Consolidation procedure settings

You can select the following consolidation procedure settings:

Infobase level settings.
Business unit level settings.
Settings of report preparation regulation.
Settings of GL accounts for consolidation of shares in associates and joint ventures.

Infobase level settings

In the IFRS accounting section, open the IFRS settings form and click Standard GL accounts to open the Standard database GL accounts catalog. Here create predefined GL accounts for consolidation adjustments and entries made as a part of consolidation procedures.

Set accounts for goodwill, non-controlling share in equity, shares in the financial result of associated companies and joint ventures, and other accounts involved in consolidation entries generated by the Consolidation adjustments document.

Business unit level settings

To specify some settings, click General catalogs – Business units. In the catalog, create a group consolidation perimeter folder.

In accordance with IFRS 10 Consolidated Financial Statements, the consolidation perimeter includes the parent company and subsidiaries. For associated companies and joint ventures, only proportional shares in net assets are consolidated.

The consolidation perimeter includes not only the group parent company and subsidiaries but also associated companies, joint ventures, and third parties if their financial statements are required to calculate consolidation adjustments.

Consolidating company is a perimeter folder in the "Regulations for preparing reports" catalog, which contains the parent company and subsidiaries.

For each consolidating company, we recommend that you create one or several eliminating companies. Their analytical trial balance will record consolidation adjustments related to the consolidating company financial statements.

There can be multiple eliminating companies in one perimeter, for example, to separate intercompany transaction elimination, currency translation reserve, entry repetition at the consolidation level, consolidation procedures, and consolidated deferred tax.

The catalog can contain several folders with nested companies, that is, several consolidation perimeters.

For each consolidating company, in the Consolidating company field of the item form, you can select a previously created parent company (a top-level folder) from the Business units catalog if, for example, consolidation across several subholding companies is required inside the perimeter.

In the Currencies catalog of the Presentation currency field, select a currency in which consolidated financial statements will be prepared for this perimeter. In the First application date field, enter the first application date for the consolidated separate financial statements of the parent company or the individual published financial statements of the group companies if such financial statements are prepared on them.

For each business unit, including eliminating companies, enter the required information on the Default parameters tab. The Date of opening IFRS balance entry field shows the date when IFRS balance was entered in the infobase.

In the Currencies catalog of the Presentation currency field, select a currency in which this company provides its financial statements for further consolidation.

In the Currencies catalog of the Functional currency field, select a currency in which the company keeps accounting. The presentation currency at the company level can be the same as the functional currency.

In the Company type field, from the drop-down list, select the To be consolidated value for the perimeter company and the Eliminating value for the eliminating company.

In the Default regulation parameters section, in the Consolidating company field, select the consolidating company folder from the Business units catalog. In the Relation to group field, from the Relations to group catalog, select the status of this company in relation to the group. This status will later be used to automatically determine a consolidation method.

To do this, go to the Relation to group catalog, create items for each company status kind in the group. In the Group status field, select the respective option: Parent company, Subsidiary, Associated company, Joint venture, Related party, or Third party.

The Company kind field groups companies by the required attributes. For example, this grouping is used in process templates or for similar purposes.

To use this grouping, specify an company kind. To do it, select the item created for this grouping from the Business unit kinds catalog.

For example, some companies belonging to a group submit their NAS data with all the drilldowns needed to prepare IFRS statements. While other companies in the group can independently prepare individual IFRS statements and submit them for consolidation.

NAS accounting of some companies can be as close as possible to IFRS. You do not need to request additional NAS data drilldowns, or such drilldowns are not available, for example, for associates and joint ventures. For such situations, you can create your own catalog item. Depending on the source data provided by the company, different process templates will be used.

Generating versions of regulation for preparing reports for IFRS consolidation

To carry out consolidation procedures, use Regulations for preparing reports.

In the regulation on the Organizational structure tab, set up the group ownership structure. The ownership structure for consolidation must be hierarchical: one of the companies included in the group must be the parent one, and other companies must be subsidiaries, associates, or joint ventures.

The organizational structure can include either one consolidation perimeter or multiple perimeters, including nested ones.

The consolidation perimeter includes:

Only one consolidating company that identifies the perimeter.
Arbitrary number of consolidated companies.
One or several eliminating companies. For example, one eliminating company for each consolidation adjustment kind. An eliminating company may not be included in the perimeter. For example, if individual statements are prepared for the company and consolidation adjustments are not required.
One parent company.

A consolidating company is a Business units catalog item with the Business unit that is not a tax resident type.

The consolidating company has the highest hierarchy level in the group ownership structure.

The Presentation currency column displays a currency used to generate company report forms and submit them for consolidation. This currency in the company's individual accounts may be the same as its functional currency.

The Effective equity share column displays the automatically calculated effective equity share of the parent company in the company as of the date of effective share calculation according to the investment flow documents.

You can specify the date of effective share calculation in the Effective share date field. By default, the date of effective share calculation is set equal to the regulation creation date.

In the Relation to group column, specify a status under IFRS for the group company, that is its relation to the consolidating company. This column is filled automatically only if you have created a regulation with automatic calculation of effective equity shares. In this case, the system fills the status according to the investment flow documents.

If this service is disabled (see above in this chapter), manually set the company statuses for IFRS and corporate taxation in the regulation version.

The Company status for consolidation field has the following statuses:

Subsidiary whose equity share is more than 50%.
Associated company whose equity share is from 20% to 50%.
Third party whose equity share is less than 20%.
Related party.

If you need to prepare separate statements for a parent company or individual statements for any other company, create a consolidating company and an eliminating company for each such statement.

For each consolidating company, select a parent company. To mark a parent company, right-click the company and click Set as a parent.

Once the regulation version is created and set up, the application will use it during consolidation procedures for the corresponding consolidating companies.

GL accounts for associates and joint ventures

You can set up GL accounts for associated companies and joint ventures in the GL accounts of net assets of associates/joint ventures information register.

For each associate/joint venture, create items of this register for each capital account available for this company to further record the investor's share in the financial result and other comprehensive income of this company.

In the NA accounts field, specify the capital account of the associated company/joint venture and assign it the respective account in the Account for equity method field. This account will record the investor's share entry under the equity method.

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