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Category: Consolidation

  • Understanding Intercompany Dividend Elimination in Financial Consolidation

    Understanding Intercompany Dividend Elimination in Financial Consolidation

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    Why Intercompany Dividends Must Be Eliminated When consolidating financial statements across multiple entities within a group, one essential adjustment is the elimination of intercompany dividends. These are dividends paid by one subsidiary to another entity within the same group—such as a holding company or another subsidiary. While dividends are legitimate transactions between companies, they must…

  • Why Do We Eliminate Intercompany Transactions in Financial Consolidation?

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    Seeing the Group as One When a group of companies is under common control—such as a parent company with several subsidiaries—the goal of financial consolidation is to present their financials as if they were one single economic entity. This means transactions between the entities in the group are internal, not external, and do not represent…

  • AI and Financial Consolidation: The Future of Multi-Entity Reporting

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    Introduction: A New Era in Finance Financial consolidation has traditionally been a complex, manual process requiring significant coordination across departments, countries, and systems. As businesses grow through acquisitions or international expansion, consolidation becomes even more challenging. Multiple entities mean multiple sets of financials, charts of accounts, currencies, and compliance requirements. Artificial Intelligence (AI) and Machine…

  • UK GAAP vs. US GAAP: Key Differences in Financial Reporting

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    When operating across the UK and the US, businesses must navigate the differences between UK GAAP (Generally Accepted Accounting Practice in the UK) and US GAAP (Generally Accepted Accounting Principles in the US). While both frameworks aim to provide accurate financial reporting, they have distinct rules and approaches. 1. Principles-Based vs. Rules-Based Approach One of…

  • Financial Consolidation for SMEs: Is It Necessary and How to Start?

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    Many SMEs believe financial consolidation is only for large enterprises, but even smaller businesses can benefit from it. Why SMEs Should Consider Financial Consolidation ✔ Better Financial Visibility: Consolidating financials across multiple entities gives a clearer picture of overall business health. ✔ Easier Decision-Making: Helps SMEs make informed strategic decisions based on accurate financial data.…

  • The Impact of Different Accounting Standards on Financial Consolidation (IFRS vs. GAAP)

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    Financial consolidation is already a complex process, requiring businesses to aggregate financial data across multiple subsidiaries, often spanning different countries, currencies, and regulatory environments. The challenge is further amplified when companies operate under different accounting standards. The two most widely recognised frameworks—International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP)—introduce variations in how…

  • New Feature: Virtual Groups for Flexible Financial Consolidation in BrizoSystem

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    In financial consolidation, companies often rely on fixed hierarchies based on legal structures. But what if you need to analyze data from a different perspective—such as by region, business unit, or operational division? BrizoSystem now introduces Virtual Groups, allowing users to create custom hierarchies beyond the default legal company structure. This feature provides greater flexibility…

  • Centralised vs. Decentralised Financial Consolidation: Which Approach is Right for You?

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    When managing multiple entities, companies must choose between centralised and decentralised financial consolidation. Each approach has pros and cons—let’s explore them. Centralised Consolidation In this approach, the parent company controls and consolidates all financial data. ✅ Advantages: ❌ Challenges: Decentralised Consolidation Subsidiaries handle their own financial data, and reports are later combined at the group…

  • Common Mistakes in Financial Consolidation and How to Avoid Them

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    Financial consolidation is essential for businesses managing multiple entities, but the process can be complex and prone to errors. Here are some of the most common mistakes companies make and how to avoid them. 1. Not Eliminating Intercompany Transactions Properly Intercompany sales, loans, and expenses must be eliminated to avoid double counting. Failing to do…

  • Financial Consolidation for Companies with Different Fiscal Year Starts: Challenges and Solutions

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    Introduction Financial consolidation is a critical process for companies with multiple subsidiaries or business units, as it combines financial data from various entities into a single, unified report. This process is essential for providing stakeholders with a clear picture of the organization’s overall financial health. However, when subsidiaries operate under different fiscal year starts, the…