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Reconciliation
The figure shows the reconciliation diagram. Reconciliation starts once you set up the reconciliation parameters and import data to a report instance.
During the reconciliation, users responsible for the reconciliation and supervisors view the information about discrepancies, their settlement, and approval in the Intercompany reconciliation by indicators report.
The users can add comments to any discrepancies and open disputes. If there are no discrepancies, the reconciliation is completed.
One of the assignees responsible for the reconciliation transfers a discrepancy to the Dispute category. It happens when the discrepancy reason cannot be found and discrepancy settlement actions cannot be approved with the assignee responsible for the reconciliation by counterparty.
When you create a dispute from a discrepancy, the intercompany reconciliation supervisor is automatically notified. All disputes are settled by the reconciliation supervisor.
You can set up the Intercompany reconciliation by indicators report to display additional columns, groupings, filters. You can also specify a sort order for the report data. For example, you can set up grouping by subperiods, by mapped dimensions (contracts, projects, transactions), or by currencies.
Settling discrepancies
You can use the "Intercompany reconciliation by indicators" report to settle the discrepancies that may occur during intercompany data reconciliation. To do this, select a discrepancy line.
You can choose between the following discrepancy settlement options:
- Use "Settlement wizard" to automatically settle discrepancies whose amount is less than the specified materiality threshold.
- Use the standard entry template to settle discrepancies caused by a standard reason specified in the Discrepancy reasons field.
- Settle discrepancies manually.
To start discrepancy settlement, click Settle or double-click a cell in the Discrepancy column. This opens the Intercompany transactions discrepancy settlement document.
For the selected discrepancy by companies, the document records the intercompany transaction amounts of each party, the AR/AP accounting currency, the presentation currency of consolidated statements under IFRS, and the intercompany transactions reconciliation section. On the Settlement tab, in the Discrepancy reason field, specify the reason. The Data source field shows the source for the intercompany transactions reconciliation.
The Values of dimensions and amounts tab shows the total amount of discrepancies between companies for this reconciliation section.
A discrepancy settlement entry is made in the company specified in the Company field. The Settlement party field shows whether the company is a debtor or a creditor for the reconciliation.
The Values of dimensions and amounts table is automatically filled with the total discrepancy amount for the data source indicator displayed in the Indicator field and with the indicator name displayed in the Name field. You can change the settlement amount manually.
The Reconciliation dimensions table automatically displays dimensions used for reconciliation and dimensions used for further elimination. If the dimension is used to eliminate, for example, a GL account, the Extra dimension type field of the Extra dimension values table automatically displays extra dimensions that match the dimension. You might also need to fill these extra dimensions.
To view the transactions that will be included in the transformational adjustment and displayed in a trial balance report instance under IFRS on the Entries to generate tab, click Fill in entries.
The Source reconciliation data adjustments table shows a report instance to make a settlement-based change in. It also displays an editable indicator with dimensions of this change. When posting, on the Transformational adjustment sheet, the Transformational adjustment document is generated. It adjusts indicators of the report instance used for reconciliation.
In the Transformational adjustment document, the Resulting adjustments tab shows an editable report instance where the added settlement line appears when displaying a drill-down for the editable indicator.
Before generating a transformational adjustment, you can manually change the entry attributes, for example, GL accounts.
On the IFRS accruals tab, the IFRS accruals document is generated. It contains settlement accrual entries for a trial balance report instance under IFRS of the company being settled.
Transformational adjustment of this document also contains an editable report instance. Here, you can drill down the edited indicator and see the drilled down settlement amount.
Automatically settling minor discrepancies
You can run the minor discrepancy settlement wizard from the "Intercompany reconciliation by indicators" report. To do this, click Settlement wizard. This opens a wizard window where you can set filters and start automatic settlement.
You can automatically settle only discrepancies that do not exceed the materiality threshold set in the Intercompany reconciliation template document settings.
When minor discrepancies are settled automatically, these discrepancies are written off to a technical account specified in the "Reconciliation template". For this, we recommend that you use the account included in the structure of the statement of financial position. When an off-balance account is used as a technical account for settling discrepancies, the formed discrepancy amount must be transferred to an account included in the structure of the statement of financial position, or allocated among several such accounts.
Commenting on discrepancies
To add a comment on a discrepancy, open the Intercompany reconciliation by indicators report and double-click the Comments field. Enter a text in the comment window field. To add it to the table, click Add comment. To attach a file to a comment, in the comment window, click Attach file.
Comments are required to identify the discrepancy reasons and determine the party that will correct the reports to settle discrepancies.
To settle discrepancies, you can:
- Reload input forms with corrected data.
- Post an additional entry to correct a discrepancy caused by a certain standard reason.
- Forcibly settle minor discrepancies using the settlement wizard.
- Manually settle disputable discrepancies if you are the reconciliation supervisor.
The discrepancy method and the party that makes changes to the accounting are determined based on comments entered by users. A comment must contain information about the discrepancy approval or disapproval of the reconciliation assignee, a discrepancy reason description, or confirmation that the assignee's data is correct and the discrepancy is caused by the counterparty's error.
If the discrepancy reason and the discrepancy settlement method cannot be determined based on the comments, one of the reconciliation assignees selects the Dispute check box.
Initiating disputes
With the "Intercompany reconciliation by indicators" report, you can escalate a discrepancy issue to a superior. In the Dispute column, select the check box next to the discrepancy. The check box selection date will be automatically displayed in the Dispute start date column. The person responsible for the dispute settlement will receive a notification.