Enable M3 Group Consolidation

Outcome

• Each subsidiary is configured for group consolidation and registered at the parent company.
• The balance accounts to consolidate indicate which exchange rate to apply at conversion.
• A table for converting the subsidiary's chart of accounts to that of the parent company is created.

Use the outcome to run the process described in managing group consolidation.

See Managing group consolidation.

Before you start

Before you can start, you must complete these requirements:

• The corporation must have well-defined rules, routines and policies for group consolidation. You must have a good understanding of the parent company's and the subsidiary's accounting policies.
• Define the subsidiaries and the parent company in 'Company. Open' (MNS095) or in 'Company. Connect Division' (MNS100).
• You must know the identity and division of the parent company.
• Define the chart of accounts of the subsidiaries and the parent company in 'Accounting Identity. Open' (CRS630). If you choose not to convert the subsidiary's chart of accounts, you must also register the parent company's accounting identities for the subsidiary.
• Define the currency in 'Currency. Open' (CRS055).
• If conversion of currency is required, you must define the exchange rates in 'Exchange Rate. Open' (CRS056).

Follow these steps

1. Define basic settings for subsidiary for M3 Group Consolidation

   First, set the basic consolidation rules for the subsidiary company. This includes selecting these information:

   • The subsidiary's identity to be displayed in all the subsidiary's transactions at the parent company
   • The consolidation currency.

   Use the program'Settings – Subsidiary' (GMS010).

2. Select conversion method for balance accounts

   To convert the cumulative balance of each period balance using the exchange rate valid at the end of each period, you must select alternative 1='Cumulative conversion' for each balance account to consolidate in 'Accounting Identity. Open' (CRS630/F).

   In the USA, such conversion is required as part of the financial reporting under the GAAP standard. The conversion normally applies to equity accounts.

   Note: This solution requires that the subsidiary does not convert its balances to the parent company's currency, but instead, the parent company do the currency conversion.

   The default value is alternative 2, which causes the balance of each period to be converted at the exchange rate valid during the last (current) period.

3. Configure transfer of general ledger and budget transactions in group consolidation

   For each subsidiary, you must define how to handle general ledger and budget transactions during transfer to the parent company. This includes defining these information:

   • The accounting dimensions whose transactions to transfer
   • The dimension where the subsidiary's identity is displayed, which makes it possible for the parent company to identify the transactions
   • Whether the chart of accounts is to be converted to the parent company's chart of accounts based on the account conversion table.
   • Exchange rate types to use.

   Use the program 'Settings – Transfer of General Ledger' (GMS015) and 'Settings – Transfer of Budget' (GMS020).

4. Define conversion of subsidiary's chart of accounts

   If the subsidiary's chart of accounts differs from the one used by the parent company, you must register the parent company's differing accounts. For each account, you must define one or more ranges of the subsidiary company's accounts to be totaled in the parent company's accounts when transferring all the transactions in the range.

   Although this activity is done per subsidiary, normally the account conversion rules are owned by the parent company.

   Use the program 'Account Conversion. Open Table' (GMS100).

5. Register subsidiary in parent company

   In the parent company, you must register information about each subsidiary that is necessary for the parent company to receive transactions. This includes registering contact information, the consolidation currency, and the percentage of the holding of each account that the subsidiary sends to the parent company.

   Use the program 'Settings – Parent Company' (GMS090).