Reconciling Intercompany Accounts - RainFocus€¦ · using Intercompany JE’s) Saved Search with the right data can help you troubleshoot most of your transactional issues. Perform

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Reconciling Intercompany AccountsSteve Bain & Chris Vandemore

April 4, 2019


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Speakers

Steve Bain

Regional Director

Customer Solutions Group

Chris Vandemore

Director

Product Management


Agenda

4

1 Pieces of the Intercompany Puzzle

2 Identifying issues – the process of elimination

3 Putting the pieces of the puzzle back together

4 Intercompany features Roadmap Highlights


Pieces of the Intercompany puzzle


Pieces of the Intercompany Puzzle

Chartof

Accounts

Currency Denomination

Consolidation

Revaluations

Consolidated(Translation)

Exchange RatesEliminations

Opening BalancesNetSuite

Configuration

Intercompany Accounting


Pieces of the Intercompany Puzzle - Configuration

NetSuite Configuration

Intercompany Auto Management

Centralized vs. Non Centralized Accounting

Chart of Account types

Intercompany Relationships – (Customers & Vendors)

Auto Eliminations

Types of TransactionsJournal Entries, Intercompany Journal Entries, Sales Orders, Purchase Orders, Time & Expenses

Currencies


Pieces of the Intercompany Puzzle – Chart of Accounts

ChartOf

Accounts

Account Types:

AR & AP – Needs Customers & Vendors

Other Current Assets & Liabilities – Easier to use

but provides less controls around the process

Interco Revenue & COGS – don’t mix with regular

Revenue & COGS

Revaluation setting

Elimination setting

Subsidiary restrictions


Pieces of the Intercompany Puzzle – Opening Balances

Opening Balances

Currency Denomination is key!

Opening Balances are loaded in the Local (Base)

Currency of the Subsidiary

You may need to restate your opening balances into other

currencies

Saved Searches used to determine Currencies “out of

balance” in your Intercompany accounts


Pieces of the Intercompany Puzzle – Currency Denomination


Currency Denomination is still key!

Always transact in the same currency on both side

Otherwise your accounts may not revalue correctly

Transfer pricing agreements may or may not specify which

currencies to transact and settle in

Best practice is to transact in the currency you will

ultimately use to settle the transaction


Pieces of the Intercompany Puzzle – FX Revaluation

Foreign currency revaluation should be run as part of monthly

close process

If changes are made to accounts, re-run revaluation again

NS revaluation process uses the Currency Exchange (spot)

Rate table

This rate must align to the end of month “Consolidated”

exchange (translation) ”Current" rate

Foreign Currency Revaluations


Pieces of the Intercompany Puzzle –Consolidated (Translation) Exchange Rates

Recalculate your “Consolidated” exchange rates at month end

Current (Consolidated) rate used to translate must align to the

Spot rate used to Revalue accounts

If required to use Parent Company exchange rates, consider

manually aligning Currency Exchange (spot) and Consolidated

(translation) rate tables

Rounding differences can occur when translating financial

statements into the reporting currency


Pieces of the Intercompany Puzzle – Elimination Entries

Run eliminations as part of your month end close

Elimination Flag should be marked on all Intercompany

transactions

Flag defaults on transactions if Chart of Accounts properly

marked

Elimination entries that don’t balance push the difference to

the CTA (Cumulative Translation Account)


Pieces of the Intercompany Puzzle - Consolidation

Consolidation

Review Translation Rates (recalculate)

Make sure your Elimination Entries balance (net to zero in total)

NetSuite pushes Elimination Entry “out of balances” to a CTA Elimination Account. This indicates issues with your Intercompany

You should never get a CTA effect from an Intercompany elimination (except for elimination of CY InterCo profits from CY Income & PY Profits from Retained Earnings


Pieces of the Intercompany Puzzle

Chartof

Accounts


Consolidation

RevaluationsConsolidated(Translation)

Exchange RatesEliminations

Opening BalancesNetSuite Configuration

Intercompany Accounting


Identifying your Intercompany issues


Identifying your issues – The process of elimination

Run your Consolidated Balance Sheet (in Subsidiary Column Context)

• Do your Intercompany balances zero out?

• Before Eliminations?

• After Eliminations?

• Do you have a CTA balance in the Elimination Subsidiary?



Chart of Accounts - Check Configurations (Revaluation & Elimination)

Review balances by currency - make sure currency totals net to zero (via

Saved Search).

Revaluation – make sure revaluation completed for all accounts

containing foreign currency transactions (via Saved Search).

Consolidated Exchange Rates – make sure they are recalculated before

running consolidated financials

Make sure spot rate table aligns with current translation rates.



Review transactional details for the following (Via Saved Search):

Missing Transactions – If not using Intercompany Journal Entries, are

transactions missing on one side?

Currency Denomination Issues – are both side in same Currency (If not

using Intercompany JE’s)

Saved Search with the right data can help you troubleshoot most of your

transactional issues.

Perform reviews monthly, don’t let it get away from you

Note: If you are using Intercompany Auto Management you will not have

these problems



Transaction Saved Searches - include the following fields:

• Subsidiary

• Period

• GL Account

• Amount Debit (base currency GL impact)

• Amount Credit (base currency GL impact)

• Currency

• Amount Foreign Currency (transaction currency)


Identifying issues – Transaction Saved Search

• Make sure you set the Consolidated Exchange Rate to None!


Putting the pieces of the puzzle back together


Putting the piece back together – Where to start?

Month end checklist – make sure you follow the steps!

• Revalue open foreign currency balances

• Calculate Consolidated Exchange Rates

• Run Intercompany Eliminations

Missing any one of these steps can cause your Intercompany accounts to be

out of balance in Consolidated Balance Sheet


Putting the piece back together – Currency Re-denominaton

Fix currency denomination issues with J/E’s to swap out currencies

Each currency requires it’s own J/E

Override exchange rate to create net zero GL Impact

Use clearing accounts (not set to revalue)

No need to fix every historical transaction or open closed periods

Run Saved Search to verify that currencies balance

Run revaluations when complete


Putting the piece back together – Revaluations

Correct Chart of Accounts Configuration - to flag account for revaluation

Run Revaluations – (after currency denominations are corrected)

Note:

Expect a larger than usual P&L Impact in the period you run revaluations for

the first time


Putting the piece back together – Eliminations

Correct chart of account settings

Mark historical transactions to eliminate

If high volume of transactions, consider moving balances in total to

new GL accounts

Separate JE for each currency

Mark entries in new accounts to eliminate


Putting the piece back together – Missing transactions

Record Missing transactions

You don’t have to go back and put them in closed periods

Record in current period before final revaluation is run

Record in correct currency


IntercompanyFeaturesRoadmapHighlights


Intercompany Solution Concepts

AVAILABLE NEXT

AVAILABLE FUTURE

Global ProjectCorporate

Exchange Rate

Global Customer

Global Employee

Global Vendor

Transfer Order

Time andExpense

Centralised AP Centralized PO

Cross subFulfillment

CentralisedPayment

Intercompany Netting

Intercompany Reconciliation&Elimination

Intercompany Auto-Settlement

Projected Profitability What If Analysis

Intercompany Workspace

Reconciliation&Elimination Audit


Transfer Pricing

Interco reconciliations&

Elimination

IntercopanyAuto-Settlement

Automated Accounting

IC Netting

IntercompanyWorkspacer

What If Analysis

Audit-Reconciliation&Eliination

Transfer Order

Time andExpense

Centralised AP Centralized PO

CentralisedPayment

Cross subFulfillment

IntercompanyBusiness Execution

AVAILABLE NEXT

AVAILABLE FUTURE

• The operational Workflows the processes your resources execute without the need for accounting mastery and concerns the right transfer pricing method has been applied. Seamless to your resources allowing them to focus on your business not your accounting


Q&A


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Documents

Reconciling Intercompany Accounts - RainFocus€¦ · using Intercompany JE’s) Saved Search with the right data can help you troubleshoot most of your transactional issues. Perform