Co$ta - Perimeter Change Management
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- Concept
1.1. Need
Perimeter Change management is needed to ensure comparability of figures over time when the reporting structure changes, by restating the reference period to align it to the structure of the current period.
The reference period that we compare against is usually the Budget or the previous year, but it can also be the Best Estimate / BFR.
Examples:
Reference Period | Restatement | Restated Reference period | Delta vs current period | Current period | Comment |
Budget Y: 100 | (20) | 80 | +30 | Actuals Y: 110 | The difference to explain is +30 and not 110 - 100 = +10 |
Actuals Y-1: 90 | (5) | 85 | +25 | Actuals Y: 110 | The difference to explain is +25 and not 110-90 = +20 |
Budget Y: 100 | (20) | 80 | +35 | Best Estimate Y: 115 | The difference to explain is +35 and not 115 - 100 = +15 |
Normally the Best Estimate should reflect the latest reporting structure, so there is very limited need for restatement when comparing Actuals vs Best Estimate: we will not use
Some changes in master data have a retroactive impact in the reports (i.e. they change historical figures), others do not.
1.2. Typical cases
Perimeter Change | Example | Retroactive impact in reporting systems (automatic restatement)? | Main dimension(s) to restate |
Transfer of activities between entities | O&G from Novecare & TS Brotas site from Energy to Coatis | Usually yes | GBU (Resp CCs) + Bdg Hierarchy |
Transfer of people between entities | HR from GBUs to Corporate, Controllers from GBUs to SBS | Usually no | Resp CC (GBU, bdg hierarchy) |
Divestments | Amphoterics business from Novecare | Share deal: yes Asset deal: no | Company Resp CCs (Bdg hierarchy) |
Acquisitions | Méréville site in Novecare | No | Company / Resp CCs (Bdg hierarchy) |
Change in consolidation rates of companies | Cytec Nibras from non-conso to conso 100% | Yes | Company (conso leve), Bdg hierarchy |
Internal organizational change in a GBU leading to a change in the budgeting hierarchy | Transfer of Supply Chain from transversal function to sites | Depends on how the change is managed | Resp. CCs / Budgeting hierarchy |
1.3. Scope
The perimeter change developments only apply to Co$Ta reporting:
- In BW: Co$Ta Origin
- In Qliksense: Co$Ta Origin and Co$Ta Destination
- HR (FTEs): pending
It does not cover P&L items that are not in the scope of Co$Ta (e.g. Sales, raw materials & energy, post-EBITDA items), and does not cover balance sheet or cash flow items (e.g. working capital, fixed assets, many CAPEX items…).
1.4. Methodology
When changes are impacting the data retroactively, the reporting system’s past data will change, and will no longer reflect the original situation (automatic restatement).
In this case, we will rely on a flow (“Perimeter Correction”) that will allow to rebuild the original figures we had before the automatic restatement.
Then in all cases, we will use another flow (“Perimeter Adjustment”) to restate the original figures and have them comparable to the current period.
Note: the budgeting hierarchy for the current year will be frozen at the same time as the budget figures. Any subsequent change for Best Estimate leading to discrepancies with this frozen version will have to be managed through perimeter adjustments on the budget. Consequently, there can be no automatic restatement on the current year budget.
1.5. Examples
1.5.1. Cost Center A is reassigned from GBU X to GBU Y
Impact on previous year’s actuals: automatic restatement to GBU Y.
Impact on current year’s budget: no automatic restatement.
1.5.2. Part of the costs of CC A are transferred to a different CC (i.e. starting in the current year, these costs are posted on CC C instead of CC A)
Impact on previous year’s actuals: no automatic restatement takes place.
Impact on current year’s budget: no automatic restatement.
2. How does it work?
2.1. General principles
- The perimeter correction and perimeter adjustment flows are loaded in BW through a specific transaction, via a flat file.
- Perimeter correction and adjustment flows can be retrieved in BW (via Adjustment Perimeter Type (C_PERITYP).
- The data is then loaded into Co$Ta and available in the Co$Ta reports.
- Co$Ta Reports offer the possibility to display the original figures, the flows and the restated figures (see each report’s definition in the Co$Ta Wiki documentation).
- The level of granularity (in terms of dimensions) at which we load the flows have to be adapted to the level of detail we want for the restatement:
- Most will have to be loaded at Cost Center (or budgeting node for the budget) level and at GBU level
- The development enables the automatic determination of dimensions (e.g. determine macro-package & package based on sub-package provided in the file, removing the need to provide all dimensions)
- However, when dimensions are provided in the upload file, they overwrite any automatic determination based on the current structure (mandatory if we want to restate items that were changed because of a change in the budgeting hierarchy for example)
- Loading flows with more granularity will help having consistent drill-downs in the reports but is heavier to prepare
- It is advised to apply a materiality threshold to select for which perimeter changes to apply this technique
- Unless the scope change is an acquisition or divestment (or change in consolidation rate), perimeter adjustments and corrections should compensate and should not change the total of the reference period.