How intercompany eliminations are prepared and approved

Two ways to compare

The intercompany method in Settings has two choices:

• Match documents, then eliminate each match. Invoices and bills between the companies are matched one by one, and each match is eliminated.
• Eliminate at account level, no matching. The balances on paired accounts are compared and eliminated.

A group that brings in only trial balances always uses account level, because there are no documents to match.

At account level

Each intercompany account is paired with its counterpart in the other company, such as a receivable with a payable, or income with an expense. Balance sheet pairs are compared on the balance at the month end, and profit and loss pairs on the month's amounts. The elimination starts at the smaller side of each pair, and you can lower it.

An investment against the subsidiary's share capital, and dividends between the companies, are drafted by hand as their own entries. Once approved, they count for later months with the same amounts.

Draft and approve

1. A preparer chooses Draft elimination on the intercompany screen for the month. Finconsol creates a draft journal entry.
2. The draft is submitted and then approved in Journal entries by a second person.

A preparer cannot approve their own entry. An administrator can, and Finconsol then shows that the same person posted and approved it. A closed month refuses new eliminations.

What is left over

Whatever is not eliminated stays in the statements and on the list of differences until it is resolved. Each difference says why it is there, for example:

• One-sided: only one company recorded the balance.
• Above tolerance: the two sides differ by more than the intercompany tolerance set in Settings.
• No counterparty set, so it cannot be matched.

A difference is marked settled once the companies agree, or once an approved journal records the missing side. The Data Health screen counts the differences still open.