (data source). Our total amount is stored on ‘Total EPU’, which is nothing more than ‘Input amount’ + ‘EPU amount’.

Our starting situation:

Ownership:

Equity elimination on subsidiary level in Oracle HFM

Assuming we have ran the consolidation, let’s take a look at the equity elimination of the subsidiary Europe_Sub, see next screenshot. From the Value dimension, we choose [Entity Currency], [Elimination] and [Contribution]. On [Entity Currency] we see the input, on the next column the figures which are eliminated and the plug account, while the last column shows the amount which is ‘contributed’ to the Holding. As you can see the accounts L710, L720 and L730 are eliminated for 100%, this results in a contribution of ‘0’. The total amount which is eliminated is posted against the plug account L770.

So, what triggered this? Most likely the accounts which are eliminated for equity are marked in the metadata, in our example with ‘EQELIM’ in the user defined 1 field:

From the consolidation rules, which execute the equity elimination, this mark ‘EQELIM’ is picked up and the appropriate accounts are eliminated according to the ownership. Closely followed by the elimination rule that sums up the amounts eliminated and posts this on the plug account. A small remark; if minority is the case, the eliminated equity amounts are divided by the plug account and a minority account according [PMIN] from the ownership table.

We have eliminated the subsidiary equity Europe_Sub, in the exact same way the USA_Sub is eliminated. We will continue to the elimination of the equity on the holding.

Equity elimination on holding level in Oracle HFM

For the equity elimination on Holding level we ‘re looking at the EPU data source, because in our example the EPU amounts are calculated by the consolidation rules and posted on the EPU data source. Please read our blog ‘How Equity Pick Up works in HFM’ for more details regarding Equity Pick Up.

On holding level, the account A300-Financial fixed assets (aka participation in subsidiaries) is eliminated as it is posted against the subsidiaries ICP. This results in a contribution of ‘0’. The contra entry on [Elimination] is made against the L770 – Equity Plug Account, which is marked as the plug account of A300-Financial Fixed Assets in the metadata.

Result on consolidated level in Oracle HFM

After these steps, L770 – Equity Pick Up Account, is even. The result on consolidated level (L770 – Equity Plug Account = 0) is:

Where to look if issues occur during the Equity Pick Up in Oracle HFM

A frequently occurring issue in Oracle Hyperion Financial Management (HFM) is to do with the Equity Plug Account. Sometimes, this account doesn’t equal zero on Holding level. This can be caused by various reasons:

• The consolidation [method] in the ownership is incorrect
• Equity of subsidiary is not equal to participations in subsidiaries on the holding
• If you are using Equity Pick Up in HFM; the EPU share is different from Ownership

The path of consolidation in Oracle HFM

Consolidation processes in Oracle Hyperion Financial Management (HFM) are actually quite logical. The equity elimination and contribution are triggered by clearly defined actions. Once you know these steps, you can easily search for the causes of data issues. This way, you can correct or even prevent issues.

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Text: Bert Dotinga