What is consolidation system?
A consolidation system collects, eliminates and standardises accounting figures across companies so that group management gets a comprehensive basis of figures. With ReAI, the finance team can build a robust process that connects eliminations, currency conversion and reporting directly to the source systems.
What does a consolidation system do?
- Automates eliminations of internal revenues, costs and balance sheet items.
- Handles currency conversion and exchange rate differences for foreign units.
- Standardizes chart of accounts and dimensions so that all legal entities follow the same structure.
- Produces reports that build on accounting data warehouse and provide real-time insight to group management.
Key processes in ReAI
| Process | Manual Method | Consolidation System |
|---|---|---|
| Elimination of internal transactions | Excel sheet per company | Rules that automatically match intra-group documents |
| Currency management | Post-calculation with historical rates | Currency engine that updates daily |
| Reporting | Several versions of profit and loss | One common accounting dashboard |
| Notes and documentation | Text files in separate folders | Automated production via automated note production |
This is how you establish consolidation in ReAI
- Map the company structure and label internal counterparties with their own dimensions.
- Connect the data sources to ReAI and synchronize the chart of accounts with the corporate standard.
- Set up elimination rules and test them against historical data before going live.
- Schedule a continuous accounting close with partial deliveries throughout the month.
- Share consolidated reports via the ReAI portal so that the board has access to updated information.
Best practices for governance
- Define clear division of roles between finance managers, controller team and local accountants.
- Use workflow in ReAI to document approval of eliminations and adjustments.
- Integrate results and forecasts with continuous reporting to ensure that forecasts and actual figures match.
- Evaluate data quality monthly with measurements on deviations, latency and number of manual documents.
Common challenges and how to solve them
| Challenge | Consequence | Measures |
|---|---|---|
| Different Account Plans | Delays in consolidation | Map deviations and publish a master chart of accounts in ReAI |
| Insufficient documentation | Increased audit risk | Associate work tasks with each elimination rule |
| Lazy updates from subsidiaries | Outdated Management Information | Set deadlines and notifications in ReAI for submission |
| No match between notes and ledger | Deviations in the annual accounts | Link notes directly to registers in the system |
Next step
Build a roadmap for further development of the consolidation process together with the financial management. When the consolidation system is tightly integrated with data warehouses and automated controls, ReAI can deliver more reliable management information and free up time for analysis and strategic advice.