1. The Complete Legal Organizational Chart
List all entities, ownership percentages, voting rights, acquisition dates, indirect holdings, and any special agreements.
2. The scope of consolidation
Document the reasons for including or excluding each entity, as well as the proposed method: full consolidation, equity method, or other appropriate treatment.
3. Accounting Standards
Identify each subsidiary’s accounting framework, the Group’s accounting policies, differences in accounting methods, and the adjustments needed to ensure consistent data.
4. Deadlines and Schedules
Offset fiscal year-ends, local deadlines, and audit requirements must be incorporated into the group’s schedule.
5. Consolidation Packages
A package must specify the expected formats, checks, attachments, deadlines, and responsible parties. It must limit manual reprocessing at the central level.
6. Intragroup Transactions
- sales and purchases;
- receivables and payables;
- dividends;
- loans and interest;
- disposals of fixed assets;
- internal margins on inventory;
- Commitments and Guarantees.
7. Acquisitions and Disposals
Retain the contracts, price analyses, valuations, acquisition dates, and data needed to calculate goodwill.
8. Deferred Taxes
Identify temporary differences, carryforward tax losses, consolidation adjustments, and applicable tax rates.
9. Off-Balance-Sheet Commitments
Guarantees, covenants, disputes, significant contracts, and social commitments must be identified in a consistent manner.
10. Closing Governance
Define roles, controls, validations, deviation handling, and the process for escalating issues.
FAQ
Should you buy software in the first year?
Not necessarily. The choice depends on the number of entities, the complexity, the frequency of reporting, and the desired level of automation.
Can subsidiaries under different accounting standards be consolidated?
Yes, provided that the group principles are defined and the standardization adjustments are documented.
What is the first deliverable to be produced?
A scope memo outlining the scope, methods, timeline, responsibilities, and key risks.