HFM Beginners Guide

Oracle Hyperion Financial Management 11.1.1.3 Beginner’s Guide

Many finance executives face the daunting task of consolidating their

companies financial and operating results using spreadsheets that are difficult to

maintain and audit. Some are encumbered with custom reporting solutions that

don’t scale or address global requirements, while others are dependent on general ledger-based approaches that can’t pull data from numerous transactional systems without significant IT support. What is needed is a single version of the truth-one view of financial and operational results integrated from multiple systems - without delays.

Why HFM

PLAN + Powerful FEATURES + Design Considerations + Reporting Tools =

Ø Less confusion less time

Ø Shorter closes and Transforms data into usable information

Ø Viable WEB delivery mechanisms

Ø Process management for tight control of the review and approval process

Ø Data Validation

Ø Currency translation to support multiple local currencies.

Ø Automatic elimination for intercompany data and transactions.

Hyperion Financial Management

“Financial Management is a comprehensive, Web-Based application that enables you to manage enterprise financial information quickly and cost effectively. Financial Management delivers global data collection, financial consolidation, reporting and analysis in single highly scalable solutions.”

Complex Organizational Consolidation

• Multiple Transactional Currencies

• Intercompany Transactions

• Minority Interest

• Maintaining Historical Representation of Data

• Ability to handle Journals

• Full Audit Trails –

• Data & End User Actions

• External Reporting to Stakeholders

Product Architecture

Architecture

Financial Management uses a multitier architecture that includes a client tier, an

Application tier and a database tier.

The client tier contains the user interface. It communicates with the application

tier. The primary function of the client tier is to display, enter, and maintain data

and to maintain metadata.

The application tier contains the application, the report, and Web servers. The

Web server enables you to access the Web-based portions of Financial Management. The application server contains the financial intelligence and

connections to the relational database and OLAP engine. It also contains architect for managing metadata.

The data tier contains the relational databases for Financial Management

metadata and source data.

Overview

HFM Process

Financial Management is a powerful application that enables you to manage

enterprise financial information quickly and cost effectively. You follow a typical

task flow for a monthly financial cycle.

1). Load and add data To add data to your application by loading it from a file

and by using data forms.

2). Calculate After enter data, you can run calculation rules to populate calculated accounts.

3). Adjust data after you calculate data, you can adjust the data by using journals that provide an audit trail of your adjustments.

4). Translate and consolidate data. After data for individual business units is entered and adjusted, you can translate and consolidate the data.

5). Approve data after data is consolidated, you can submit the data for review and approval.

6). Lock data after you receive the approval for the submitted data, you can lock the data to prevent further modifications.

7). Run and publish financial reports. You can run reports against the approved data.

With

Components

Financial Management integrates application creation and management in a

centralized administration environment.

Ø Single sign-on—Users log on once to Workspace to access Architect, Financial Management, and the reporting tools.

Ø Single console for application management and creation—Users create,

manage, and deploy applications from Architect. These applications are opened

in Financial Management for data retrieval and data output.

Ø Centralized repository of key dimensional elements for different products.

Ø Centralized console for controlling data flow between applications.

Financial Consolidation, Reporting & Analysis

Financial Management enables highly efficient collection and consolidation of data from diverse sources. It includes these features:

• Process management for tight control of the review and approval process.

• Data validation.

• Currency translation to support multiple local currencies.

• Automatic eliminations for intercompany transactions.

Financial Management is designed for large-scale, centralized Web deployment.

You can use Financial Management to consolidate data from diverse general

ledger systems and locations around the globe.

SEC – The U.S. Reporting Standard

Principles-based

Ø Does not replace framework requirements

Ø Focus on areas of highest risk of material misstatement to financial statements

Ø Management flexibility to tailor evaluation process to specific facts and

circumstances

Ø Provides guidance on supporting the assessment

Ø Provides framework for evaluating deficiencies

10K- 10Q

Dimensions

Dimensions describe an organization’s data and usually contain groups of related members.

Examples of dimensions are Account, Entity, and Period. Financial Management

supplies eight system-defined dimensions and enables you to populate up to four custom dimensions that you can apply to accounts. Dimension members are

arranged in hierarchies. Upper-level members are called parent members, and a

member immediately below a parent member is referred to as the child of a parent member. All members below a parent are referred to as descendants. The bottom level hierarchy members are called base-level-members.

Scenario Dimension

The Scenario dimension represents a set of data, such as Budget, Actual, or

Forecast. For example, the Actual scenario can contain data from a general ledger, reflecting past and current business operations. The Budget scenario can contain data that reflects the targeted business operations. The Forecast scenario typically contains data that corresponds to predictions for upcoming periods. A Legal scenario can contain data calculated according to legal GAAP format and rules. You can define any number of scenarios for an application and define attributes for Scenario dimension members, such as the default frequency, the default view, and zero data settings.

Year Dimension

The Year dimension represents the fiscal or calendar year for data. An application can contain data for more than one year. You specify a year range when you create the application and select a year from the Year dimension to process data.

Period Dimension

The Period dimension represents time periods, such as quarters and months. It

contains time periods and frequencies by displaying the time periods in a hierarchy. For example, if the Actual scenario maintains data on a monthly basis,

generally 12 periods of data are available for this scenario in a year. Financial

Management supports years, months, and weeks for the period dimension. It does not support days for the dimension.

Entity Dimension

The Entity dimension represents the organizational structure of the company, such as the management and legal reporting structures. Entities can represent divisions, subsidiaries, plants, regions, countries, legal entities, business units, departments, or any organizational unit. You can define any number of entities. The Entity dimension is the consolidation dimension of the system. Hierarchies in the Entity dimension reflect various consolidated views of the data. Various hierarchies can correspond to geographic consolidation, legal consolidation, or consolidation by activity. All relationships among individual member components that exist in an organization are stored and maintained in this dimension. Entities in an organization are dependent, base, or parent entities. Dependent entities are owned by other entities in the organization. Base entities are at the bottom of the organization structure and do not own other entities. Parent entities contain one or more dependents that report directly to them. You define attributes for Entity dimension members, such as the default currency and security class, and to specify whether the entity allows adjustments and stores intercompany detail.

Value Dimension

The Value dimension represents the different types of values stored in your

application, and can include the input currency, parent currency, adjustments, and consolidation detail such as proportion, elimination, and contribution detail. For example, the Entity Currency member stores the value for an entity in its local currency. The Parent Currency member stores the value for an entity translated the currency of its parent entity.

Account Dimension

The Account dimension represents a hierarchy of natural accounts. Accounts store financial data for entities and scenarios in an application. Each account has a type, such as Revenue or Expense that defines its accounting behavior.

You define attributes for Account dimension members, such as the account type, the number of decimal places to display, and whether the account is a calculated,

consolidated, or intercompany partner account.

Intercompany Dimension

The Intercompany dimension represents all intercompany balances that exist for

an account. This is a reserved dimension that is used in combination with the

Account dimension and any custom dimension. Financial Management can track

and eliminate intercompany transaction details across accounts and entities. You

can also run intercompany matching reports to view intercompany transactions.

View Dimension

The View dimension represents various modes of calendar intelligence; for

example, Periodic, Year-to-Date, and Quarter-to-Date frequencies. If you set the

view to Periodic, the values for each month are displayed. If you set the view to

Year-to-Date or Quarter-to-Date, the cumulative values for the year or quarter are displayed.

Custom Dimensions

Four custom dimensions are available for analysis of detailed data. You can use

custom dimensions to store additional details associated with accounts, such as

products, markets, channels, balance sheet movement, or types of elimination. For example, custom dimensions could include Product Line, Region, Channel, or Customers.

Dimensions

You create metadata for applications by defining dimensions. Dimensions

describe your organization’s data. Examples of dimensions are Account, Entity,

and Period. The elements that comprise a dimension are called members. For

example, GrossMargin and TotalRevenues are members of the Account dimension.

Dimension Hierarchies

Members of a dimension are arranged in hierarchies. Upper-level members are

called parent members and a member immediately below a parent member is

referred to as its child. All members below a parent are referred to as descendants.

The bottom-level members of the hierarchy are called base-level members. The

illustration in the slide shows a part of the dimension hierarchy of the Account

dimension. In this hierarchy, the Total Revenues member is a child of Gross

Margin. Sales, Other Revenues, Salaries, Total Revenues, and Total Costs are

descendants of Gross Margin. Sales, Other Revenues, and Salaries are base-level

members.

Dimensions and Data

Consolidation

Data is typically entered into base-level members of dimensions and not into

parent members. Values for parent-level members are aggregated from the

children of the parent-level members. In some cases, data for base-level members

is calculated. For example, the Salaries account member might be a base-level

member whose value is calculated based on head count and salary rate. In the

illustration in the slide, the data values from the base-level members are rolled up to the parent-level members—Total Revenues and Total Costs. Data values from Total Revenues and Total Costs are then rolled up to their parent, Gross Margin.

Financial Consolidation

Consolidation is the period–end process of combining the financial results of

separate subsidiaries with the parent company to form a single, combined

statement of financial results.

Consolidation is the process of gathering data from descendants and aggregating

the data to parent entities. Consolidation applying only to Entity dimension.

After loading or entering data into base level entities we run a consolidation for a

selected scenario or period to aggregate data throughout the organization.

Steps to perform consolidation

Before Consolidate

After Consolidate

When you consolidate an entity, the processes are required for the descendants of the entity run automatically.

• Calculation rules are run for all descendants of the entity for the period

being consolidate and for all prior periods

• If the data for the children & parent entities are in different currencies the data is translated based on the exchange rate.

• Intercompany transactions between entities are eliminated at their first common parent.

• Data is consolidated from base level entities to parent entities.

FINANCIAL CLOSING

The financial close process is important to a company as it is the function directly

related to producing company financial results for each period end. Restricting

access to accounting and reporting applications and establishing clear write-off and reserve policies are examples of financial close process controls. These controls can be preventive or detective in nature.

Financial Close Management

Streamline the process of Fast Closing

• Analysis of process closing (Closing Fast)

• Monitoring Process

• Calendar of activities

• Single Task List

• Automatic Workflow

• Ensuring Compliance

• Email and calendaring

FCM: different visions of the process

ProcessMonitoring

•Illustrate the current status of all process in simple and intuitive Dashboards

and reporting the ad-hoc offer a complete and immediate understanding in real

time closing process

• Automatically update the states tasks assigned to the process

• Highlights that the tasks are risk or delay

• Encourage users to improve closing process

Active Financial Close Calendar

• Detail all the tasks necessary the closure process accountant

• Provides multiple views of workflow process Calendar Task list

• Customizable for each user

Task Management

• Assignment of tasks in most types of function of different processes Milestone

Tasks.

• Access and use for each user

• Integrates with tasklist systems EPM and EBS (eg: AR sub ledger close to GL)

• Enables automation of processes complex

• Supports management hierarchies processes, dependencies and associations

• Activities can be incorporated Systems email / calendar (MS Outlook, others)