Validations
The NDC Financial Consolidation application incorporates robust validation capabilities to ensure the accuracy, completeness, and consistency of financial data, facilitating efficient financial closing and ensuring compliance with IFRS reporting standards.
Purpose
The Validations functionality is designed to:
- Prevent and identify data anomalies and errors: Automatically scrutinize data submissions for inconsistencies, missing information, and logical discrepancies that could compromise the accuracy of financial statements.
- Streamline the consolidation process: Reduce the need for manual review, iterative corrections, and rework by identifying and flagging issues at the earliest possible stages of data submission and the consolidation workflow.
- Support IFRS compliance: Systematically enforce predefined accounting principles, inter-relationship rules, and disclosure requirements essential for accurate and auditable IFRS financial reporting.
- Provide audit readiness: Provide transparent and comprehensive audit trails, detailing all validation checks performed, errors identified, their resolution status, and the users involved.
Key features and capabilities
The Validations functionality in NDC Financial Consolidation provides the following key features
The system allows for the definition and configuration of a wide range of validation rules. These rules can be tailored to specific organizational requirements, chart of accounts, and IFRS compliance needs.
Validation execution
Validations can be run on-demand or automatically before data submission or at specific stages of the consolidation process. The validations can run concurrently across large datasets including many entities.
Intuitive error reporting and management
The system generates comprehensive and easily digestible report outlining all validation failures with the ability to drill down from high-level validation summaries to the underlying detailed transactions to facilitate rapid investigation and root-cause analysis of errors.
Comprehensive audit trail
The system maintains a complete and immutable audit trail of all validation runs.
This includes details on who initiated the validation, the exact timestamp of execution, the full results of the validation, and a log of any actions taken to resolve identified errors, providing full transparency and compliance readiness.
Examples of validations
Verification that Total Assets = Total Liabilities + Total Equity at various aggregation levels (e.g., entity level, group level).
Profit reconciliation Ensuring that Profit (Loss) for the period in the Statement of Profit or Loss reconciles with the corresponding movement in Retained Earnings or Accumulated Losses on the Balance Sheet.
Intercompany elimination checks Validation of intercompany balances to ensure proper elimination, including checks for intercompany loan balances, intercompany sales/purchases, and intercompany receivables/payables across all entities within the consolidation scope.
Cash flow statement reconciliation Checks to ensure the opening and closing cash balances align with the Cash flow statement.
Data completeness checks Identifying missing required data points (e.g., ensuring all segment data is provided for income statement accounts).
Coherence of statements and disclosure notes Verification that detailed breakdowns of selected accounts match the balances in the statements (e.g., the totals of currency or maturity breakdowns of receivables equal to the closing balances in the balance sheet).
Zero balance of selected flows Checks to ensure that flows such as Reclassification of Internal merger are zero in total.
Currency conversion consistency Verification of foreign currency translation impacts and consistency across relevant accounts.