"The particularly attractive, user-friendly and process-orientated approach to operating the software was what ultimately convinced us about Corporate Planner Cons."
Head of Group Accounting & Controlling
- Consolidated financial statement
The challenge of complex group structures – consolidation at IDS Group
Major changes, as well as an increasingly complex group structure, prompted IDS Gruppe Holding GmbH to introduce a professional consolidation software program. In CP-Cons, the right answer for all its requirements has been found.
The companies assembled around IDS Group Holding GmbH consist of individual businesses and a parent company, which together provide integrated IT and automation solutions for smart grid and smart metering systems for the international utility and waste management market.
In 2012 and 2013, a great many changes and reorganisations were taking place in the group, whose holding company is located in Ettlingen. Participating interests were shifting and subsidiaries or shares were being traded on all group levels. An intermediate holding company was set up. The increase in complexity which resulted from the rising number of companies prompted Manuel Erndwein, Head of Group Accounting & Controlling at IDS Group Holding GmbH, to look for a corporation-wide answer to these mounting demands – in the form of convenient software support.
The top priorities were to replace the existing Excel-based consolidation solution and to optimise the procedure for preparing the consolidated financial statement. Against this background, the changeover to a professional consolidation solution was to be made, and the subgroup financial statements as well as the consolidated financial statement for the entire group for the financial year 2013 were to be prepared with new software. A team from the “Accounting and Controlling IDS GmbH” and the “Group Accounting & Controlling IDS Group Holding GmbH” departments invited proposals from five different vendors. Following the second round, in August 2013 the decision was made in favour of CP-Cons, the consolidation software from Corporate Planning. “The particularly attractive, user-friendly and process-orientated approach to operating the software was what convinced us in the end,” the Head of Group Accounting & Controlling remembers.
It was then a question of getting the software up and running and clearly depicting the consolidation process from start to finish by the end of the year. Four employees, all from different subgroups, would be working with the software in future. In close cooperation with a CP consultant, the various steps in the process were developed and implemented in workshops.
Guided by the clear workflow diagram which takes the users through the individual consolidation steps, the accounting and corporate performance management experts prepared the ground for a professional consolidated financial statement.
When the user administration settings had been defined, the consolidated reporting entity and the chart of accounts were created. IDS Group is structured in three levels. At that point in time, the top level consisted of one parent company and twelve subsidiaries. Below that, on the second level, there were six subsidiaries. There were also five more subsidiaries on the third level, which all belonged to IDS GmbH. This group structure was built in the “consolidated entity” step at the start. Along with the definition of the chart of accounts, which could either be selected from a choice of German Commercial Code and IFRS templates or created from scratch, this formed the basis on which the consolidated financial statement would be produced.
So that a smooth transition to the new application could be guaranteed, it was necessary to begin by depicting the previous-year consolidated financial statement again in CP-Cons. Then there was the greatest challenge – the substantial restructuring of the group and the correct reconciliation of the previous-year values of all the companies. The new intermediate holding company, which on the one hand purchased third-level subsidiaries and thus promoted them to the second level, and on the other hand itself became the new second-level parent following a qualified share swap, had to be added. The data from the extremely heterogeneous ERP environment at the subsidiaries were transferred automatically via data import from merged Excel sheets.
The preliminary work in the system had been completed in time for the annual financial statement deadline. Manuel Erndwein and his team succeeded in producing the consolidated accounts for 2013. “We were able to comply with the shareholder’s tight schedule in getting the consolidated financial statement on all three levels prepared and audited,” the management accountant is pleased to report. The feedback from the employees involved was very favourable too.
The consolidation process has been well-structured and consistent ever since. “The two employees from the third level produce the entire third-level subgroup financial statement in CP-Cons, and the two users from the first and second level get the entire second-level subgroup financial statement ready as well as the top-level consolidated financial statement,” Manuel Erndwein says of the process. He regards the process-orientated documentation of the consolidation procedure in a standardised system as an added benefit of the new solution. In the next step, more and more third-level subgroup financial statements will be transferred to CP-Cons, until the entire group has been integrated in the process. Reflecting future changes in the group structure or adding more companies or new employees to the established consolidation process will no longer constitute much of a challenge to the management accountant.
About IDS Group
IDS Group is a specialist in IT and automation solutions for smart grid and smart metering systems for the German and European utility and waste management industry. Its innovative product and service portfolio covers all aspects of technical grid operation, geodata-based information processing and metering.
With over 650 qualified staff in the fields of development, sales, production, project handling and administration, the turnover achieved by IDS Group in 2013 amounted to almost EUR 100 million.