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Unified chart of accounts as a base layer for your consolidation process

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    Helen Veetamm

Have you ever faced the problem in your consolidation process where subsidiaries use different accounts for similar transactions? Or you need the information in a more detailed way as it is in subsidiary’s accounting? Despite of the consolidation software or manual consolidation, these situations are always a nightmare for accountants. In either way it needs adjustments. A simple solution to avoid these problems and shorten your consolidation process is to unify group’s Chart of Accounts (hereinafter as CoA). Here’s a short to-do list of questions to think about.

Is CoA usable for all group entities?

If all the entities are using the same CoA in everyday accounting or reporting, the CoA should have accounts for every business activity (i.e financial investments, investment property, inventories etc).

Is your CoA with sufficient level of details?

You financial data outcome is as detailed as is your CoA. Think of the outcome the users have a need for and how detailed this information should be. CoA’s aggregation level shouldn’t be too high nor too low.

Is there a need to change CoA in local accounting programs?

In the case where separate accounting programs are in use and if you want to have more details in reporting or consolidation, you should consider changing the local accounting program CoA as well. For example, if you have the cost and accumulated amortization of buildings on one account in subsidiary accounting, but you want your data to be seen separately for consolidation, you need to have the cost and accumulated amortization separately in your local CoA as well.

Have you communicated the CoA principles with other users?

It is important that group entities use CoA the same way for reporting. Be sure and control that other users understand the CoA logic as it is meant to be.

Have you done account hierarchy and grouping in CoA?

Please be sure that account hierarchy and account grouping in CoA correspond to the needs of reporting and consolidation. It accelerates the reporting process.