How Financial Modelling and Data Integration Automated And Transformed Group and Individual Accounts Preparation Process

Consolidating group accounts can be a complex process for medium as well as large group of companies.

Scene depicting books going into a funnel and one dropping out — AI Generated Image

There are a number of common problems that can arise. Here are some of the most frequent issues:

Unfortunately, relying on manual consolidation is all too common. Many companies find themselves piecing together consolidated accounts using a patchwork of non-standard spreadsheets and even word processors. This approach is prone to errors, time-consuming, and lacks the transparency needed for robust financial reporting.

Despite the availability of sophisticated consolidation processes, a significant number of companies persist with manual methods for preparing consolidated group accounts. This often involves a laborious process of gathering financial data from disparate sources across subsidiaries.

The data is then painstakingly combined and manipulated using a hodgepodge of non-standardized spreadsheets and even basic word processing software.

This reliance on manual workflows is error-prone, as human error can easily creep in during data entry and manipulation.

Additionally, the lack of automation makes the process incredibly time-consuming, often leading to delays in finalizing financial statements. Furthermore, the use of non-standardized tools creates a lack of transparency and audit-ability, making it difficult to track changes and ensure the accuracy of the consolidated accounts.

This outdated approach simply doesn't meet the demands of modern financial reporting, putting companies at risk of errors and inefficiencies. Financial Modelling and Data Integration in conjunction with automation were key tools to this issue.

How did one particular company prepare group accounts?

In this case study, a company's existing financial consolidation and reporting process was a testament to sheer human endurance. Both consolidated and individual accounts were generated entirely by hand. This meant a complete absence of automation, with every step from data gathering to calculations and formatting relied on manual data manipulation.

This laborious process necessitated the dedicated efforts of a single consultant for a staggering four months each year. While this approach managed to produce the necessary financial statements, it was undeniably inefficient. It placed a significant burden on a single individual and left the company vulnerable to errors inherent in manual data entry. Additionally, the lack of automation limited scalability and flexibility, making it difficult to adapt to changing reporting requirements or company growth.

This outdated system ultimately hindered the company's ability to perform timely and accurate review of the accounts before publication.

Strategy to overcome the limitations of present procedure to prepare accounts

Recognizing the inherent limitations and inefficiencies of the manual approach to financial reporting, we championed the adoption of an automated system for generating both consolidated and individual accounts. This initiative was driven by a three-pronged strategy aimed at revolutionizing the company's financial reporting process.

After in-depth discussions and rigorous analysis of various approaches, we arrived at a comprehensive solution to tackle the inefficiencies of our manual consolidation process. These discussions were not merely brainstorming sessions; they involved meticulous consideration of all potential avenues, weighing their strengths, weaknesses, and potential impact on the entire financial reporting ecosystem.

The solution we've developed, which we'll delve into further, was designed to streamline the consolidation process, significantly improve efficiency, and elevate the accuracy and transparency of our financial reporting. This shift will ultimately empower us to gain deeper insights and make more informed decisions for the company's future.

Proposed Action Plan

Input Model At the core of the solution lies a standardized input model. Designed with user-friendliness in mind, this model will be distributed electronically to each company's finance team. This ensures consistency and reduces the potential for errors arising from variations in individual spreadsheets. The model will be tailored to capture the specific financial data required for consolidation, streamlining the data collection process for subsidiary teams. Once completed, the model can be submitted electronically, eliminating the need for manual data entry and the associated risk of errors.

Process Spreadsheet

The processing spreadsheet will automatically deposit the data into a database and generate text files to update the accounts production software.

Database A central, secure database, providing a single source of truth for all financial information.

Reporting Spreadsheet

Furthermore, a pre-designed and pre-programmed spreadsheet will be utilized to generate the consolidated income statement, balance sheet, and cash flow statement. This eliminates the need for manual manipulation and formatting of data, saving valuable time and reducing the risk of errors creeping in during these processes.

Accounts Production

An accounts productions software was implemented to automate the accounts for individual companies and group. The update is provided by text files from the process spreadsheet.

The beauty of this system lies in its automation. Upon receiving the completed input model from each subsidiary, a designated workflow will trigger the entire consolidation process automatically. This eliminates the need for any manual intervention, significantly reducing the time required for consolidation and freeing up resources for more value-added activities. Should any adjustments be necessary, a revised input model can be easily submitted, triggering a recalculation of the consolidated statements. This approach fosters a centralized, efficient, and error-free consolidation process, while also promoting transparency and facilitating easier audits. Overall, this solution streamlines the consolidation process, improves data integrity, and empowers a more efficient use of resources within the finance department.

Detailed Design and Implementation Based On The Proposed Action Plan

The standard input model took the form of a user-friendly spreadsheet distributed electronically to each subsidiary's finance team.
The model provided an intuitive user interface to input data.
There were separate sections for earnings statement, balance sheet and the notes to the accounts.
All this data was summarised in one data table.
Once completed, the data wasn't just copied and pasted.
This data table was transferred automatically to the database as described in Process Spreadsheet below.

Ownership and Streamlining Consolidation Process

To clearly define ownership and streamline the consolidation process, a novel approach was implemented. For each subsidiary, a pseudo-company named "Adjustment Company" was created and managed by the group accounts team. This "Adjustment Company" served as a repository for all consolidation adjustments, including goodwill, its amortization, elimination of intercompany transactions, and any other relevant entries. This clear separation of responsibilities ensured the finance teams focused on accurate data entry for their respective companies, while the group accounts team maintained control over consolidation adjustments.

Dual Role of Input Models

A dedicated spreadsheet, designed specifically for this purpose, played a central role in data transfer. This dedicated spreadsheet housed a script that automatically read the data table within each input model.
This script then seamlessly transferred the extracted data directly into the database application. Standardized queries written in SQL (Structured Query Language) facilitated the actual data update within the database, ensuring accuracy and consistency.
This was achieved by leveraging a built-in scripting language within the spreadsheet itself.
The script essentially read the data table in each input book and seamlessly transferred it into the database application.
Standardized queries written in SQL (Structured Query Language) facilitated the actual data update within the database ensuring accuracy and consistency.

To ensure efficient data storage and retrieval, a PC-based database was designed with a single, central table.
This table housed all financial data for every company and financial year it related to.
The key to this streamlined approach lay in the data transfer script embedded within the input spreadsheet.
This script functioned like an intelligent tagger, attaching a specific financial year identifier to each piece of data it transferred from the input models.
This approach eliminated the need for separate data tables for each company and financial year, while still allowing for efficient retrieval and analysis of data for specific periods.
Lookups between input data and master files were implemented.
Data feeds were created to provide data to prepare individual company and group accounts.
This centralized data repository fostered accessibility and simplified the consolidation process.

A dedicated consolidation spreadsheet was designed to interact directly with the database.
This powerful tool retrieved data directly, enabling it to prepare the group accounts, generate related notes, eliminate inter-company balances, account for goodwill and its amortization, and cater any other required information.
This spreadsheet served not only as the primary tool for consolidated account preparation but also as a crucial control mechanism.
By acting as a backup for the data stored in the accounts production software, it provided an additional layer of security and facilitated the audit of the group accounts.

In parallel with the database implementation, dedicated accounts production software was introduced to automate the preparation of both individual company statutory accounts and the consolidated group accounts.
The script in the process spreadsheet was enhanced to generate text files in a format readable by this software. These text files acted as the data feed for automated accounts production within the software.
The accounts for individual companies and the group were updated automatically if any changes were made to the accounts.

This multi-pronged approach, combining user-friendly input models, clear ownership structures, a robust database, and automation through scripting and dedicated software, resulted in a streamlined and efficient consolidation process. It not only reduced manual intervention and the risk of errors but also fostered transparency and facilitated easier audits.

Reaping the Rewards With Powerful Combination of Data Integration, Financial Modelling and Automation

The implemented solution proved to be a resounding success. The standardized input model, coupled with the automated data transfer and consolidation processes, significantly streamlined the financial reporting cycle. Manual intervention was minimized, reducing the risk of errors and freeing up valuable time previously dedicated to consolidation tasks. Perhaps the most tangible benefit was the elimination of the need for a dedicated consultant. The finance team was empowered to handle the entire consolidation process in-house, fostering a deeper understanding and ownership of the financial data.

This solution demonstrates our expertise of automation, Financial Modelling and Data Integration to design elegant business solutions.

Does your business struggle with inefficient and frustrating processes?

At AnalytixPlanning, we possess the necessary technical, programming, and design skills to transform these roadblocks into streamlined solutions. Our team of experts can analyse your current processes, identify areas for improvement, and develop customized solutions that leverage automation, data management, and user-friendly design. We don't just solve problems, we empower your team to work smarter, not harder. If you're ready to unlock the full potential of your business, contact us today and let us help you streamline your path to success.

Analytix First, Then Planning.

Turn data insights into action.

Streamlining Group Accounts Production Using Data Integration, Financial Modelling and Automation