Financial consolidation with SAP Business One

Taken by itself, the term "consolidation" simply means that one puts a certain fact into context. In the world of the Accounting However, financial consolidation is a well-defined process that involves several special features and accounting principles.

Versino Financial Suite for SAP Business One Finance

Financial consolidation consists of consolidating the income and expenses of a group of affiliated companies in a single annual accounts or a joint tax return are reported. An enterprise is associated with a company if it is wholly or partly owned by another company.

In the course of financial consolidation, the individual business units of a parent-subsidiary group are presented as a single company. The annual financial statements are published under the umbrella of the parent company. The financial aspects of the subsidiaries are presented as if the companies were divisions of the parent company.

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Essentially, the main steps of accounting consolidation are in the process of financial consolidation:

Collecting balance sheet data (e.g. assets, liabilities, equity, income and expense accounts) from different general ledger systems and assigning them to a central chart of accounts
Consolidation of data according to specific financial accounting rules and guidelines, e.g. HGB, US-GAAP or International Financial reporting Standards (IFRS)
Reporting the results to internal and external stakeholders

The main financial reports that arise in the preparation of consolidated financial statements include the income statement (GUV), which balance sheet and the cash flow statement.

One might think that financial consolidation would consist of a relatively simple addition of figures taken from the financial reports of the companies in a group. However, this is not the case. Rather, specific calculations and consolidation adjustments must be made. This includes, among other things:

Conversion of foreign currencies
Elimination of intra-group transactions and balances
Adjustment entries
Accounting of partial ownership

There are also different consolidation methods, which may differ depending on the share a parent company has in a subsidiary.

In a large company, the process of financial consolidation is usually carried out by the finance department, which is under the supervision of the controller or the head of the department accounting/reporting and is ultimately supervised by the commercial management.

Financial consolidation in SAP Business One

For this purpose, SAP provides the add on "Intercompany Integration Solution for SAP Business One" available

The Intercompany Consolidation function broadly uses the basic functionality of SAP Business One to create the consolidated accounts. One needs to set up additional companies in SAP Business One for this, one per consolidation level. The new "consolidation" company is then only used for the financial consolidation reports.

The SAP add-on streamlines processes such as financial consolidation, but cross-company procurement between two or more companies that are SAP Business One deploy. It is used in over 60 countries and supports subsidiaries that use SAP Business One. This also applies to those that use different currencies. The following functions, among others, are associated with it:

Manage multiple subsidiaries, business units, legal entities and currencies
base data Replicate and share
activities Consolidate, coordinate and display in all business areas without manual reconciliation
Apply standardised and transparent financial processes across all business units
Simple and intuitive management of cross-business unit financial information
Increased productivity through time savings and simplified transactions