Intercompany reconciliation
Under intercompany reconciliation (including intra-group (of accounts) tuning or engl. Intercompany reconciliation ) is the process in which the accounting operations between the mating subsidiaries are checked for compatibility. The reconciliation is carried out on the general ledger and sub ledger level and takes place before the preparation of the individual financial statements and consolidated financial statements .
execution
The expenses of one company are to be reconciled with the income of another company. Analogous to this procedure, the claims of one company are to be compared with the liabilities of another company. In this process, each group company must be coordinated individually with every other group company. The reconciliation can take place by comparing the line items (documents) and their balances . Discrepancies must be corrected by means of correction or accrual entries before the individual financial statements of the companies are completed.
Inconsistencies between the companies can arise from incorrect postings, currency differences or period variances (different periods). A full reconciliation can result in currency differences in the consolidated financial statements, as the companies may have different conversion contingencies.
The intercompany reconciliation takes place before the final preparation of the individual financial statements and contributes to their accuracy. In addition, the intercompany reconciliation is also important for the consolidated financial statements, because these are derived from the consolidation of the individual financial statements of the group companies. Since the consolidation of expenses and income and the consolidation of debt are necessary, the intercompany coordination with any corrections to be made ensures that the consolidation steps run smoothly.
Some ERP systems include the functionality of intercompany reconciliation. Most of these systems, however, require that a homogeneous and centralized IT landscape is available throughout the group. Since this is not the case in most corporations, the intercompany reconciliation is mainly carried out using forms and / or spreadsheets (especially Microsoft Excel ) and emails . The actually central process is decentralized and takes a lot of time.
Another way to implement an intercompany reconciliation, is a Web - database . The corporate headquarters creates the master data such as companies, users, corporate accounts and permitted account combinations. It defines which languages, currencies and exchange rates are used. The group also specifies the voting rules and then opens the respective voting period. Those responsible in the companies either take over the specified group accounts directly or assign the charts of accounts of the individual companies to the group accounts. The data is entered either directly manually or via upload in the browser . If differences are found between two companies, they can only close their accounts once they have resolved the problem among themselves. In contrast to a spreadsheet-based solution, the corporate headquarters is only an observer and commentator in the coordination process and can intervene in the event of differences of opinion between the companies.
Individual evidence
- ↑ Karl-Heinz Pfitzmayer, Process Optimization in Accounting: Optimizing Transaction and Closing Processes with Re-Engineering, Gabler-Verlag Wiesbaden 2005.
- ^ Johannes Maret / Christian Voß, The introduction of exemplary consolidation procedures, in: DStR 1995, p. 655
- ↑ See Kevin Tappe, Intercompany coordination, in: Controlling magazine, Issue 7, Volume 25, 2013, pp. 413–415.
- ↑ Keuper, finance function - from Softlab Group . books.google.de. Accessed on May 17, 2009. Frederik Marx, Maturity of IS-based Financial Consolidation for Large International Enterprises: Requirements, State of the Art, and Development Directions, Working Paper provides a comparison of various ERP systems with regard to intercompany coordination and consolidation from April 26, 2011, University of St. Gallen.