Cristian Seita

To better serve global enterprises managing multiple legal entities with different currencies, we propose an enhancement to the Consolidations module. This enhancement will focus on incorporating comprehensive IAS 21 (International Accounting Standard 21) compliance features, specifically the use of weighted average exchange rates for Profit and Loss (P&L) accounts, computed according to the selected reporting period.

The weighted average exchange rate should be calculated based on the specified periods (yearly, quarterly) that the company selects. This rate will be derived from the transactions recorded within the designated period and computed as the average exchange rate over that time frame.

During our meeting with a client interested in the Consolidations module, the client suggested the addition of an intercompany dashboard. This dashboard would display all intercompany transactions between subsidiaries, facilitating necessary adjustments during the consolidation process. 

The proposed intercompany dashboard would enable users to verify whether invoices and orders have been issued correctly across both subsidiaries. It would also allow for the automatic identification and rectification, ensuring accurate elimination of intercompany transactions. This feature would streamline the consolidation process by spotting relationships between transactions in different legal entities and creating the required intercompany adjustments.

This is perceived as a Nice to have feature

According to international accounting principles, the preparation of the consolidated financial statements for the current year cannot simply be based on the previous year's consolidated financial statements. It is always necessary to start with the financial statements of the individual entities to be consolidated for the current year and then proceed with the necessary adjusting entries.

This approach ensures that all financial and operational changes of the individual entities are accurately reflected in the consolidated financial statements, thereby maintaining compliance with international accounting standards, particularly the provisions of IFRS 10 (International Financial Reporting Standards).

To achieve this, the Consolidate Online module should allow accountants to import both operating transactions and opening balances. This capability will enable the consolidation process to begin from scratch, directly using the financial statements of individual legal entities, and then applying the necessary adjustments.

In discussions with our clients, we have identified several automatic adjustments that your system should handle:

1. Automatic Cancellation of Shareholdings: Adjust for shareholdings in subsidiaries, accounting for events such as payments, subscriptions, acquisitions from third parties, and acquisitions from consolidated companies.
2. Goodwill Allocation and Depreciation: Automatically adjust the allocation of goodwill (the difference between the purchase price of a subsidiary and its net assets) and apply corresponding depreciation adjustments.
3. Capital Gain/Loss Adjustments: Automatically calculate and adjust for capital gains or losses arising from intercompany sales of fixed assets.
4. Intercompany Dividend Distribution: Adjust for the distribution of dividends between intercompany entities.
5. Equity Aggregation for Elimination: Implement automatic procedures to aggregate equity items for elimination purposes.
6. Third-Party Equity Determination: Automatically generate entries to determine third-party equity.
7. Third-Party Profit and Loss: Automatically generate entries to determine third-party profit and loss.
8. Intercompany Adjustments: Perform automatic adjustments for intercompany transactions.

Clients have expressed interest in user-friendly interfaces that allow them to input data, which would then enable the system to compute and implement these automatic adjustments seamlessly.

My suggestion is to allows budget plans to be distributed and aggregated back when the budgeting hierarchy specified in the budget planning process includes legal entities.

The distribution of a parent budget plan to children ones and their subsequent aggregation back into the parent plan is currently available when the budgeting hierarchy only includes departments. In fact, thanks to allocation schedules, stage allocations and budgeting workflows, it is possible to seamlessly perform the distribution and the aggregation of budget plans among departments.

I would like to have the same capability to be performed among legal entities. This would help to have a centralized Group budget plan to be distributed to the legal entities within the Group and then to be aggregated back for validation according to the budgeting requirements of each legal entity.