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How to make consolidation process less painful?

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    Helen Veetamm

Have you ever felt in your consolidation process that it seems to be an endless journey full of mismatches and illogical results? Probably you think that everything is left again to the last moment and the due date for reporting is unreal. You probably promise yourself that next time you will start earlier to collect all the data and to unify the group accounting principles. So, what can you do to make consolidation process less painful?

Tips for consolidation process development depend mainly on group size. Still, there are some common things to consider.

1. Set dates for reporting

If all the subsidiaries are aware of the timeline and expectations, consolidation process can be more efficient and faster. Set realistic dates — only then it creates more effectivity. Make sure that every accountant knows and accepts the dates. Remind the upcoming due date to get more attention and emphasise the importance of reporting. If someone is late with reporting, find out why and deal with the problem.

2. Delegate responsibility

The CFO or the Head Accountant of the group shouldn’t be responsible for the correctness of subsidiary data and reconciled intra-group transactions. Make sure that the accountants of subsidiaries feel their responsibility and take it seriously. Intra-group transaction reconciliations shouldn’t be done on the consolidation level. These should be already compared and adjusted between subsidiaries.

3. Unify the chart of accounts

Typically the subsidiaries within the group have different accounting software, different activities, different chart of accounts. All the reclassifications and unifications are made on consolidation level. This slows down the process and generates too many additional tasks to CFO/Head accountant role. If the Chart of accounts is similar or the same in the whole group, it decreases the adjustments.

4. Make notes

If the consolidation is done annually or quarterly, it may happen that you don’t remember all the eliminations and necessary adjustments. Making notes takes some extra time, but next time the process is faster. It is also helpful if the person who consolidates, changes.