Intercompany eliminations are essential to producing accurate consolidated financial statements — but they are rarely straightforward. Differences in timing, FX, rounding, or posting practices often mean intercompany balances don’t match perfectly when it’s time to eliminate.
To help finance teams automate with confidence without losing control, BrizoConsol introduces the Auto Elimination Log — designed to surface exceptions clearly and keep accountants in the decision loop.
The Challenge With Fully Automated Eliminations
The appeal of fully automated elimination is obvious: intercompany balances are identified, matched, and eliminated without manual intervention. The close gets faster. The risk of missed eliminations is reduced. But intercompany data in the real world is never perfectly clean, and blind automation creates a different kind of risk — eliminating differences that shouldn’t be eliminated, or eliminating in a way that obscures a genuine error that needs investigation.
The differences that appear in intercompany balances fall into two categories. The first is routine variance: rounding from currency conversion, minor FX rate differences on the same transaction recorded in two currencies, or small timing differences on transactions near period-end. These are expected and are safe to eliminate automatically. The second is substantive variance: a recording error in one entity, a transaction that was posted to the wrong account, or a timing difference large enough to represent a genuine dispute between entities. These need review before any elimination is posted.
The question for any automated elimination system is how to handle both categories correctly — automating the routine without hiding the substantive. That’s what tolerance levels and the Auto Elimination Log address.
Tolerance Levels for Auto Elimination
BrizoConsol now supports configurable tolerance levels for auto elimination. When auto elimination runs, the system checks whether the difference between intercompany balances is within the defined tolerance threshold.
- Within tolerance: The elimination proceeds automatically. The difference is treated as routine variance and eliminated as part of the automated run.
- Exceeds tolerance: The system does not force the elimination. The record is captured in the Auto Elimination Log for accountant review, and no elimination entry is posted until a deliberate decision is made.
How tolerance levels work in practice Entity A records an intercompany receivable of USD 50,000. Entity B records the corresponding payable of USD 49,994 — a USD 6 difference from a rounding in the currency conversion. Tolerance is set at USD 10.
The USD 6 difference is within tolerance → auto eliminated automatically. No review required.
In a different pair: Entity C records USD 50,000 intercompany receivable. Entity D records USD 47,200 payable — a USD 2,800 difference. This exceeds tolerance → captured in the Auto Elimination Log. No elimination is posted. The accountant reviews the difference, discovers Entity D processed the invoice in the wrong period, and posts a manual adjustment before the elimination is applied.
The tolerance threshold is configurable — finance teams set it at a level that reflects their group’s typical rounding and FX behaviour, ensuring the automated elimination handles what it should and flags what it shouldn’t.
The Auto Elimination Log
The Auto Elimination Log is the central review point for every intercompany difference that exceeded the tolerance threshold and was not automatically eliminated. When an exception is captured in the log, the accountant can see which entity pair generated it, what the balance difference is, and what threshold it exceeded — giving them the information needed to investigate and decide the appropriate action.
This log transforms exception handling from a reactive discovery process — where issues are found during review or at audit — into a proactive, structured workflow. Every exception is visible, every decision is deliberate, and the resolution is documented rather than applied informally. For auditors reviewing the consolidation, the log provides evidence that exceptions were identified, reviewed, and resolved — not silently swept into an automated elimination that may not have been appropriate.
💡 The audit trail value: An Auto Elimination Log that shows every exception, the difference amount, and the resolution action is stronger audit evidence than an automated system with no exception record. It demonstrates that automation was applied with judgment, not blindly.
Validate-Only Mode: Awareness Before Action
In addition to the tolerance-based automation, BrizoConsol offers a Validate Only mode. When selected, the system runs the same elimination checks and flags any entries that would exceed the tolerance threshold — but does not apply any elimination entries.
This is particularly useful in several situations:
- Early-stage consolidation reviews: Running validate-only before the month-end close gives the finance team advance warning of which intercompany balances will require attention, so investigation can begin before the close is under time pressure.
- New entity onboarding: When a newly acquired entity enters the consolidation for the first time, validate-only lets the team check the intercompany position without risking an incorrect elimination on the first run.
- Process validation and training: Finance teams can run validate-only to review what the elimination logic would do — and confirm it aligns with their expectations — before switching to full auto elimination mode.
Validate-only mode allows finance teams to be proactive rather than reactive — understanding where exceptions will arise before they need to be resolved under close pressure.
Automation Designed for Real-World Consolidation
The combination of tolerance-based automation, exception logging, and validate-only mode gives BrizoConsol’s auto elimination a structure that reflects how intercompany data actually behaves. Not every difference is an error. Not every difference should be ignored. The system handles the routine automatically, surfaces the substantive for review, and provides the audit trail that demonstrates both were handled with appropriate judgment.
See how BrizoConsol’s Auto Elimination Log gives finance teams speed where it’s safe and control where it matters. Learn more or see it in action →