Record to report / R2R – General Accounting – Inter company

Transaction Entries

We looked at the components of an inter company general accounting process.

Let us check out the sub-processes in this category a little more in detail.

The first sub-process was intercompany reconciliations.

We had covered this in the following earlier posts:

The next sub-process is intercompany transaction entries. Normally each unit would pass the entries at their end. And then a reconciliation process would follow. But as a back office unit, you may be working for multiple units, with all the accounting updates being done by you. This type of centralization really helps. You can make simultaneous entries for the two units and thus eliminate the need for reconciliations. Any discrepancies / differences of interpretations / amounts can be immediately handled, all approvals taken and then the entries passed.

Well, for each entry, there has to be an evidence / a signed off procedure for being uploaded to the accounting system. You may need an agreement for specialized transactions, like the inter country ones, as the treatment for foreign exchange rates will pose a challenge, needing approvals and synchronization.

So the process involves the following:

  • Validating and collecting the transaction evidence
  • Ensuring policy adherence
  • Collection of special approvals, if needed
  • Passing the entry in each unit

Simple isn’t it? Looks simple, but each business has its own set of challenges and uniqueness, which adds to the complexity of this process.

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