Easily Automate Equity Pick-up

Roughly speaking, there are two types of valuation methods for holdings around the world: net asset value and historical cost. In the Netherlands, more than 90% of holding companies use the net asset value system. With net asset value, all changes in a subsidiary's equity are incorporated into the parent company's equity records, a process called equity pick-up. As a result, the value of participations at the parent is always equal to the subsidiary's net asset value. Normally this process is time consuming and errors can easily creep in, but with our FIT you automate the Equity Pick-up process.

Our FIT equity pickup from CCH Tagetik

Manually doing Equity Pick-up is time-consuming and error-prone. CCH Tagetik, Wolters Kluwer's EPM software, has a module capable of automatically processing equity changes at a subsidiary to all its parent companies above it. We incorporated this module into FIT based on our own best practices. As a result, FIT meets our seven stringent requirements for good Equity Pick-up software.

Our requirements for goodEquity Pick-up software

1. Journals

There are systems that enter Equity Pick-up entries directly as values, but the module in CCH Tagetik creates neat journal entries of the entries. Because of the additional detail that journal entries provide, it is especially nice when analyzing Equity Pick-up movements when the EPM system creates journal entries. In addition, auditing accountants also find this very pleasing.

2. In local currency

Equity Pick-up is basically an after-the-fact correction to a parent company's data, which often must also be processed in the local ERP system. In addition, Equity Pick-up movements made in the last month of a fiscal year must be opened in the following year. We find it important that your EPM system makes the EPU entries in local currency, so that this is in line with your ERP and therefore can be processed the same in your ERP later on.

3. Multiple mothers

A subsidiary may have multiple mothers within the entity structure. In addition, the different parent companies may each have a different local currency. Both cases are supported in our FIT.

4. Multiple mutations

Some companies want to apply their Equity Pick-up to all changes in equity, while other organizations only want to pick up net income for the fiscal year. CCH Tagetik is a system that can pick up an unlimited number of changes in equity, so incomplete Equity Pick-up does not appear in our FIT.

5. Periodic booking

The ownership percentage of an investee may change during a current fiscal year. When this is the case, changes in a given month must be picked up at the then current ownership percentage. Although most EPM systems can pick up ownership percentage changes as year-to-date amounts, this creates more manual work. A periodic method is also available in our CCH Tagetik FIT.

6. Override ownership

In CCH Tagetik, Equity Pick-up percentages are automatically generated from the ownership register, which saves double maintenance work. However, there are times when the Equity Pick-up percentage needs to differ from the consolidation percentage. Fortunately, this is also supported in our FIT.

7. Different processes

Many organizations have a difference in reporting depth between actual, budget and forecast processes, also a difference in depth between different periods in the actual process sometimes occurs. In the FIT it is possible to maintain different processes next to each other, so you have variation in your setup within the same application.

The Ideal Equity Pick-up Software

Although there are several options where the focus is on automating Equity Pick-up, in our opinion CCH Tagetik is one of the few EPM tools that performs this perfectly. Our FIT meets all of our stringent Equity Pick-up requirements. This makes time-consuming and error-prone Pick-up calculations of the correct net asset value a thing of the past. With the help of our FIT, you can get right down to it. This will save you a lot of time and increase the quality of your consolidation.