Prepare Consolidation - Subsidiary

IFS/Consolidated Accounts is used for consolidation of general ledger balances and budget balances from a group of one or more companies to a parent company. All the companies involved must be registered in IFS/General Ledger. If the companies form a group having several levels, the links between these companies must be entered in IFS/Accounting Rules.

The work with the consolidation starts in the subsidiary. Consolidation of general ledger balances takes place periodically, while consolidation of budget balances usually takes place annually. If the subsidiary company and the parent company are not in the same database, the consolidation can be created in a file and then sent to the parent company.

The subsidiary company and the parent company can use different accounting currencies. However, for consolidation, the currency rates are determined by the parent company. Any currency rate differences are calculated and posted automatically. IFS/Accounting Rules contains functions for managing currency rates and the posting type for currency rate difference.

Basic Data Requirements (BDR)

Before the consolidation can start in the subsidiary, the subsidiary must be connected to the parent company. Then, the links between the chart of accounts and/or account groups, the links between code parts, and the links between code part values are entered, if appropriate. If no links are entered, then the same chart of accounts must exist in the subsidiary company and the parent company. Note! A code part (code part B-J) in the parent company’s code string must be defined for the code part function Consolidation.

Linking of the accounts between subsidiary and parent companies, can be done by any of the following:

1. Linking an account group to an account in the parent company.
2. Linking an individual account to another account in the parent company. This takes precedence over any link to an account group.
3. Entering no link. This means the same account must exist within the parent company.

The code part values in the subsidiary can be linked to any code part value in the parent company. Several code part values in the subsidiary can be linked to a single code part value in the parent company.

Before consolidation, perform the following procedure in each subsidiary :

• Connect the subsidiary to the parent company. Select Company Relationships. In the Parent Company field, enter the ID of the parent company by using the List of Values. Enter a value in the Cons Code Part Value field. The name of the parent company is then displayed automatically in the Consolidation Company Description field. If the subsidiary company and the parent company do not belong to the same database, enter the path and file names in the Consolidation File Directory field where the consolidation information can be saved. Note: If the parent company is entered in a different database, that parent company must be created in the subsidiary’s database. The subsidiary must have the same chart of accounts and arrangement of code parts as the parent company. This information is used for validation when the consolidation is created.
• Select Define Code String. Enter values to define how the code parts in the subsidiary are to be linked to the code parts in the parent company. Code part A (account) is always linked to code part A (account) in the parent company. You can create any link between other code parts (B-J) within the subsidiary and parent company, based on the assumption that the parent code parts are not being used for any other additional function. Use the Parent Code Part field for entering the code part in the parent company to which the information is to be consolidated.
• Consolidation takes place automatically from the subsidiary account to the parent account if no special link is made between accounts in the companies. You can define links between an account group in the subsidiary and an account in the parent company. Note: The accounts used for consolidation in the parent company must have the code part demands Can or Mandatory for the code part used for the additional function Consolidation.
• Option 1: Select Account, then locate the accounts to be consolidated. In the Consolidation tab, enter the link between the accounts.
• Option 2: Select Account Groups, then find the account groups to be consolidated. In the Default Parent Account field, enter the account in the parent company to be used for consolidation.
• If consolidation is to include more code parts, select Code Part Values. Click on the tab for the code part to be consolidated. Find the code part values to be consolidated, then connect each code part value in the subsidiary to a code part value in the parent company via the Parent Code Part Value field.

Description of Process Model

The balances for the period that is to be consolidated must exist in the subsidiary. The corresponding accounting period must be closed. If any errors occur when the consolidation is performed, an error log file can be checked for information on the errors. The period status is then changed to "Balance not consolidated". The consolidation errors must be corrected before the consolidation information is created once more.

The budget values that are to be consolidated must exist in the subsidiary. If any errors occur when the consolidation is performed, an error log file can be checked for information on the errors. The consolidation errors must be corrected before the consolidation information is created once more. After the consolidation has been performed successfully, the budget values are consolidated.

If the subsidiary and the parent company keep accounts in different databases, a consolidation file is created automatically. The file is then manually transferred to the other database.