Balancing Segment - decide upon
Date: Thu, 14 Oct 1999 22:10:32 -0700 (PDT)
From: udaya bhaskar udayabg1@yahoo.com
To: oraapps-l@cpa.qc.ca
Subject: SOB - Balancing Segment
Dear friends
Requirement of the client is Balance Sheet for each of
their 20 divisions apart from the consolidated Balance
Sheet for all the divisions together. Can i make
Division segment as Balancing Segment. What are the
advantages and disadvantages of the same.
Division Depot Account Department
Balancing None Natural Cost Centre
two digit two digit six digit four digit
We suggested that keep company level as balancing
segment and division level without any qualifier.
Company Division/Depot Account Department
Balancing None Natural Cost Centre
two digit two/two digit six digit four digit
At present company prepares balance sheet at company
level. We promosed that based on the second structure
we can provide information of income, expenditure and
balance sheet account details upto division / depot
level as well.
Could you please tell me pros and cons of the above
two strcutures.
Regards
udaya bhaskar
Date: Fri, 15 Oct 1999 14:54:02 -0700 (PDT)
From: DIPANKAR BASU dipankar_99@yahoo.com
To: oraapps-l@cpa.qc.ca
Subject: Re: SOB - Balancing Segment
Hi Uday
I am not sure about the difference in division and
depot in your client system. Apparenly, from the first
structure, it appears that they are independant of
each other and different.
Also, I assume that your client will have several top
down approaches like budgeting at the company level
(at least for some heads) other than preparation of
the balance sheet.
The first structure, in my opinion, is not workable as
it will then exclude all company level information.
Also, consolidation will be a problem unless you
decide to define a division as parent.
The second structure merges division and depot which
also may not be appropriate. Your divisionwise
reporting will be hampered.
My suggestion will be to go for a 5 segment (all
independent) structure with the obvious segments.
Co=balancing, Account=Account, Department =cost
centre.
Hope this helps,
Date: Mon, 18 Oct 1999 08:05:51 -0400
From: Karen Knelly kknelly@epix.net
To: oraapps-l@cpa.qc.ca
Subject: Re: SOB - Balancing Segment
We also had to do reporting to the balance sheet level. We had
relatively few problems.
Pros: Get balanced financials at a lower level.
Cons: Need to post net income by division. JE's that contain
information on more than one division need to create an intercompany
entry. Since the balancing account is at the Division level, you will
need to clear out suspense accounts in order to balance. If you had the
balancing segment in the Company segment, the JE's could contain any
division and still be in balance at the Company level. This would
create more work trying to balance at the divsional level.
We needed to start doing consolidating at a company level. In order to
make this happen we had to move the balancing segment to the Company
level. The only way we could do this is to have Upper Management give
the okay to stop reporting the balance sheet at the divisional level.
We will still be able to generate P&L statements by division.
Date: Mon, 18 Oct 1999 15:50:36 +0300
From: "Sunil" contactsunil@yahoo.com
To: oraapps-l@cpa.qc.ca
Subject: Re: SOB - Balancing Segment
We have faced a similar situation recently. We required a separate Trial
Balance for the Company and for each of the Branches. In addition to this we
manage Funds for outsiders and require separate Balance Sheet for these
Funds. Considering that Consolidation is easier than clearing Suspense
Accounts, we decided on the following:
1.To enable Trial Balance preparation for each Branch, Head Office & Fund,
designate each of these values in the the Balancing Segment.
2.Combine HO, Branch & Fund in a single segment to enforce Balancing
Controls in Apps.
3.Consolidation for Branch & HO will be met through FSG.
I think the following guiding principles can be followed in deciding the
Balancing Segment:
1.Will the entity (Branch, Division, Strategic Business Unit, Brand, Fund)
have its own funds & is accountable for the sources & application of the
funds.
2.Will the entity report by preparing a separate Balance Sheet & Income
Statement.
3.Is the entity a legal reporting entity & is required to present its
Balance Sheet.
4.Is the entity a high level responsibility center(For example a Strategic
Business Unit), accountable for all its operations.
5.Is the 'Division' an entity in itself & is treated as a profit center(For
Example R&D Division for a Group of Pharma Companies)
6.Is the Entity a combination of Service Center & a Strategic Profit Center
which is accountable for all its operations and state of affairs.
7.Is the entity a different Line of Business(For example a Manufacturing
Company with Trading Operations).
8. Fiduciary Trusteeship Relations within an entity. For instance a Company
Managing Portfolios for different Groups or say a large company managing
Superannuation Fund for Employees.
9.Accountability of Sources & Application of Funds is of utmost
significance(A Bank Branch or an ATM)
Will like to share experiences of other list group members.
Regards
Sunil
Date: Wed, 20 Oct 1999 01:28:32 -0700 (PDT)
From: udaya bhaskar udayabg1@yahoo.com
To: oraapps-l@cpa.qc.ca
Subject: Re: SOB - Balancing Segment
Hi Dipankar
Thanks for your reply.
I would like to give detailed view of the client
requirement. Client wants banace sheet at Division
level. There are 3 options i could able to find out
with all are independent structures:
One structure
Company Division/Depot Account Depat.
Qualifier: Balancing None Natural CostCen.
Size : two four six four
Division/ Depot of four digit is spilled two each for
division and depot as parent and child. Here the
problem is division/depot transactions would not be
matched and therefore not possible to provide the
balance sheet unless user does the balacing of
transactions manually.
Second Structure
Division Depot Account Department
Qualifier: Balancing None Natural Cost Centre
Size : two two six four
The problem i found here is unless we provide cross
validation rules, chances are that wrong depot can be
selected by the user for a division. It leads to wrong
combination. Otherwise enforcing two many cross
validation rules would slow down the response.
Secondly, unlike in first strcuture, there is no
provision to create any new company in case going to
form by the client. Therefore company level balance
sheet for other entites if client wants not possible
in this case.
Third stucture
Division/Depot Account Department
Qualifier: Balancing Natural CostCen.
Size : four six four
Division/ Depot of four digit is spilled two each for
division and depot as parent and child.
In this case it is possible to ensure balance sheet at
division/depot level as it is balancing segment.
System ensures that transactions are balanced at
division/depot level. Infact it is even possible to
generate for depot also.
I would like to know that advnantages and
disadvantages in these structure from the above.
Best Regards
udaya bhaskar
Date: Wed, 20 Oct 1999 13:49:39 +0300
From: "Sunil" contactsunil@yahoo.com
To: oraapps-l@cpa.qc.ca
Subject: Re: SOB Balancing Segment
Hi Uday/Dipankar & all,
We have faced a similar situation recently. We required a separate Trial
Balance for the Company and for each of the Branches. In addition to this we
manage Funds for outsiders and require separate Balance Sheet for these
Funds. Considering that Consolidation is easier than clearing Suspense
Accounts, we decided on the following:
1.To enable Trial Balance preparation for each Branch, Head Office & Fund,
designate each of these values in the the Balancing Segment.
2.Combine HO, Branch & Fund in a single segment to enforce Balancing
Controls in Apps.
3.Consolidation for Branch & HO will be met through FSG.
I think the following guiding principles can be followed in deciding the
Balancing Segment:
1.Will the entity (Branch, Division, Strategic Business Unit, Brand, Fund)
have its own funds & is accountable for the sources & application of the
funds.
2.Will the entity report by preparing a separate Balance Sheet & Income
Statement.
3.Is the entity a legal reporting entity & is required to present its
Balance Sheet.
4.Is the entity a high level responsibility center(For example a Strategic
Business Unit), accountable for all its operations.
5.Is the 'Division' an entity in itself & is treated as a profit center(For
Example R&D Division for a Group of Pharma Companies)
6.Is the Entity a combination of Service Center & a Strategic Profit Center
which is accountable for all its operations and state of affairs.
7.Is the entity a different Line of Business(For example a Manufacturing
Company with Trading Operations).
8. Fiduciary Trusteeship Relations within an entity. For instance a Company
Managing Portfolios for different Groups or say a large company managing
Superannuation Fund for Employees.
9.Accountability of Sources & Application of Funds is of utmost
significance(A Bank Branch or an ATM)
Will like to share experiences of other list group members.
Uday in your recent mail you have suggested "Balancing Segment-None". What
is the impact. Is this allowed in Apps?
Regards
Sunil
Date: Wed, 20 Oct 1999 13:52:59 -0400
From: sbradley@sprynet.com
To: oraapps-l@cpa.qc.ca
Subject: Re: SOB - Balancing Segment
I have a similar dilemma with a client. They want to be able to have
balanced balance sheets at the company and division level. If your
structure says a division can only be in one company then use one segment:
division = child values, company = parent values.
There is also a way to have 2 segments be balancing segments. Assume
division activity can be in multiple companies so you need a company and
division segment. Also assume you must balance both of these segments. Set
division up to be the balancing segment. You will need to create a separate
division for each company it can be a part of.
With 3 companies and 5 divisions you may have:
Company A = Division 1(A) and Division 2(A)
Company B = Division 2(B) and Division 3(B)
Company C = Division 4(C) and Division 5(C)
Define parents in the Division segment for Divisions 1,2,3, etc. Write
cross validation rules for the one to one company/division relationships.
This will restrict the divisions to the proper companies. If the divisions
are balanced, so are the companies. Just be sure you keep up with the
maintenance of the cross validation rules for new companies and divisions.
Respectfully,
Steve Bradley, CPA
OASIS Consulting Group, Inc.
Office 404-352-8387
Fax 503-218-9747
Pager 888-912-2569
Date: Fri, 22 Oct 1999 23:33:27 -0700 (PDT)
From: udaya bhaskar udayabg1@yahoo.com
To: oraapps-l@cpa.qc.ca
Subject: Re: SOB - Balancing Segment
Dear Friends
Finally we convinced the client to retain company
segment as balancing segment. Same time we assured him
that to get all revenue, expenditure accounts and
corresponding current asset and liability account to
division level. And also fixed assets recording is
upto division level. Only the issue is owners equity,
term loans is not possible and therefor better keep at
the company level.
Second reason is to avoid too many cross validation
rules as twenty divisions of the company spread across
various locations. And here they are looking
centralised database and server to connect to all
locations. In case we have too many cross validation
rules it may slow down the resonse time of the
machine.
Third issue in our case that each division has again 5
to 10 depots / wearhouses/stockpoints/maintenance
workshops/etc. which are identified to each of the
division. It is essential to have one segment which
consits of division and depo with parent and child
concept. Otherwise it is possible to select wrong
combination unless cross validaton rules are defined.
Finally we convinced the client to retain company
level segment as balancing segment.
Thanks to you all.
Regards
udaya bhaskar
Date: Fri, 22 Oct 1999 23:48:40 -0700 (PDT)
From: udaya bhaskar udayabg1@yahoo.com
To: oraapps-l@cpa.qc.ca
Subject: Re: SOB Balancing Segment
Hi sunil
Thanks for your reply.
Regarding reply to the balancing segment, I said
balacing segment we proposed to the client is at the
company level instead of the division level as asked
by the client. The reason we said contains lot of
cultural factors rather than system constraints. At
present company prepares the balance sheet at the
corporate level and we proposed to devise the five
segments as company/Division-Depot/Account/
Dept-section/Cusion segment for feature use.
As the divisions are not profit centres in terms of
purchase decisions, salary fixation, employee
retention, assets procurement, etc. and therefore
cannot be considered as profit centre.
As you rightly pointed out there is no requirement
under any law to submit balance sheet to any
authority.
Other points dont apply in this case.
Finally we convinced the client to retain company
level as balancing segment.
I have written a seperate mail on other points in
detail how we can met the objectives of the client.
Regards
udaya bhaskar