The future of consolidation: The reconciliation of intercompany balances: is there hope?

The future of consolidation (2/7): The reconciliation of intercompany balances: is there hope?


The reconciliation of intercompany balances: is there hope?

By Allen White, Sigma Conso co-founder & Administrator

We feel that it is necessary to address briefly an area that has historically been a weak link in the consolidation process, that is, the reconciliation of intercompany balances.

We have identified several invariable aspects of consolidation over the past 40 years:

In practice, from the standpoint of principles, this means that:

For  the  first  time  in  40  years  of  dealing  with  the  interco  issue, not only do there appear to be many benefits, but they are now
long-term.

The  right  tool  exists  today.  Groups  must  become  aware  of  the benefits  of  making  an  investment  in  this  respect,  despite  the overwhelming feeling of contributing to accounting errors in their companies and to an activity which is, when all is said and done, not very profitable.

Yet,  this  step  must  be  taken  to  ensure  optimisation  of  the consolidation process!

Articles in the “Future of Consolidation” series:

  1. The structure of the data to consolidate and processing in consolidation
  2. The reconciliation of intercompany balances: is there hope?
  3. IFRS and local GAAP
  4. Statutory consolidation and reporting: unified consolidation
  5. Group structure
  6. Financial communication
  7. Impact of future technological changes on consolidation

 


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