Company consolidation is necessary when one company owns another company, or when there is a group of companies. Even though from a legal viewpoint each company is classed as a separate entity, from an economic point of view they cannot be classed as individual at all.
Note: As an alternative to the Company consolidation routine, you can use the Group reporting functionality for transfer and conversion of balances across companies. See Differences between Company consolidation and Group reporting for more information.
Where one company owns the majority of the other company the first company is known as the corporate company and the second company is known as the subsidiary (here referred to as the originating company). The corporate company must produce a set of “Group accounts” which illustrates the whole group’s results as well as their individual results.
Prerequisites
See Setting up Company consolidation for information.
DC1 Financials allows you to create as many companies as you require, all operating independently. Your companies’ activities may be diversified so that they are operating in different countries and business environments. This may result in a requirement for different account code structures, base currencies and period handling.
- Consolidate your accounting information and prepare consolidation reporting.
- Combine account and summary id parts in the Work with consolidation company hierarchy routine.
- Convert your chart of accounts into the corporate format.
- Translate your currencies into the corporate currency.
- Convert your company accounting periods into the corporate calendar and merge account balances and related budgets.
- Transfer preliminary financial statements and then transfer only changed account balances for the definite financial statements.
- Perform multiple total updates to the same period(s) in the corporate company.
- Perform periodic revaluations within the corporate company, including also balances from originating companies which are connected in the Work with consolidation company hierarchy routine.
- Report amounts before revaluation and show revaluation amounts separately (for consolidated accounts with fluctuating exchange rates).
The consolidation handles the different exchange rate definitions when translating the balances. This means that you have the option to use current, average or historic rate for your company consolidation. You are free to make journal adjustments directly to your corporate company and to use DC1 Report Writer to produce your group reports with a detailed analysis by member operating company. The company consolidation routine handles the consolidation of any number of companies in the same iSeries computer.
Note: G/L balances are transferred to a consolidation company, but G/L detailed postings and A/R or A/P transactions or balances are not transferred.
The corporate company can also be an operating company, depending on how you have set it up in the system. DC1 Financials allows you to define a multi-hierarchy depending on the requirements. Note: It is recommended that you create a separate corporate company to be used only for company consolidation purposes. If the corporate company is a non-operating company you should, when creating the corporate company (see Setting up Group reporting), set it up in such a way that the Account file and period structure reflect how you want to report and analyse the consolidation of your companies.
Note: The balances to be converted must be from the same financial year.
Originating company code
For consolidated transactions, certain routines in DC1 Financials include or exclude the originating company code in the corporate company, which indicates which originating company code the new created transactions will receive. For example, in the copy/elimination routine the new transactions will receive the same originating company code as the original transactions. In the revaluation routine all originating company codes will be included in the calculation, but the new created transactions will receive the corporate company code as originating company code. See Company consolidation technical information for an illustration of how the originating company code is retrieved to the corporate company.
On-line reports
You can drill across from on-line reports in the corporate company to the originating company, as well as drill down within the company you are in.
Automatic elimination handling
If you for some reason find it necessary to re-run a total period update, then you can specify if you want to automatically remove all old transactions and balances for the selected originating company(ies) and current period(s). Note: Revaluation performed in the corporate company for transactions transferred from the originating company(ies) will not be removed. Removal of one or several vouchers will cause gaps in the voucher number series. And, it will not be necessary to run the Rebuild balances from transactions routine afterwards.
Automatic revaluation handling
When you run an automatic update you can specify if you want the G/L revaluation routine to automatically start after transferring accountings for the selected period(s) and originating company(ies).
Note: Automatic revaluation handling can only be performed if:
- at least one of the selected originating companies has another system currency than the corporate company,
- the Automatic update field on the Update corporate company panel is YES,
- a code to identify the company is defined for all selected originating companies as a fixed account (in the same account part) in Work with consolidation company hierarchy,
- the account part for the fixed account is defined in the Consolidation transfer control file,
- the voucher type to be used is defined in the Consolidation transfer control file or on the Update corporate company panel, and
- no journals in error exist for any originating company. If transactions exist in journal in error, an automatic revaluation will only be performed if the Automatic elimination handling is activated.
Consolidation management
The following tasks are included in the Company consolidation routine:
- Originating company tasks
- Create interface file
- Work with G/L translation periods
- Create interface file for opening balances
- Work with company hierarchy
- Work with account/sum id part conversions
- Corporate company tasks
- Update corporate company
- Retrieve financial transactions
- Work with pseudo accounts
- Work with consolidation transfer controls
- Work with journals in error
- Revalue G/L account balances
- Copy/eliminate journals
Enquiries and printouts
- G/L translation period file
- Consolidation company hierarchy file
- Account/Sum ID part conversions
- G/L translation period
- Company account conversion error report
- Consolidation conversion report
- Consolidation exchange rate error report
Related topics
- Originating company tasks
- Define the consolidated relationship between the corporate and originating company
- Define the components of the consolidation conversion
- Maintain the G/L translation period file
- Validate a consolidation
- Corporate company tasks
- Maintain consolidation transfer controls
- Update the corporate company