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Processing Consolidations

The consolidation process can be broken down into five basic steps:

  1. Setting up the consolidation company and subsidiaries

  2. Exporting data for consolidation (if necessary)

  3. Testing data to be consolidated

  4. Consolidating the data

  5. Processing consolidation eliminations

Setting up the Consolidation Company

Before you can perform a consolidation, you need to set up the consolidated company. The company must be set up like any other company in the program with its own chart of accounts and dimensions if desired. If a new company will be used to consolidate subsidiaries remember that the Setup Checklist can be used to copy the Chart of Accounts and other setup information to the new company.

  1. The chart of accounts for a company that will be consolidated must specify accounts for consolidation. For each posting G/L account in each company, you must specify the G/L account in the consolidated company to which the balance will be transferred on consolidation. This is a mapping that will allow companies with different chart of accounts to be consolidated together.

  1. To consolidate several companies' financial data in a consolidated company, you must enter information about the subsidiary as business units to be included and about the degree to which their figures will be included.

  1. You can specify exchange rates when consolidating the financial statements of business units if the financial statements are in a foreign currency. The three exchange rates that the program uses are Average Rate (Manual), Closing Rate, and Last Closing Rate.

  1. You can consolidate dimension information as well as G/L Accounts. In the Dimensions Value window, fill out the ShowConsolidation Code field.

    How the Consolidation Code field is filled in depends on whether dimension information is to be transferred to the consolidated company when you consolidate:

    • If you do not wish to consolidate dimension information, you should leave the Consolidation Code field blank. You must also make sure not to select any dimensions in the Copy Dimensions fields in any consolidation functions or reports described later in this section.

    • If you do wish to consolidate dimension information, you can still leave the Consolidation Code field blank. However, the consolidation will only work if the dimension values in the business unit are exactly the same as the consolidated company.

    • You should only fill in the Consolidated Code field where the dimension value code in the business unit is to be consolidated to a different dimension value code in the consolidated company. The contents of the field should be the dimension value code contained in the consolidated company.

Exporting Data for Consolidations

If a business unit is located in another database, you must export the consolidation data to a file before it can be consolidated. Each company must be exported separately. For this purpose, the program uses the ShowExport Consolidations batch job.

After the batch job is run, all the entries in every G/L account are processed. For every combination of selected dimensions and date, the contents of the entries' Amount fields are totaled and exported. Afterward the next combination of selected dimensions and date with the same account number is processed; then the combinations in the next account number are processed, and so on.

The exported entries contain the following fields: Account No., Posting Date, and Amount. If dimensions information was also exported, dimension codes and dimension values will also be included.

Testing Data to be Consolidated

Before you consolidate the data, it is a good idea to check whether there are differences between the basic information in the business units and in the consolidated company. There are two reports for this purpose: one for testing a database and one for testing a file.

Consolidating the Data

After you have tested the data, you can begin the consolidation. This process can be done by either consolidating from within the same database or consolidating from files.

Processing Consolidation Eliminations

After you have consolidated all the companies, you must make elimination entries, or remove entries involving intercompany transactions. To process consolidation eliminations, you must:

  1. Manually calculate the eliminations

  2. Enter the amounts in a general journal

  3. Post the journal

Before you post the eliminations, you can look at the effect on the trial balance of the consolidated company by using the G/L Consolidation Eliminations report. The report displays a tentative trial balance, that is, shows the consequences of eliminating the entries by comparing the entries in the consolidated company with the eliminations that have been entered in the general journal. Calculating the eliminations is a time-consuming manual process that may be aided by setting up specific intercompany accounts, intercompany customers/vendors and intercompany posting groups.

Related Topics

Consolidated Trial Balance Report

Consolidated Trial Balance (4) Report


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