Integrated Forms, Simplfied Consolidation

Feature Article | May 21, 2008 by Gina Hardebeck

Haniel, an international group based in Duisburg, Germany, has balanced its books since 2004 according to IFRS. “The figures needed for a year-end close are all captured and processed with SAP Strategic Enterprise Management (SAP SEM),” says Patrick Lange, project director of corporate IT at Haniel.

The accounting regulations also demand a number of supplemental texts. Examples include details on the type and length of depreciation and the composition of financial liabilities. “The SAP application is not set up for these kinds of qualitative comments,” says Lange. As a result, Haniel had to work with a transitional solution for two years.

Microsoft Excel workbooks as a transitional solution

As a conglomerate, Haniel consists of five enterprise areas, each of which operates independently around the world and offers different services and products. To help each business unit capture the required supplemental information for consolidation, the business department of Haniel Holding provided all subsidiaries with a 40-page Microsoft Excel file. Because there was no connection between the data in SAP SEM and the information in the Microsoft Excel spreadsheets, much manual effort was needed to make sure that the data in the files matched the data in the consolidation system.

“That was the difficulty,” says Lange. “Haniel Holding had to process an enormous flood of information from more than 800 units, multiplied by 40 Microsoft Excel workbooks. That’s just about impossible to do manually. The lack of integrated data made it impossible to drive reports that cover several years or different individual businesses.”

That all ended in 2006. Driven by the central business department of Haniel Holding, the IT application for the creation and management of supplemental ISRS tasks was redesigned. The needs were obvious. The Microsoft Excel solution had to be replaced. Accounting personnel needed to record amounts, values, comments, and explanations in one environment and integrate the data with the master and transaction data for business consolidation in SAP SEM. Haniel wanted to map the entire process from data entry at the level of each company right up to consolidation at the group level in one system.

Automated workflow simplifies consolidation

Lang knows that there is still work to do. “Even with the integrated solutions, the five enterprise areas have a great deal of freedom to make specific adjustments to the forms. In terms of the supplemental information, we want to make the auditors’ work easier with transparent calculation logic that is defined in advance. Production of the annual report at Haniel is oriented to business consolidation in SAP SEM. Like any special system, it must be based on standards and be able to be integrated into the existing system infrastructure,” he adds.

Haniel contributed the concrete business case and the technical knowledge for creating an annual report to the software. An IT service provider also based in Duisburg, cundus, provided the architecture and the technical implementation. cundus specializes in business intelligence and in developing applications based on the SAP NetWeaver technology platform.

cundus suggested integrating a workflow into the SAP software. Its front end would include a form engine that could capture any kind of content – even complex forms – anywhere along the structure of the group. Integrated control is used without additional intervention to distribute, complete, and summarize the Web-based supplemental forms along the company hierarchy. The process begins at the highest consolidation level, Haniel Holding. That’s where the supplemental IFRS forms area created. The five enterprise areas then adjust the forms as necessary and distribute them to subordinate organizational units and individual companies.

Bundled supplemental information for upper management of the group

Once all the forms have been completed, they are checked against the consolidation data from BCS in SAP SEM. For example, do the supplemental texts explain the amounts listed in the accounts according to IFRS? “After the forms are released by the author at the level of the local office, the data is automatically aggregated at the next-highest consolidation level, and, if necessary, given additional supplemental information.

Transparency and consistency prohibit this level from making any follow-up changes to monetary values. But if consolidation still requires manual corrections, adjustment companies can be set up. The advantage of this approach is that the data at the superior levels of consolidation – internal group postings or differences that arise because of currency conversions – does not affect the data of individual companies.

Currency rates, master data, and consolidation data is read directly and without human intervention from SAP SEM. “At the end, Haniel Holding then has a bundled version of all supplemental information from all the individual companies and consolidation areas,” says Lange.

The status monitor provides an overview

The application has been available to the 400 users of the five enterprise areas since last August. “Departmental employees are most happy with the intuitive operation. No special training was necessary. If users did have any questions, they usually involved simple, organizational matters like passwords,” says Lange.
The application has made it much easier to deal with everything related to supplemental information throughout the Haniel Group. When the process begins, the employee responsible already has an eye on the forms needed for the current reporting period. The employee can complete the forms and analyze the data with integrated reporting that produces with PDF files optimized for printing or Microsoft Excel files.

The reports explain how totals from individual levels combine to form consolidation-level totals and include comments. A status monitor displays the processing status for all sets of formulas so that those responsible for the process always have an overview of its progress.

Haniel currently uses the formula engine for the year-end and quarter-end closes. From its inception, the software was not designed only for the Haniel Group. As a standard add-on that works with SAP NetWeaver, cundus iasNotes is also available to other groups for the management of their IFRS supplements.

The Haniel Group in Brief

The Haniel Group operates globally and ist more than 55,000 employees produced sales of €27.7 billion in 2006. Haniel has five enterprise areas that operate independently in various industries – and all at the top.

  • Celesio is a leading European pharmaceutical company.
  • ELG is a wold-leading company for the sale and preparation of raw materials for the stainless steel industry.
  • HTS is a leading European supplier of textile services, laundry-room hygiene, and mats.
  • TAKKT is a leading European and North American distributor of office supplies and operating and warehouse equipment.
  • Xella is globally successful in the areas of building materials, dry construction systems, and raw materials.

The Haniel Group also has interests in additional companies, especially Metro AG, of which Haniel owns about 35%.

Haniel Holding takes care of the strategic and financial management and sets personnel policies for the entire group. The group has been headquartered in Duisburg, Germany for more than 250 years and has been family owned for just as long. Nevertheless, capital and management have been separate since the start of the 20th century, when the more than 500 partners brought in external management.

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