Accounts and consolidation process

Introduction¶

The following account attributes are relevant for the consolidation process:

the conversion type, or the strategy to be applied to convert the amounts saved in a certain account
the enabling or disabling of Intercompany management
an indication of whether the account forms part of financial investments or net equity

For more details on accounts, see .

Conversion type¶

The conversion type specifies the FX rate to be used to convert the amounts entered in a certain account into the consolidation currency.

The available options are:

P&L FX rate : The P&L conversion method is defined in the conversion rule. It is possible to override, for the individual process, the settings of the default conversion rule and replace them with the chosen FX rate (average FX rate/period average FX rate/year-end FX rate). Used for the P&L, detail accounts and other variation accounts.

Average FX rate: This converts the cumulative amounts to the average FX rate present in the FX rates table.

Period average FX rate: This converts the amount for the period to the period average FX rate present in the FX rates table and then adds it to the converted data of the previous period.

Final FX rate: This converts cumulative amounts to the final FX rate present in the FX rate table. Used for the balance sheet, detail accounts and ‘other stock’ accounts. Equity accounts are excluded, as these are normally converted at the historical FX rate.

Historical FX rate: This stratifies the conversion based on the period FX rate. There is no FX rate numeric value. In order to obtain the final converted value, the system adds the converted variations to the initial balance, each based on the type of FX rate indicated in the relative table. Used for equity accounts.

Prev. P&L FX rate: Applied to the reserve variations that receive the distribution of profit and the balance sheet net result for the previous year. Only used for variation accounts and detail accounts.

Prev. Final FX rate: Applied to the accounts representing the initial balances. However, these accounts are actually calculated on the basis of the carryforward processing operations, and are not the result of conversions. Only used for variation accounts and detail accounts.

Initial balance FX rate: this converts incoming area variations or percentage variations in the case of a decrease of accounts converted at the historical FX rate, when the entry or reduction occur at the start of the period, or when the amount refers to carrying forward. Only used for variation accounts.

With this kind of FX rate, it is useful to specify the Reference account for Initial balance/Year-to-date average FX rate which allows you to calculate the conversion coefficient. Only if the conversion type is “Initial balance FX rates” or “Year-to-date average FX rate”. Must be a "Normal" or "Detail" Balance Sheet account.

If not present, the system will use the parent account of the control group to which the account being converted belongs as the account.

Year-to-date average FX rate: this converts outgoing area variations or the percentage variance in the case of a decrease of accounts converted at the historical FX rate, i.e. when the exit or reduction occur during the period and other operations alter the value of the account. Only used for variation accounts.

With this kind of FX rate, it is necessary to specify the conversion coefficient in Reference account for Initial balance/Year-to-date average FX rate.

None: This is applied to accounts that are not subject to currency conversion. This is used for ‘other variation’, ‘stock’ and ‘initial balance variation’ accounts.

Conversion method¶

Accounts are typically converted in accordance with the following methods:

Account type	Conversion type
Profit and Loss (including the net result) and its details / Other variation accounts and their details	- P&L FX rate
Balance sheet and its details	Final FX rate. An exception is made for certain accounts (e.g. net equity, including net result) which are converted at the historical FX rate.
Other stock accounts and their details	Final FX rate
Balance sheet variations (new entries for the year)	P&L FX rate, final FX rate or FX rate overridden on the process
Balance sheet variations (write offs of amounts accumulated in previous fiscal years)
Entries with a counterparty in the profit and loss account (e.g. depreciation)	P&L FX rate
BS net result variations (period net result)	P&L FX rate
BS net result variations (previous fiscal year net result and relative counterparty account on profits carried forward)	Previous fiscal year P&L FX rate

During the conversion, CCH Tagetik uses the conversion type specified for every account in the accounts table (see ). The conversion type can be overridden for each individual account within the individual processes (see ).

IC management¶

Intercompany amounts are all the amounts, costs, revenues or assets that refer to a transaction between entities belonging to the same group. An account can only accept intercompany values if the IC Management option is selected (see ).

For example, the Assets - Machinery account, which contains the value of the machinery possessed by an entity, does not typically have intercompany amount management enabled because, in general, ownership is not shared.

If there is only one intercompany account, it is possible to calculate the gross figure for that account automatically, by adding together all of the intercompany amounts already entered without using MD scripts (see ). This is possible if the Gross amount equal to the IC sum option is selected (see ). An IC on Gross amount basic calculation logic is generated for the automatic calculation of the gross figure.

Use an account for specific setups¶

You can specify that a certain account be used in the setup of consolidation rules/logics. This is done by selecting the Use Account for setup option (see ).

You can select one of the following setup options:

Option	Description
No	The account is not used for the setup
Net Equity	The account can be used in the net equity accounts setup.
Financial investments	The account can be used in the financial investment accounts setup.

Note: this attribute is not mandatory in the account creation step. However, defining it speeds up the setup of the ownership structure register, the minority rules and the equity evaluation rules.

Excluding accounts from the proportional calculation¶

You can specify accounts to be excluded from the proportional calculation. To do this, you must select the Exclude from proportional calculation option. (see ).

Note: this option must be activated for non-financial accounts, such as the quantity/number of employees, or Other Variation or Other stock accounts.