By Stefan Farrugia on 2018-03-27
Accountants must adjust the consolidated financial statements because this is critical to understanding how inter-company transactions impact the income statement and balance sheet. The accounting adjustment process is very time-consuming and open to human error, especially if it involves a large number of Excel sheets.
Your first instinct might be to improve your Excel skills so you can create more complex formulas or get a computer with more power so you can run Excel sheets faster because they become cumbersome and slow. Both of these may improve in the very short term, however very soon these improvements will not be enough. We suggest you move beyond these short-term advancements to work your way to a more solid process that will benefit the whole organisation in the long term.
Make sure your team is entering quality data for your inter-company balance sheet
Your team has a key role to play in the accuracy of your data. There are ways to reduce human error; however, the first step is to make sure your team is well-trained. It is also important that you have simple, clear communication channels between the financial teams across your organisation. Teams should be screened for low performers and adjustments made accordingly.
Upgrade from Excel to an inter-company accounting consolidation software
When you use consolidation software, it will provide you with tools that help you verify the data through reporting. It’s true that not all errors can be traced through reports, however, it opens a path to uncovering errors. A package that has verification and validation rules will ensure that errors and inconsistencies are minimised to provide error control during your accounting consolidation.
Use a tool that improves your process visibility and control
Using an automation tool means you can improve the financial consolidation process flow and gain complete visibility of your process which will result in more consistency for easier consolidations.
Accounting consolidation software like CFOUR will help you control the stream of traceable data, allowing you to share with other users or locking it once finalised to prevent any further changes from other members of the team.
Use accounting consolidation software that fits in with your current environment
When choosing the software you want to bring as little change as possible. Asking all your financial teams to change their software is not feasible, and therefore your best option is to choose a package that integrates with any accounting package. This kind of accounting consolidation software will allow you to integrate all your data from various sources and process it in a way that gives everyone full visibility of the process.