This section provides an overview of management consolidation and explains how DIVA approaches budget consolidation.
1. What Is Management Consolidation?
Management consolidation refers to consolidated closing procedures used to grasp the overall business performance of a corporate group and enable rapid decision-making. Unlike legal consolidation (for external reporting), it has the following characteristics:
- Objective: Management control, business evaluation, and future forecasting.
- Multi-dimensional axes: Aggregation and analysis are performed not just by company, but also by business segment, locational segment, etc.
- Speed-oriented: Quick reporting is prioritized over high precision.
2. Budget Consolidation in DIVA
Within the broad scope of management consolidation, budget consolidation in DIVA specifically focuses on "future plans and forecasts."
Specifically, it integrates the following three elements:
| Operation Phase | Description | Role in Budget Consolidation |
|---|---|---|
| Budgeting | Setting target values for the next fiscal year and agreeing on the corporate group's overall direction. | "Goal setting" before the fiscal year begins |
| Budget-Actuals Management | Promptly collecting monthly actuals and identifying variances from the budget. | "Progress analysis" of actuals against budget |
| Forecast Update | Constantly updating year-end projections based on actuals. | Year-end "forecast" |
3. Basic Cycle of Budget Consolidation in DIVA
DIVA is designed to support a standard budget cycle that encompasses everything from next-year budgeting to mid-period forecast updates.
It facilitates "budgeting" before the fiscal year starts and performs monthly "forecast updates" while tracking actual results throughout the fiscal year.
Yearly Schedule Image (Example: March-closing company)
Operating schedules vary depending on the company's fiscal year-end and scale, but the general image is as follows:
Budgeting Operations: Creating and updating budget plans
- Budget (Jan–Mar):
- Finalizing target values during the 3 months before the current fiscal year (April) begins.
- Revised Budget:
- Overwriting the initial budget with the latest assumptions when major environmental changes occur during the period.
- Forecast (May–Next Apr):
- Constantly updating the total corporate group profit expected at year-end by adding "remaining period forecasts" to "current actuals."
Actuals Operations: Tracking actual performance
- Monthly Actuals (May–Next Apr):
- Collecting results from subsidiaries every month.
- Once these actuals are finalized, the accuracy of the aforementioned "forecast" improves, enabling early responses to variances from the budget.