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Inter group Accounts

Dear All,

We are a group of six legal entities; each legal entity has its own currency, so our inter group transactions are done with six different currencies. When consolidating the report of the group, the due to and due from accounts do not balance to zero because of different exchange rates that are used when entering the group transactions.

I appreciate if you share with me how the GP can help to balance these accounts to zero, or if there is another method that is used.

Thank you

Hello Waleed,

You have two options to resolve this, shown below:

1. Using Management Reporter (Working Papers): setup your corporate reporting exchange rate using management reporter and perform the consolidation at the level of the report, keeping in mind that following IAS #27 you should eliminate all intercompany balances, transactions, income, and expenses in full as a part of the consolidation procedure therefore your issue should no longer exist as both transactions on both companies were eliminated.

2. Using correcting Journals (Actual GL): before doing the consolidation, create 1 transaction for each company and for each currency to close the actual difference to the multicurrency relealized gain/losses, you can do changes in the exchange rate to fix small variances.

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