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The office of the CFO, run from 1 data model with named owners.

Consolidation, planning, reporting, tax, treasury and audit each keep their own copy of the group's entities, accounts and periods. We map those copies to 1 set of definitions with a named owner.

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The office of the CFO is the finance function and every system its numbers pass through.

The office of the CFO covers the close, the consolidation, planning, forecasting, statutory reporting and the board pack, and each of the 6 reads the same entities, accounts and periods. Constancia is an EPM consultancy that builds those 6 functions on 1 data model for multi-entity groups.

In a group with 12 entities on 3 ERPs, the same customer, cost centre and account can be defined 3 different ways before the consolidation ever runs.

The group financial controller in that position spends the first week of every month arguing with 3 entity finance directors about whose gross margin the board should see.

6 functions in the office of the CFO read 1 model, and each one breaks where the model does.

  1. 01

    The close

    Each entity finishes its ledger to a calendar, and the group controller waits for the entity that always lands on the last day.

  2. 02

    Consolidation

    Currency translation, intercompany eliminations and ownership adjustments turn 12 ledgers into 1 set of group numbers.

  3. 03

    Planning

    The budget and the forecast are built on drivers the business owns, on the same entities and accounts as the actuals.

  4. 04

    Forecasting

    The rolling forecast reads last month's actuals from the consolidation, so a variance can be traced to the ledger it came from.

  5. 05

    Statutory reporting

    The accounts, the notes and the filings tie out to the consolidation, and the auditor tests the same figure the board read.

  6. 06

    Management reporting

    Every measure in the board pack has 1 definition, 1 owner and 1 source, so 2 reports stop disagreeing.

Tax and audit read the same model, which is why the tax provision sits under this pillar.

2 objects decide whether the office of the CFO trusts its own numbers.

01

The reconciliation ladder

We reconcile in layers, bottom up: local currency, translated, eliminated and consolidated. The new close then runs beside the old one until the difference between them is zero.

  • Local currency agrees to each entity's ledger
  • Translated balances agree to the published rates
  • Eliminations net to zero across the group
  • The consolidated result agrees to the pack
02

The close calendar

Every handoff in the close is a person sending a file to another person, and the handoffs are where the days go. We draw the calendar as it is run, then remove the handoffs the model can carry itself.

  • The entity ledgers close and load
  • Intercompany is matched and eliminated
  • The consolidated pack is signed by a named person

A group needs this work when 4 things describe its finance function.

  1. 01

    A close that runs in more than 1 ledger

    Entities close in their own ERPs and the group numbers are assembled afterwards, in a consolidation or a workbook.

  2. 02

    A legacy consolidation on its way out

    HFM, BPC or IBM Controller still produces the group numbers, and its vendor is moving customers elsewhere.

  3. 03

    A date the finance function cannot move

    An IPO, an integration, a first audit or a new CFO's first board meeting is already in the diary.

  4. 04

    Definitions with no owner

    Gross margin, headcount and revenue by customer each have 2 defensible definitions, and nobody has been appointed to choose.

ERP implementation and management consulting sit outside this pillar, and we do not take them on.

13 services sit under the office of the CFO, and EPM consulting is the one most groups start with.

Questions finance directors ask about the office of the CFO.

What does the CFO centre do?

A CFO centre is a shared service that runs the close, the consolidation and the reporting for several entities at once. The tasks are the same as in any finance function, and the difference is that 1 team performs them for many entities.

What does CFO stand for?

CFO stands for chief financial officer. The office of the CFO means the whole finance function around that role, from the entity accountants to the group controller, and the systems they work in.

What are the 2 types of consolidation?

Full consolidation adds 100% of a subsidiary's figures and shows the minority share as 1 line. The equity method records only the investor's share of an associate's profit. A group with both keeps its ownership table in the data model before the first close is run.

What should be avoided in consolidation?

A group should avoid running the eliminations in a workbook outside the system, because the balances stop agreeing to the ledgers. The second thing to avoid is a chart of accounts that each entity extends on its own.

What is the disadvantage of consolidation?

Consolidation hides the entity behind the group total, so a loss in 1 subsidiary can sit inside a group profit unseen. A data model that keeps the entity dimension on every figure removes that blind spot.

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