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How Fitch Ratings Leverages EPM 10 for Global Financial Consolidations

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Fitch Ratings is the third largest rating agency, with 50+ offices world wide and 2,000+ employees. Fitch discusses how they overcame their legacy pain points towards faster and more accurate closes.

Fitch Ratings is the third largest rating agency, with 50+ offices world wide and 2,000+ employees. Fitch discusses how they overcame their legacy pain points towards faster and more accurate closes.

Published in: Business, Technology
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  • 1. How Fitch leverages EPM 10 for global financial consolidations Ranjit Prithviraj
  • 2. Fitch Ratings At-A-Glance • Fitch is the 3rd largest rating agency • Dual-headquartered in New York and London • Global Headcount: 2,000+ professionals • Location: 50+ offices globally • Reports in both IFRS and US GAAP • Maintains two reporting currencies (USD and GBP) www.fitchratings.com 1
  • 3. Legacy Pain Points – Bottlenecks in the close process • Non-standard chart of accounts across the Group • Manual processes and process issues Consolidation Facts: • Utilizes leading ledger (IFRS) and parallel ledger (US GAAP) • Consolidates 77 companies in 33 currencies • Reporting - Requirement to produce management reports quickly • Split ownership percentages of 5-100% at various subconsolidation levels • 9 levels of consolidation • Automatic ICO and COI to speed up the close • Data Load www.fitchratings.com 2 2
  • 4. Business Requirements Data Integration: General: • • • • • Shorten close cycle Decrease load times to under 15 minutes. Flexible user friendly and intuitive reports Role based security access Better system integration • • Global chart of accounts One point of entry - all source data in ECC Automated retrieval of data from ECC BW EPM10 Centralized master data creation for shared dimensions Hierarchy maintenance in EPM10 and reload to BW • • • Information Delivery: Feature Functionality: • • • • • • Capture translation adjustment by account (account roll-forward and cash flow) Automate ICO and COI Alerts required for process chains Multiple reporting currencies Multiple GAAP requirements www.fitchratings.com • • • Scheduled and ad-hoc data loads during the work day Reconciliation from ECC to EPM10 LFL and actuals available at same time (management and GAAP reporting) Drill-through and drill-down back to ECC data (journal level detail) 3 3
  • 5. ERP Landscape Diagram ECC L1 Ledger - US GAAP 0L ledger - IFRS Transactional ledger L2 Ledger - Local GAAP All data - GL, COPA, subledgers, FX rates SUBS Billing and Revenue data BW LFL calculatio n BEX Reportin g EPM 10 IFRS (0L) US GAAP (L1) IFRS (0L) P&L and BS P&L IFRS (0L) ICO GL accounts LC, GBP, USD TC, LC, USD, LFL USD CONSOLIDATION MODEL Statutory reporting MANAGEMENT MODEL Consolidation entries & eliminations CTA - translation of BS (non equity) to month end spot Consol entries and elims www.fitchratings.com Management Reporting Management only adjustments TC, LC, GBP, USD ICMATCHING MODEL Intercompany Reconcilaition Memo data only, no data entry 7/26/12 4
  • 6. Data Conversion – Migration from legacy environment Old structure • One ledger in ECC (multiple Local GAAPs) • Consolidation companies with many currencies • Many manual group consolidations • Manual corrections to errors in CTA New structure • 2- ledgers in ECC - (IFRS and US GAAP) • Deconsolidate and reposition consolidation company balances • Convert only opening balance - Sync fixed assets and other system generated sub ledger accounts - Sync intercompany by transactions • Clean up of history took many months - Reconfigure old data to look like new (UAT and data conversion) www.fitchratings.com 5 5
  • 7. Data Conversion – Migration from legacy environment Old structure New structure • One ledger in ECC (multiple Local GAAPs) • • • Consolidation companies with many currencies • 2- ledgers in ECC - (IFRS and US GAAP) Deconsolidate and reposition consolidation company balances Convert only opening balance • Sync fixed assets and other system generated sub ledger accounts • Sync intercompany by transactions • Many manual group consolidations • Manual corrections to errors in CTA Clean up of history took many months www.fitchratings.com 6 6
  • 8. Key Objectives for a faster close  Building a full data flow for management, legal, US GAAP, IFRS reporting within BPC NW 10  Automation of key consolidation processes with drill through and other performance improvement to expedite close process  Offering flexibility w/o comprising usability  Solution which not only supports but also enables business decisions and incremental improvements www.fitchratings.com 7 7
  • 9. Return on Investment  Better integration with system of record – SAP - ECC  Central repository of all data in BW – Single Source of Truth  Quick turnaround : Huge reduction in time spend collecting information for close.  One common solution alleviates inconsistencies in reporting  Reduction in down time of system and reduction in data load times  Improvement in reconciliation & close cycle time www.fitchratings.com 8 8
  • 10. Best Practices and Lessons Learned  Prototype approach  Build a process based solution  Leverage a common data model across the Organization.  Make data available from different systems as and when needed  Focusing on usability is key.  Create a user controlled process for more accountability www.fitchratings.com 9 9
  • 11. Disclaimer Fitch Ratings’ credit ratings rely on factual information received from issuers and other sources. Fitch Ratings cannot ensure that all such information will be accurate and complete. Further, ratings are inherently forward-looking, embody assumptions and predictions that by their nature cannot be verified as facts, and can be affected by future events or conditions that were not anticipated at the time a rating was issued or affirmed. The information in this presentation is provided “as is” without any representation or warranty. A Fitch Ratings credit rating is an opinion as to the creditworthiness of a security and does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. A Fitch Ratings report is not a substitute for information provided to investors by the issuer and its agents in connection with a sale of securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch Ratings. The agency does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS AND THE TERMS OF USE OF SUCH RATINGS AT WWW.FITCHRATINGS.COM. www.fitchratings.com 6/6/13 10
  • 12. New York One State Street Plaza New York, NY 10004 London 30 North Colonnade Canary Wharf London E14 5GN

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