This training content is for advanced users.
The below training video provides examples of the two approaches to consolidations.
Consolidations is a broad term, and in Reportance it is used to describe two things:
1) Combining two or more sources of data as if they were one
For example, if a single entity had two stores run through different accounting files, consolidation in this context would refer to grouping these files together so as to report on the entity as a whole.
2) A formal grouping of the financial statements of related entities to show a 'global' view.
This may, or may not, be of a strict consolidated group (as understood in general financial reporting terminology).
For both of these types of consolidations, Reportance provides two approaches to working with consolidated data.:
The Streamlined Approach
The Classical Approach
Before touching on these two approaches, we will deal how Reportance knows to 'link' two accounts together so they will report on the same line.
Linking Accounts
In Reportance, an Account is actually a grouping of individual Client Accounting System Accounts, so that one Account can have multiple Client Accounting System Accounts, as shown in the following diagram:
For a more in depth look at this, review the training material on Sourcing Data, specifically the Account Hierarchy section.
Because of this Account Hierarchy, Reportance can easily determine which accounts from different systems are equivalent to each other.
Accounts can be linked in the Accounts screen by dragging and dropping one Account on top of another so that a box is drawn over it (see the following diagram), this will cause Reportance to put all the Client Accounting System Accounts into the same Account.
Once the chart of accounts are linked together correctly, we can use one of the two general approaches to Consolidation in Reportance.
The Streamlined Approach
In the streamlined approach, we tag specific accounts as being 'consolidated' accounts, and let Reportance determine the elimination entries as a result. This approach is by far the simplest, but requires two things:
1) That all inter-entity transactions exist in accounts which exclusively contain inter-entity transactions
2) That the balances of all of these accounts across each consolidated dataset balance to zero. Note that individual accounts need not balance to zero, but the sum of all consolidated accounts across all consolidates datasets must balance.
If these rules are met, consolidation can be performed as follows.
Step 1) Link the datasets which will create the consolidation
If this is a grouping of accounting files within a single entity:
First create the datasets which contain the data for each accounting file/division/store. Each dataset will need to have the same date range in order to be eligible for grouping.
Next, in the Client Info screen, select Add Group Dataset. For this type of dataset, instead of loading data, you can add other datasets to construct a consolidated trial balance. Click Add Dataset to choose from eligible datasets (which must have the same date range) to add to the Group Dataset.
The end setup will look something like follows:
If this is a grouping of data from multiple entities to form a consolidate group:
Ensure that all entities, with their associated datasets, are already set up in Reportance.
Create a new entity by going to the Client Info screen and selecting Add New Entity. This entity is not a physical entity but a notional one (the consolidated group) which will simply act as the container for 'totals', so usually call it something like "XYZ Group". Prior to saving, ensure the Is a Consolidated Group tickbox is checked.
Next, click Add Consolidated Dataset, give the dataset a name and date range. You can then other datasets from both this entity and any other entity to construct a consolidated trial balance. Click Add Dataset to choose from eligible datasets (which must have the same date range) to add to the Consolidated Dataset.
Step 2) Nominate Consolidated Accounts
If there are no inter-entity or intra-entity transactions to be eliminated, you can proceed straight to the next step.
In the Accounts screen, find each account which contains inter-entity transactions, go to Options, Edit Account, and select the Consolidated checkbox. Note, all accounts which are marked as Consolidated have a tag appearing after the account name, for example:
Step 3) Configure the Reports
Now you are ready to report. In the Reports screen, prepare a new Report Template to work with.
In each column, you can add any Consolidated Dataset or Group Dataset to the report by selecting them from the Dataset drop-down menu. These datasets provide a special View property that let you choose what you wish to display:
Show All - will show the summation of all accounts inside the Consolidated or Group Dataset, without applying any eliminations
Elimination Entries - will show just the elimination entries
Consolidated Balances - will show the summation of all accounts after taking into account elimination entries
Note, in many cases, you will show the Consolidated or Group Dataset twice, once showing the 'Eliminations' view, and once showing the 'Consolidated Balances' view.
You have a choice on how you display the data, for a conventional consolidation report which shows each entity, an eliminations column and the total consolidated balance, you would have a column configuration that looks something like the following:
The Classic Approach
The classic approach allows you to create consolidation journals which serve to calculate the eliminations. This approach is both more flexible and more time consuming, so the Streamlined Approach is preferred wherever possible.
In the classic approach, perform Step 1) as in the Streamlined Approach. Then:
Step 2) Perform the Eliminations
To do this, create a dedicated dataset to house the elimination journals. For the source, select one of the existing sources which contain the most common accounts that you will wish to journal to/from, or create a new Excel source and call it 'Eliminations' if you prefer to keep all elimination accounts separate.
Next, go straight to the Journals tab where you can enter the consolidation journal entries.
Once done, add this 'Eliminations' dataset to the Group Dataset or Consolidated Dataset as the case may be.
Review the Accounts screen to ensure any accounts introduced by the journalling process are correctly linked to Reportance Accounts.
Step 3) Reporting
As with the streamlined approach, you can now add the Consolidated or Grouped Dataset as a column. However, this time set View to "Show All", which, given it includes the eliminations dataset, will automatically show the full consolidated balances. If you wish to show a separate eliminations column, you can create a column and use the 'Eliminations' Dataset you created earlier.