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What is an intercompany reconciliation?

Normal business relationships among a parent and subsidiaries cause intercompany transactions that need to be recognized in the separate financial statements of these entities. When the time comes for periodic reporting, the parties engage in reconciling their accounts. In this article we will review the reasons why intercompany reconciliations are needed and look at reconciliation procedures.

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Question added by OUBAICHE ZAHIRA , Finance Manager , HYFLUX
Date Posted: 2015/11/10
Ajay Kumar Ajay Kumar
by Ajay Kumar Ajay Kumar , Account Executive , Shyam Steel Industries Ltd

Intercompany reconciliation is basically the reconciliation of funds transfer to each other, stock transfer and all the monetary transaction.

Afreen Pasha
by Afreen Pasha , accounts executive , kohinoor televideo private limited

Intercompany reconciliation means reconciling the ledger balance of both companies in their books.and reconcile the diffrence.

 

 

sijo sebastian
by sijo sebastian , MIS Analyst & Business Support Co-ordinator , First Abu Dhabi Bank

Inter company reconciliation is process of matching general ledgers of subsidiary companies. The mismatches may be because of currency conversion rate or may be due to manual recording errors. This differnces needs to be identified and fixed for the periodic financial reporting. 

Rameez Hussain
by Rameez Hussain , Senior Accountant , Calltronics, Du Authorized Channel Partner

Intercompany reconciliation means reconciling the ledger balance of both companies in their books.

For Example: Company A & B are sister concerns and there are many transactions in a year at day end we have to check the balance of Company B in A company books and balance of company A in B company books both the balances must be equal. If company A balance in B books is 5000DR then company B balance i A books must be 5000CR

ABDUL RASHEED P.K NOOR MAHAL
by ABDUL RASHEED P.K NOOR MAHAL , Internal Audit , Suhail Bahwan Automotive Group

Reconiling GL accounts, Vendor Accounts and Customer Accounts of group companies are called inter company reconciliation.

Sanjay Prasad
by Sanjay Prasad , Sr.Analyst , MERCER CONSULTING INDIA PVT LTD.

International groups have to consolidate all the various General Ledgers of their subsidiaries in order to eliminate inter-company flows. ... The process, which normally takes place monthly or quarterly, frequently identifies a large amount of mismatches between subsidiaries in the group.

Akeem Oguntoyinbo
by Akeem Oguntoyinbo , Factory Accountant , Unilever Nigeria PLC

Reconciling Intercompany Accounts. Intercompany accounts are accounts in an organizations' General Ledger that represent a balance of payments due from, or to, entities related by common ownership or control.

Muhammad Omer
by Muhammad Omer , Finance Officer , La Vedette Cafe LLC

The balances between the groups / subsidiaries need to reconcile. Let take example of Group (A) and its subsidiary (B). If the Group (A) books showing the receivable from subsidiary B is 10,000 US dollar then it means that Subsidiary (B)  books must show payable to Group (A) exactly the same amount 10,000 US dollar.  If the amount is not reconciled, then it need to be further investigated if any transaction is not recorded in one book and that need to be incorporated to clear inter-company balances.

Aakash Desai
by Aakash Desai , Financial Analyst / Project Lead , Hewlett Packard

Normal business relationships among a parent and subsidiaries cause intercompany transactions that need to be recognized in the separate financial statements of these entities. When the time comes for periodic reporting, the parties engage in reconciling their accounts. In this article we will review the reasons why intercompany reconciliations are needed and look at reconciliation procedures.

Mary Ann Marimat
by Mary Ann Marimat , Chief Finance Officer , Alliance Pacific Resources Corporation Contact n0. : 09331429546

The process, which normally takes place monthly or quarterly, frequently identifies a large amount of mismatches between subsidiaries in the group.

Sanoop Illath
by Sanoop Illath , Accountant , Wharf International

International groups have to consolidate all the various General Ledgers of their subsidiaries in order to eliminate inter-company flows. This is Intercompany Reconciliation. The process, which normally takes place monthly or quarterly, frequently identifies a large amount of mismatches between subsidiaries in the group. Mismatches can be with invoiced goods and services (internal Accounts Receivable vs Accounts Payable) but also with other transactions such as loans and deposits, interests on internal positions and other balance sheet items.

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