Consolidation and Introduction of Consolidation Systems

Even for experienced accountants, the complex of issues in “consolidation” regularly poses challenges. In addition to the classics of consolidation, such as removal from the group of consolidated companies and corporate mergers, there are also a number of special topics waiting to be addressed by corporations in the finance industry.

Challenges in Consolidation

For financial corporations whose Group companies issue bonds and acquire bonds from Group companies, there is the question of how the challenges of consolidating bearer debt instruments in which the issuer has no knowledge of the consolidation circumstances can be handled without establishing a complete, double-entry bookkeeping system for Group accounting at the same time. While the corresponding securities are held within the corporation, this information may still be possible through bilateral reports, but the process becomes very time-consuming as soon as the instrument has left the corporation again and only the issuer still has to report changes in acquisition costs.

Another special case in the finance industry is portfolio sales within a corporation, where not only intercompany profits have to be eliminated, but also both the acquisition date of the company and the acquisition date of the corporation serve as the basis for both the categorization and determination of the impairment level.

On the procedural side, the requirements of different consolidation groups are added for balance sheet/commercial law purposes on the one hand and regulatory purposes on the other hand. Depending on the complexity of the corporate structure and the consolidation issues as well as the question of what additional information is to be consolidated for internal controlling purposes and what drill-down options there should be at the Group level, different requirements arise for the consolidation tools and also for the general finance architecture at Group level.

WTS Advisory Support in the Introduction of Consolidation Systems

WTS Advisory will support you with its experts in complex individual issues relating to consolidation, such as removal from a group of consolidated companies, consideration of profit transfer agreements, consolidation of bearer securities and the reporting of mergers and acquisitions as well as the revision of the general consolidation processes and the selection and introduction of consolidation tools. In the area of consolidation tools, WTS Advisory has partnerships with corresponding software providers, but acts as a neutral consultant in the selection of software, as we do not produce any software solutions ourselves.

If you are interested or have any questions, please contact us.