Consolidation is an important financial activity in an organisation. When a company has more than one subsidiary, they want to consolidate the Balance Sheet and Profit & Loss, to see the company progress and make decisions. Consolidation is a process of collecting all the financial data from all the subsidiaries, and reporting in a single structure.
All the subsidiaries must use the same financial system i.e. Dynamics 365 Finance and Operations.
Consolidation has some pre-requisites, and then it can be configured in the system and then run periodically, to check the figures for Balance Sheet and P&L Statement.
In Dynamics 365 Finance and Operations, Consolidation is setup as below:
1 – Create a fresh Legal entity in the system for reporting purpose. This legal entity is only used for Consolidation, you cannot post a transaction in it. This company is called Consolidation Legal Entity in Dynamics 365 Fin and Ops.
2 – Setup Chart of Accounts, number sequence, fiscal period, currency for the newly created legal entity
Creating a fresh legal entity is Dynamics Fin and Ops requirement.
Depending on your business structure, you can configure any one of the three methods of Consolidation.
The three methods are:
Method # 1 – When the Consolidation legal entity’s Chart of Accounts (COA) is same as that of all the subsidiaries. This means that the Consolidation legal entity and the subsidiaries are using the same chart of accounts.
This method is simple, and most organisations prefer this one.
Method # 2 – When the Consolidation Company’s Chart of account is different and with no main accounts in it. This means that the COA for consolidation company is empty.
Subsidiaries COA is different as well. In this scenario, the main accounts are created automatically in the Consolidation Legal entity at the run time of Consolidation process.
Method # 3 – When Consolidation company and all the subsidiaries have a different COA. In this scenario consolidation is tedious and cumbersome, as you would need to manually map the main accounts with that of the Consolidation Company’s main accounts. For example, your subsidiaries have below Bank Accounts
150810 – Bank Account – USD
112002- Bank Account – EUR
150811 – Bank Account – AUD
and the Consolidation company is using the bank’s main account as 120021 – Bank Account – All.
In the subsidiaries you would need to map the number 120021, in the above three Bank Accounts (150810,112002,150811)
After you configure the method, you can run Consolidation by either importing, exporting and via online.
Online Consolidation is pretty straight forward and real time, but few organisations prefer excel import/export, so that they can review the transactions before the final consolidation and delete duplicate entries.