Things to Consider-

Designing Cash Flow Process in HFM

Russ Rogers & Jeff Pitts May 8, 2013
 Purpose and Definitions

Purpose
Provide an overview of everything to consider when automating a statement of cash flows in HFM
Not teach you all detailed steps surrounding building of metadata, artifacts and business rules. This
would simply take too much time.
Provide some explanation and thought process behind the metadata, artifacts and rules included in
this presentation
There is no such thing as a statement of cash flows that is 100% automated. Some manual
intervention will always be required

Definitions
Metadata Members and structures defined in HFM Metadata Manager used for the purpose of
storing data that is both submitted and calculated (i.e. scenarios, years, accounts and customs 1-4
Business Rules A form of Visual Basic defined in HFM Rules Editor used for the purpose of
calculating results
Artifacts Data Forms, Data Grids and Reports defined in HFM Web used for submission and
validation of data and reporting of results

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 Metadata Consideration Create a Custom Dimension Structure for Balance Sheet

Custom Dimension
To be used for all Balance Sheet roll forward activity
Dimension members include: Beg Balance, Additions, Retirements, Transfers
Top member of Custom Dimension structure is assigned to all Balance Sheet accounts
Process creates a valid intersection of each Balance Sheet account with each roll forward member

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 Business Rule Consideration Calculate Beg Balance on all Balance Sheet Accounts

Beginning Balance Rule

Calculates the Beginning Balance on each Balance Sheet account
Conditional Statement excludes accounts flagged as IsICP

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 Process (Artifact) Consideration Collect Supplemental Roll Forward Data by
Location

Task List of Web Data Forms by Location

Data forms to capture supplemental information not included in source ERP system
Data forms include: Beg Balances (calculated), Additions, Retirements, Transfers
Data forms include: Validation Check (Scalc) to compare roll forward balances entered to GL Load

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 Process Monitor Traffic Light Validate Supplemental Roll Forward Data in Total

Task List of Web Data Forms by Location

Very same validation checks in each data form is contained on report
Cells in green confirm all supplemental data is properly submitted
Cells in yellow highlight differences between supplemental data and FDM load

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 Metadata Consideration Create a Changes in Balance Sheet Account Structure

Account Dimension
All accounts are defined as Expense type
Purpose is to capture changes on all Balance Sheet accounts
Total number of accounts in this structure is less than the number of accounts in the Balance Sheet
structure
Lowest level base accounts only go down as far as changes that need to be captured
Use naming convention of CHT_ for parents and CH_ for base members

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 Metadata Consideration Create a Custom Dimension Structure to Capture Changes

Custom Dimension
Includes members for changes in Beg Balances, changes in End Balances and changes in Activity for
3 key levels of value dimension (<Entity Currency>, <Parent Currency>, [Elimination])
Assigned as top member for all Changes in Balance Sheet accounts
Can be in same Custom Dimension used to capture Balance Sheet roll forward activity
Top member assigned to all CHT_ and CH_ accounts

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 Business Rule Consideration Calculate Cash Flow Beginning and Ending Balances

Rule <Entity Currency>

Rule populates beginning and ending balances on <Entity Currency>
Rule populates using proper signage depending on whether account is an asset or liability type

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 Business Rule Consideration Calculate Cash Flow Beg and End Balances
(Continued)

Rule [Elimination]
Rule populates beginning and ending balances on [Elimination]
Rule populates using proper signage depending on whether account is an asset or liability type

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 Business Rule Consideration Calculate Cash Flow Beg and End Balances
(Continued)

Rule <Parent Currency> is USD

Rule populates beginning and ending balances on <Parent Currency>
Rule populates using proper signage depending on whether account is an asset or liability type

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 Business Rule Consideration Calculate Cash Flow Activity

Rule
Rule calculates on 3 levels of value dimension (<Entity Currency>, [Elimination], <Parent Currency>)
Rule uses conditional statements to populate ECCH activity, ELCH activity, and PCCH activity
Rule populates using proper signage based on previous business rule

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 Process (Artifact) Consideration Create Data Grid to Validate ECCH_Activity Rule

Data Grid Confirms <Entity Currency> net to 0

Displays POV: A#CH_BalanceSheet, V#<Entity Currency>, C2#EC_Cashflow,
Displays Row: E#[Base Entities]
Displays Column: P#[Third Generation]

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 Process (Artifact) Consideration Create Data Grid to Validate PCCH_Activity Rule

Data Grid - Confirms <Parent Currency> net to 0

Displays POV: A#CH_BalanceSheet, V#<Parent Currency>, C2#EC_Cashflow,
Displays Row: E#[Base Entities]
Displays Column: P#[Third Generation]

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 Process (Artifact) Consideration Create Data Grid to Validate ELCH_Activity Rule

Data Grid - Confirms [Elimination] net to 0

Displays POV: A#CH_BalanceSheet, V#[Elimination], C2#EC_Cashflow,
Displays Row: E#[Base Entities]
Displays Column: P#[Third Generation]

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 Metadata Consideration Create Cash Flow Statement Reporting Accounts

Account Dimension
Accounts used for presentation and
calculation of each line item that appears on
the St. of Cash Flows
All accounts are defined as Expense type
The hierarchy of the account structure
models how the report should be displayed
(i.e. Operating, Financing and Investing
sections).

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 Metadata Consideration Expand Changes in Balance Sheet Custom Dimension

Custom Dimension
Includes members for CFS_Total, CFS_Calc and CFS_Input
Assigned as top member for all Cash Flow Statement reporting accounts
CFS_Calc member used for calculations and CFS_Input used for input adjustments (i.e. manual
input for off Balance Sheet item)

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 Process (Artifact) Consideration Create St. of Cash Flow Data Form

Data Form- St. of Cash Flows

Column 1 (CFS_Calc) represents the line item calculations (not yet discussed)
Column 2 (CFS_Input) represents the line item input (i.e. manual input for off Balance Sheet items)
Colum 3 (CFS_Total) is the parent member that sums the calculations and inputs to the line items and
is the member to be used for reporting

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 Business Rule Consideration Calculate Cash Flow Statement Reporting Accounts

Rules for <Entity Currency>

Conditional statement used to calculate all reporting accounts prior to currency translation

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 Business Rule Consideration Calculate Cash Flow Statement Reporting Accounts

Rules for [Elimination]

Conditional statement used to calculate reporting accounts that use Intercompany accounts that are
eliminated during consolidation process (i.e. Automatic Intercompany Elimination accounts)

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 Business Rule Consideration Calculate Cash Flow Statement Reporting Accounts

Rules for Net Income and Dollar Overrides

Conditional statement is used to calculate Net Income and other reporting accounts that are calculated
using dollar overrides (i.e. Investment in Subs, Dividends)
Accounts not subject to translating using YTD Average (discussed next slide)

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 Metadata & Rule Consideration Create and calculate a YTD EOM AVG rate account

Account Dimension
The St. of Cash Flow reporting line items that do
translate (i.e. not calculated after currency
translation) will use the EOM_YTDAVG rate
account (or end of month YTD average)
Rule uses a special Average function that
calculates this rate as the sum of each periods
EOM rate / number of periods in year (aka a
straight line average)

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 Business Rule Consideration Translate Cash Flow Reporting Accounts

Rules for Translation

Translate Cash Flow reporting accounts using EOM_YTDAVG exchange rate account
Calculated in the Sub Translate() subroutine
Uses HS.Trans function to override application default translation method used for expense type
accounts, which includes cash flow presentation reporting accounts

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 Business Rule Consideration Calculate Beginning and Ending Cash

Rules for Cash

Used at bottom of St. of Cash Flows below Financing section
Calculates beginning and ending cash before and after currency translation

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 Business Rule Consideration Calculate Cash Proof and FX Effect on Cash

Rules for Cash Flow Proof and FX Effect (Plug)

Purpose 1: Calculate cash flow proof (before currency translation) is in balance (i.e. = 0)
Purpose 2: Calculate effect of FX on cash (after currency translation)
Cash flow proof is: Beg. Cash + Op. Act. + Inv. Act. + Fin. Act. End. Cash
FX effect is: (Beg. Cash + Op. Act. + Inv. Act. + Fin. Act. End. Cash) * -1

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 Process (Artifact) Consideration Update St. of Cash Flow Data Form

Data Form- St. of Cash Flows

Add a section at bottom for FX Proof

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 Metadata Consideration Prove the FX Plug

Custom Dimension
The total FX effect (calculated in previous rule)
could be a fairly large number that is initially
calculated as a plug
Auditors often want to know what makes up this
plug
It is possible to use HFM to prove this plug
Define metadata by expanding the cash flow
structure in custom dimension to include a
FX_Cashflow roll up that includes: FX_BB (FX
effect of beginning balance at <Parent Currency>
and FX_ACT (FX Effect of activity at <Parent
Currency>)

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 Business Rules Consideration Prove FX Effect Plug on Cash

Rules to Prove FX Effect (Plug)

Create special translation rules to calculate total FX effect on beginning cash as well as each section
(operating, investing, financing) on statement of cash flows.
FX effect on beginning cash is calculated as the difference between translating at current EOM rate
vs. prior year P12 EOM rate.
FX effect on operating activities (in total) is calculated as the difference between translating at current
EOM rate vs. translated balances reported (due to different method used to translate Net Income).
FX effect on each line making up the investing and financing activities must either be calculated by
taking the difference between translating at EOM rate vs. EOM_YTDAVG rate or by taking the
difference between translating at EOM rate vs. translated balances reported (due to different method
used on items with dollare overrides).

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 Metadata & Rule Consideration Create and calculate a PR EOM rate account

Account Dimension
Used for cash flow purposes
Used to copy prior year EOM and AVG rates to
current year

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 Metadata Consideration Create FX Proof Account roll up

Account Dimension
Used for cash flow purposes
Used to store calculated FX effect in
specific CFS accounts used on St.
of Cash Flow

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 Business Rules Consideration Prove FX Effect on Beginning Cash

Rules to Prove FX Effect (Plug for Beginning Cash)

FX effect on beginning cash is calculated as the difference between translating at current EOM rate
vs. prior year P12 EOM rate.
Prior year P12 EOM rate is stored in PR_EOM rate accounts (previous rule)

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 Business Rules Consideration Prove FX Effect on Operating Activities

Rules to Prove FX Effect (Plug for Operating Activities)

FX effect on operating activities cannot be calculated simply by using HS.Trans function in Translate()
subroutine to determine translation difference between EOM rate (used for BS accts) and
EOM_YTDAVG (used for changes on BS accts)
The actual difference must be calculated by using a combination of Translate() and Calculate()
subroutines

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 Business Rules Consideration Prove FX Effect on Investing Activities

Rules to Prove FX Effect (Plug for Investing Activities)

FX effect on investing activities cannot be calculated simply by using HS.Trans function in Translate()
subroutine to determine translation difference between EOM rate (used for BS accts) and
EOM_YTDAVG (used for changes on BS accts)
The actual difference must be calculated by using a combination of Translate() and Calculate()
subroutines

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 Business Rules Consideration Prove FX Effect on Financing Activities

Rules to Prove FX Effect (Plug for Financing Activities)

FX effect on financing activities cannot be calculated simply by using HS.Trans function in Translate()
subroutine to determine translation difference between EOM rate (used for BS accts) and
EOM_YTDAVG (used for changes on BS accts)
The actual difference must be calculated by using a combination of Translate() and Calculate()
subroutines

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 Process (Artifact) Consideration Update St. of Cash Flow Data Form

Data Form- St. of Cash Flows

Add a section at bottom for FX Proof

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Summary of Considerations Metadata, Bus. Rules, Process(Artifacts)
METADATA
Custom roll up for BS Roll Forwards
Acct roll up for CH Balance Sheet
Custom roll up to calc. changes at EC, ELIM & PC
Acct roll up of CFS reporting accts
Custom roll up for CFS Calc. and Input
Custom roll up for BB_FX & ACT_FX
Acct for EOM YTD AVG
Acct for PR EOM
Acct roll up for FX Proof
PROCESS (ARTIFACTS)
Data Forms to collect roll forwards by location
Process Monitor Traffic Light reports by location
Data Grids to prove CH Balance Sheet = 0 for EC, ELIM &
PC
Data Form for CFS Presentation accounts
Addition to CFS Data Form for FX Proof
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BUSINESS RULES
Calc. Beg. Bal. on Balance Sheet accounts (for RF WDEFs)
Calc. Beg. And End. Balances on all Assets & Liabilities using
proper signage for EC, ELIM & PC
Calc. activity on all Assets & Liabilities for EC, ELIM & PC
CFS presentation account rules for EC, ELIM & PC
Calc. YTD EOM AVG exchange rate
Calc. PR EOM exchange rate
Translate CFS presentation using EOM YTD AVG
Calc. Beg. And End. Cash
Calc. Cash Proof and FX Plug
Calc. Proof on FX plug for Beginning Cash
Calc. Proof on FX plug for Operating Activities
Calc. Proof on FX plug for Investing Activities
Calc. Proof on FX plug for Financing Activities
 Presenter Contact Information:

THANK YOU FOR YOUR TIME

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