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Consolidation Process - How to create Group Company Accounts

Shane McLoughlin
  • Updated

Consolidation allows multiple sets of company accounts to be combined and reported as a Group Company.

Each individual company must continue to prepare and file its own statutory accounts where required. The consolidated accounts are produced separately and combine the results of the holding company and its subsidiaries.

Before consolidating, make sure:

  1. All entities included in the consolidation are Companies.
  2. The Financial Year End Date of the holding company and all subsidiaries is the same.
  3. The relevant parent and subsidiary relationships have been set up in the holding company's Compliance Database.
  4. All companies use the same base currency.

We recommend that all companies included in the consolidation are in Closedown before starting the consolidation process.

Important: Bright Accounts Production does not currently support currency conversion during consolidation. The base currency of all companies included in the consolidation must therefore be the same.

Add the Parent and Subsidiary Companies

Before creating the Group Company, add the relevant group companies to the holding company's Compliance Database.

  1. Open the holding company.
  2. Go to Compliance Database > Client Details.
  3. Select Group Companies.
  4. Select Add.
  5. The Add Group Company window will open.
  6. Enter the required details.
  7. Select the appropriate Type:
    • Subsidiary
    • Parent
    • Ultimate Parent
  8. Enter part of the company name and select the Search icon.
  9. Select the relevant company from the search results and select OK.
  10. The company's address and country of incorporation should populate automatically.
  11. Select Save.

Repeat these steps for each company that needs to be included in the group structure.

Create the Group Company

Once the group structure has been set up, you can create the consolidated accounts.

  1. Open the holding company.
  2. On the relevant financial statement year — this should be the first year you want to consolidate — select the Consolidate icon.
  3. The Group Client details will be displayed.

The holding company name and financial year cannot be changed during this process.

A Group Company client code is automatically generated using GRP + the holding company client code. You can change the generated client code if required.

  1. Select Add to display the group companies set up in the holding company's Compliance Database.
  2. Review the companies displayed, including their:
    • Company name
    • Financial year
    • Type
    • Status
  3. Select the checkbox next to each company you want to include in the consolidation.
  4. Review the details carefully.
  5. Select Consolidate.

The consolidation will then be created.

Review the Consolidated Trial Balance

Once the consolidation is complete, you will be taken to the Trial Balance of the newly created Group Company.

The Trial Balance will show the aggregated balances for the companies included in the consolidation.

You can also view the balances by division, including:

  • Holding company
  • Individual subsidiary companies
  • ZZZ - Group division

The ZZZ - Group division can be used for consolidation adjustments, including appropriate inter-company adjustments.

Comparative balances

Comparative balances are also brought into the Group Company.

The comparative Trial Balance will default to the aggregated balances, but you can select the individual divisions to review the comparative figures for:

  • Holding company
  • Individual subsidiaries
  • ZZZ - Group division

When accounts are produced for the Group Company, Bright Accounts Production uses the Group Company Template.

The nominal balances for the current year and up to five comparative years are imported into the Group Company as separate divisional Trial Balances in the form of multi-lined journals.

You can then create appropriate consolidation or inter-company adjustments using journals posted to the ZZZ - Group division.

Making Divisions Editable

Divisions may need to be made editable before you can post journals directly to them.

Step 1: Enable posting in divisions

  1. Go to Staff.
  2. Highlight the relevant user's name.
  3. Select Staff Permissions.
  4. Select Settings.
  5. Tick Enable Posting in Division.
  6. Save the permission change.

Step 2: Mark divisions as editable

Once the permission has been enabled:

  1. Go to Settings > Divisions.
  2. Locate the relevant division.
  3. Mark the division as Editable.

The user should then be able to post to the relevant editable division.

Why can't I consolidate because of a currency mismatch?

Bright Accounts Production does not currently support currency conversion during consolidation.

If you are unable to add a company to the consolidation, check that its base currency matches the base currency of the other companies in the group.

Reporting Currency vs Base Currency

The Reporting Currency can be set under Compliance and affects the currency symbol displayed on reports and accounts.

The Base Currency is different. It is set under:

Settings > Accounts > Setup

The base currency is selected when the client is first set up and is locked as the client's main currency.

For consolidation purposes, the base currency must be the same across the companies being consolidated.

For example, an Irish parent company using Euros cannot currently be consolidated with an English subsidiary using Pounds where the system would need to convert the subsidiary's balances from GBP to EUR.

If a company has the wrong base currency

If a company has been set up with the wrong base currency, a new dataset may need to be created using the appropriate Country of Incorporation so that the correct base currency is selected.

You can then post journals or import a Trial Balance into the new dataset before adding it to the group consolidation.

The group structure can then be set up through:

Compliance > Client Details > Group Companies

Add the new subsidiary with the correct currency and proceed with the consolidation.

Consolidation Limitation: Parent Companies

Bright Accounts Production currently supports one parent company within a consolidated account setup.

As a result, existing group accounts with an ultimate parent company above the parent company being consolidated cannot currently be consolidated within the application.

Consider this limitation when setting up the group structure.

Re-Consolidating a Group Company

You need to Re-Consolidate if:

  • Companies are added to or removed from the group.
  • Balances in one or more underlying companies have changed.
  • Comparative balances in an underlying company have been updated.

Re-consolidation updates the Group Company with the latest balances.

Journals and comparative amounts posted to the ZZZ - Group division are not affected by the re-consolidation process.

How to Re-Consolidate

  1. Open the holding company.
  2. On the relevant financial statement year, select the Consolidate icon.
  3. Review the Group Company details.
  4. If required, add or remove companies from the consolidation.
  5. Review the updated balances and group details.
  6. Select Re-Consolidate.

The existing consolidation journals and comparative figures in the Group Company will be removed and the consolidation process will be run again.

Exception: Journals and comparative figures posted to the ZZZ - Group division are retained, including inter-company adjustments.

Once the process is complete, the existing Group Company will open at the Trial Balance with the updated consolidated balances.