Consolidation of Debts

1 General Information on Consolidation of Debts

According to § 303 para. 1 HGB, all debt relationships between consolidated companies must be eliminated. As a result, the group financial statement only shows obligations to third parties and to subsidiaries that are not included.

IDL Konsis supports the netting of receivables and liabilities to affiliated companies in various levels of detail.

2 Conditions for Consolidation of Debts and Credits

2.1 Existence of IC Data

The prerequisite for the consolidation of debts is that IC accounts (intercompany accounts) and corresponding IC account balances (ICACBAL) are available. The balances must be on the fact envisaged for consolidation. In the case of foreign currency companies, the currency conversion must have been carried out so that the IC account balances are also in group currency.

The IC accounts are defined in the account master data (COADFN). An 'I' must be entered there in the field for the IC license plate. This identifier makes it possible to further specify the account balance (ACBAL), i.e. to divide it among the corresponding counterparties in the application IC account balances (ICACBAL).

In addition, the field ‘IC breakdown' shall indicate whether the whole balance is to be divided by IC companies (license plate X), only partially (license plate A) or whether there is no sampling of IC account balances to the account balances (license plate -).

IC accounts can simultaneously be mirror accounts such as investment accounts, accruals, capital accounts and individual statement accounts. If an intercompany account is also a mirror account, we recommend dividing the development transactions also by IC companies. Otherwise, the subsequent processing of CR development reposting may be incomplete or eliminate too much. This is the case, for example, with several sub-groups. In order to ensure the completeness of the IC information in the development transactions, we recommend to activate the option "IC information for development transactions mandatory" in the FCT application in the area of Intercompany.

IC account balances can be recorded either directly in the IC account balances application (ICACBAL) or in the corresponding form entry (F-ICACBAL), or imported via the IDL Konsis IMPT interface application (KPICSALD.DSCTXT). The entry is done separately according to the affected subsidiaries as a details of the corresponding IC account.

2.2 Definition of Consolidation Function

The consolidation indicator "CD" is intended for all accounts to be included in the consolidation of debts (possibly also G+V accounts). All accounts that contain an I in the IC indicator and are to be included in the consolidation of debts are additionally given the entry for "CD" processing in the "consolidation function" field in the area of IC properties in the account master data (COADFN).

Additional types of consolidation processing (CNSFNC) make it possible to define customer-specific, subject-related voting circles / groups, e.g. for loans to affiliated companies / liabilities to affiliated companies greater than 1 year less than 5 years. This approach leads to smaller units of consideration and thus to more transparency in the consolidation process. The keys CD 00 to CD 99 can be used for these customer-specific voting groups. These keys are not overwritten by new release levels.

The definition is provided in the consolidation function application (CNSFNC). In the case of a new consolidation function, only the key (e.g. CD 01), its description and the assignment to a report column are to be maintained individually by the user. The new consolidation function is automatically assigned to the Reference consolidation method consolidation of debts. As a result, all coordination groups defined by the user (CD 00-CD 99) are initiated at the same time as the consolidation of debts via the group monitor. Conversely, it is generally not possible to start the consolidation of debts separately for a specific voting group, such as only for "CD 01'.

Individually created consolidation functions must also be saved in the account master data for the items to be considered.

2.3 Definition of Consolidation Parameters

The consolidation parameters application (CNSPAR) must define certain frame data for the consolidation of debts consolidation function. The consolidation parameters are from the user

• per group/sub-group
• per consolidation data type (actual, plan, etc.)
• per settlement period and
• per consolidation function (e.g. CD 00, CD 01)

Once the parameter is defined, it is carried forward to the following period within the framework of the Group Carry Forward. In the order from top to bottom, the following settings must be made:

Settings that affect other workflows:

Deferred taxes

If deferred taxes are to be calculated on the majority of affecting net result CD vouchers, this entry must be capitalized. All consolidation postings on the income statement accounts are then automatically flagged for the calculation of deferred taxes.

Minority interests

Affecting net result consolidation postings can be included in the calculation of minority interests. This option must be activated if this is to be done with the majority of the affecting net result SC vouchers.

Summarize carry forward

This option must be activated if consolidation postings are to be combined during carry forward. However, it only affects SD vouchers for consolidating dividends (see below)

Settings for the consolidation of debts:

Threshold group currency

A threshold value can be defined for each consolidation function (CD 00, CD 01, etc.). This information ensures that Non-cash differences below this threshold are automatically posted to the threshold account also created in CNSPAR. The threshold value shall be reported as absolute value in group currency.

Threshold percentage group currency

Rather than choosing an absolute amount that may be too high or too low per company language, it is also possible to specify a percentage by which the IC balances of the respective company languages may differ. The deviation is calculated using the following formula:

• percentage deviation = 100 - (smaller / larger value) * 100

The two values result in totals of all the debit and credit values of a voting group. Caution: These are not the two totals per company shown in the "IC Consolidation Overview" (CNSLST)!

Threshold transaction currency

If the IC balances to be processed are maintained with a transaction currency (TC), these values may also not match. In principle, the total difference would then be posted as a Non-cash difference in group currency. However, if the difference in TCS is below a threshold value specified here, it is posted as a price difference.

Threshold percentage transaction currency

A threshold for transaction currency can also be expressed as a percentage. The same calculation rule applies as for the threshold value group currency (see above)

Differential treatment transaction currency (TC Diff)

If this button is set, if there is a difference in the given transaction currency, the difference in group currency is divided into a Non-cash difference and a difference in exchange rate. A Non-cash difference, if it is below a threshold value of group currency, will be automatically posted to the accounts for threshold, the exchange rate difference on the accounts for exchange rate difference. If this button is set, it is not possible to specify a transaction currency threshold at the same time.

Cumulate Difference (DiffKumul)

By default, mutual differences within a posting are calculated separately and posted unbalanced, i.e. there can be a threshold value of income and expense at the same time. If the "DiffKumul" option is used, the total difference is calculated and netted either as an expense or income. This is also done with the posting of exchange rate differences when using disclosures in transaction currencies.

Handling of manual postings (ManBooking)

There are three variants that control how postings that have been manually added to the automatically created CD voucher should be used when repeating the consolidation of debts:

• 0 = Manual postings are deleted: both postings for manually eliminated differences and other postings are deleted, clearing must be repeated
• 1 = Manual differences postings are retained: the postings used to balance a difference are retained. If, however, other postings are recorded in a voucher that is actually already running out, they are deleted. If there are other differences when the SC is repeated, the postings received must be adjusted if necessary.
• 2 = All manual postings are retained: adjustments may be necessary here too if the amount of the differences has changed

Accounts to deposit:

Accounts for threshold expense or income

It is mandatory to state the accounts for the difference clearing. If the differences are to be treated with no effect on the result, balance sheet accounts are to be entered instead of P+L.

Account for exchange differences expenses or income

In two cases, a difference can be automatically recognized and posted as a price difference. 1: The IC balances are maintained with an indication of a transaction currency value and the TC values match in the IC balances. 2: If two companies have the same local currency and the IC balances match in LC, a difference in group currency is automatically posted as a price difference, even without specifying transaction currency. Just because the 2nd. If it is not foreseeable and the absence of exchange rate difference accounts would lead to an error, we recommend that expenses and income are always entered immediately in the accounts. Balance sheet accounts can also be stored here instead of P+L accounts in order to treat the resulting differences neutrally as to income.

Suspense account

If the offsetting of accounts receivable and accounts payable results in a difference above the threshold value, a voucher is generated which does not initially accrue (debit <> credit). The difference is then to be clarified by the user and added to the missing posting. If all vouchers are to be posted immediately, an account (with account flag T) can be saved here, on which the difference is initially posted. The user then has to use manual postings to ensure that the posting on the account is canceled and the difference is posted on the right account. As long as the account shown here is not set at 0.00, the CR state will remain yellow.

Retained earnings

If the carries forward from affecting net result debt consolidation bookings are to be carried forward to a separate profit and loss carry-forward account, this account has to be reported here. If the field remains blank, IDL Konsis will use the profit carried forward account entered in the consolidation parameters 'KK' for the carry-forward posting.

Clearing account

If you want to neutralize the shifts between the postings in the voucher, enter a clearing account with the account identifier 'N'. The account should be a balance sheet account and, if necessary, a separate clearing account should be deposited per consolidation function (CD 00, CD 01, etc.) if the processing involves different balance sheet areas.

Posting keys and/or controlling objects can be stored for all specified accounts, which are then used by default for automatically created postings.

Next information and tips:

Use of statistical accounts in consolidation parameters

The consolidation parameters must contain statistical accounts if a CDA has account class S (statistical accounts only) or M (statistical quantities only). If the threshold account specified in the consolidation parameters is a statistical account, the IC balances on the statistical accounts are processed analogous to the non-statistical accounts with the difference accounted for in the threshold account. The same applies to the remaining differential treatment (e.g. transaction currency clearing).

Use of different thresholds

A major advantage in the breakdown of consolidation of debts is also that different thresholds can be used. For example, we will want to be stricter in eliminating cash pooling accounts than perhaps in eliminating trade receivables / trade payables. The threshold may be higher for consolidation of debts to planning data types or in intrayear periods than to actual data types and at the end of the financial year. Accordingly, the thresholds per CNSFNC, fact and period can be selected differently.

ATTENTION:

If a consolidation parameter is changed after the SC has been completed, all vouchers that belong to the changed consolidation function are deleted completely, including all manual postings. The settings in the "ManBooking" field have no influence on this. I.e. if the parameters are to be changed, e.g. to change the threshold (see above), this should be done immediately after the Group Carry Forward, if there are no current postings yet.

2.4 IC Data in Group Currency

The balances of companies with currency codes that deviate from the group currency are initially posted in IDL Konsis in company currency (e.g. USD). Intercompany balances are therefore also recorded and imported into the company currency. However, consolidation of debts requires that the IC information is available in group currency. Therefore, the currency conversion has to be performed before the start of the consolidation of debts for foreign currency companies. In other words, if the currency conversion has not yet been performed in the case of a company prior to a debt consolidation run, the state for the currency conversion is red, the consolidation of debts for this company is not made. This is displayed in the IC Consolidation Overview with the FXCN Missing message.

3 Consolidation of Debts Process

3.1 Calling Up the Consolidation of Debts

As with all other consolidation measures, the starting point for the consolidation of debts consolidation function is the group Monitor (GRPMNR). There, the pull-down menu "Action" or alternatively "right mouse button" triggers the consolidation of debts for all or selectively for certain companies (desired companies are to be marked beforehand). Sub-groups folded down by the tree structure must first be folded up so that the "hidden' societies there can also be marked out.

The consolidation of debts is to be carried out for each group and subgroup level separately for all companies, whereby the sequence can be freely chosen. If the consolidation of debts is to be performed in one step for the main group and all its subsidiary sub-groups together, a function with the addition "with sub-group" must be selected. For each sub-group, only those social languages that are common at the relevant level are considered. If the companies are already in a subordinate group with the consolidation method "V" or "Q" (at the same percentage), you will receive the state "T = sub-group" in the IC Consolidation Overview.

If the consolidation of debts is performed for the selected financial statements for the first time, the "consolidation of debts make a posting" function must be selected. If CD vouchers and an IC clearing overview are already available (see below) and should perform the consolidation of debts again due to changed IC balances, the "Repeat consolidation of debts" function must be selected.

Tip: For a larger number of companies, the consolidation of debts should be started globally via the action menu, i.e. without a company being marked, since the processing can then be completed faster.

3.2 Automatic Consolidation of Debts Run

In the case of automatic consolidation of debts, the system compares the receivables and liabilities per company language. If the user has defined individual voting groups in CNSFNC and thereby attributed accounts (e.g. with CD 01), a consolidation document is generated for each CNSFNC.

If the application has been completed properly for all selected companies, a status indication is given in the column 'CD' of the group monitor. The following statuses are distinguished:

--

No debt consolidation relationships could be identified for the company in question (white background)

"4" / <exclamation mark>

The consolidation of debts has been carried out for these company, but there are differences that are still pending clarification (yellow background).

"X" / <green check mark>

Complete processing of all company debt consolidation relationships with coherent consolidation postings (green background)

<blank> / <white>

For this company, the consolidation of debts has not yet been initiated or an IC clearing set (CNSLST) has been manually deleted by the user

If IC components on fixed asset accounts (e.g. loans) are also eliminated in the course of consolidation of debts, fixed asset objects are automatically generated if they are not already available.

Default posting keys are used in CD vouchers to eliminate IC balances on mirror accounts. The mirror-appropriate elimination of IC balances takes place only with the subsequent function "CD development reposting".

3.3 Conventions for the Production of Machine Postings in the Steering Committee

The following conventions are defined in the program for the generation of automatic postings:

a) Receivables greater liabilities (debit difference)

If the receivables exceed the liabilities to affiliated companies, there is a debit difference (negative amount in "Non-cash difference GC" in CNSLST). In the debt consolidation posting, the debit side is shorter than the credit side. Therefore, the difference account expense is used in automatic offsetting. Every account is additionally provided with the company number as the key. This means that the transfer of the total completion values to the group can be clearly demonstrated for each individual company.

b) Receivables from small liabilities (credit difference)

If, conversely, the receivables are less than the liabilities to affiliated companies, a credit difference has occurred (positive amount for difference display in CNSLST). In the elimination posting, the credit side is shorter than the debit side. For this reason, automatic adjustments address the income difference account.

c) Receivables and payables on both sides with differences

Both companies have reported receivables and liabilities. Under no circumstances does the receivable of one company match the liability of the other. If the option 'DiffKumul' is activated, the differences are netted and the total amount is posted either as an expense or as income. Otherwise, the differences are booked separately.

3.4 Manual Settlement of Differences in Consolidation Postings (CNSPST)

In general, the application 'consolidation postings' (short term: CNSPST), the known quantities (receivables and liabilities from affiliated companies according to the input data in the IC account balances) are already presented from the elimination perspective. The next procedure differs depending on whether or not a suspense account is specified in the consolidation parameters.

Consolidation of debts without suspense account

If there is a difference above the threshold when offsetting the receivables against the liabilities, the consolidation voucher for exactly this difference does not initially arise. In addition to the red state in the IC Consolidation Overview, this is also indicated by corresponding error messages in the consolidating documents (CNSVCH) and consolidating postings (CONBOOK). The open difference is to be balanced with additional debit / credit postings until the voucher is released.

Advantage: there are fewer postings to manually record, as there is no posting on a suspense account to cancel. Disadvantage: If you want to create a report before completing the consolidation of debts, you will receive error messages due to the incorrect vouchers.

Consolidation of debts with suspense account

If the suspense account is used, the consolidation vouchers are always generated immediately (debit = credit), as an open difference is posted to the suspense account. Only in the IC Consolidation Overview is it possible to see that there is still a difference, which must be compensated manually, because the state will not turn green until the postings on this account have to balance to 0.00. The posting on the suspense account must be canceled in a first step before the amount is to be distributed with one/more postings on other accounts until the voucher is released.

Advantage: the vouchers always run up, when creating a group report these vouchers do not lead to error messages disadvantage: in order to compensate for the difference, an additional posting line is required in each case

All manually entered posting lines are assigned the posting status '5' = manually. This also corresponds to the processing status in the IC Consolidation Summary after the difference has been fully compensated.

3.5 IC Consolidation Overview (KGESES) - Structure

After the consolidation of debts automatically runs, the user can branch into the IC Consolidation Overview (CNSLST) by double-clicking in the column 'CR'. All processed pairs with the selected company are displayed here. The IC balance columns show the amounts taken into account per company and IC company, followed by a Non-cash difference if applicable as a result and, if transaction currency is used, a difference in exchange rate. The overview is initially limited to the company used to switch from the Group monitor to the application. To view all relevant debt-consolidation relationships, remove the company from selection.

In the column "B" = Processing status, the result from the respective consolidation of debts is distinguished with the following license plates:

• "1" = Machine created: IC balances match and have been automatically eliminated
• "2" = Automatically created with threshold value: the resulting Non-cash difference is below the threshold value and was automatically posted to the threshold account
• "3" = Machine created via transaction currency: TC values were stored in the IC balances and a currency conversion effect was created
• "4" = Machine created, change required: The resulting difference is above a threshold value and must be manually settled
• "5" = Manually created/changed by entry: A state 4 changes to state 5 when the difference that arose is balanced
• "T" = Created in child sub-group: The elimination has already taken place in the sub-group

The license plate number 4 leads to a red state in the column 'S', all others to a green one.

The amount of the Non-cash difference always remains even if the difference has already been compensated by machine or manually. In this way, the user always has an overview of the total difference.

If there is a threshold percentage in CNSPAR, the percentage determined by the consolidation of debts is shown per company language. If there are several voting groups, e.g. because of several business units or different transaction currencies, the maximum value is displayed in each case, which is responsible for ensuring that a difference has not been settled in the threshold account.

3.6 IC Consolidation Overview (CNSLST) Branch to IC Balances

The follow-up application 'IC account balances' from the CNSLST branches into the ICACBAL, as well as a double-click into the columns IC balance. There the receivables and payables accounts with the associated IC balances (in country, group, transaction and parallel currency) as defined according to the consolidation processing type are recorded in the so-called "Couple view", in which the receivables / liabilities of the company are compared with those of the IC company, so that a possible difference is clearly visible.

From here, the user can branch back into the CNSLST or directly into the consolidation postings generated by the consolidation of debts (CNSPST).

The posting voucher numbers generated by IDL Konsis are made up of the company language and the abbreviation corresponding to the consolidation processing type (e.g. CD 00 or CD01), whereby the alphanumeric, smaller company number is always the first company.

3.7 IC Consolidation Overview (CNSLST) - Non-cash Difference Make a Posting Function

If the consolidation of debts resulted in a difference which is higher than the threshold value, this difference remains and the processing status in the IC clearing overview is '4' = Machine created, change required. The state is red. To make the state green (processing indicator '5'), the difference must be balanced. This can either be done manually in the consolidation postings, by adding the missing postings on the desired accounts. However, if you still want to post the difference to the expense/income threshold account despite exceeding the threshold value, you can use the "Non-cash difference make a posting" function in the action menu. This creates the same posting that would have been created in the auto consolidation of debts if the difference had been below the threshold value.

3.8 IC Consolidation Overview (CNSLST) - Repeat Consolidation Function

With the "Repeat consolidation" function, the consolidation of debts can be repeated separately for one or more pairs. The function corresponds to the "Repeat consolidation of debts" function from the Group monitor, i.e. existing postings are initially deleted, the IC balances are again used for consolidation of debts. Manually added additional postings are retained in the consolidation parameters in the "ManEntry" field, depending on the setting.

3.9 IC Consolidation Overview (CNSLST) - Filing a Comment for Company Languages

If the posting text in the consolidation postings is not sufficient, the user has the option to add a comment for each IC-Clearing pair. This comment can be used via the 'Edit comment' function via the context menu. An editor opens, in which text can be written without formatting. This text must then be saved. The 'Show comment' function in the context menu allows you to view the comment afterwards. The comment will remain on consolidation of debts. The comment will only be deleted when

1. the IC clearing pair is manually deleted by the user, or
2. after another consolidation of debts of this IC-Clearing pair no longer exists (e.g. with a misspellings in the company financial statement - incorrect IC-company was posted).

A further adjustment / addition to an existing comment is of course possible at any time.

4 Consolidation of Debts for Dividends (SD)

Within the consolidation of debts there is the consolidation function 'PD' in addition to the standard processing 'CD 00' and the individually definable voting groups 'CD 01' to 'CD 99'. This is to be used above all for the consolidation of internal Group dividends (dividends).

For the consolidation function PD, the accounts "investment income" should be allocated to the parent on the one hand and the capital purchase at the subsidiary on the other hand. We recommend a separate account "Dividend" for the capital acceptance, which is defined as an intercompany account and allocated to PD. This makes it possible on the one hand to check that the account has to be 0.00 after consolidation, on the other hand, the profit carried forward remains unchanged compared to the previous year and can therefore be better coordinated.

The PD does not have to be launched separately, but instead it runs automatically with the consolidation of debts. The IC account balances of the IC accounts associated with this consolidation function are initially eliminated as other IC account balances within the consolidation of debts. This is done in a voucher with the processing 'PD' in the document number. In contrast to the other vouchers in the consolidation of debts, however, this voucher does not receive the posting type 'WX', but the posting type 'WU'. The voucher is then presented accordingly, i.e. with the reposting of the results effect into the retained earnings. To differentiate between these, 'PD' vouchers are carry forward into a voucher with 'VD' processing in the document number. The vouchers 'VD' are combined with the current 'PD' voucher when the participating companies are re-carry forward and presented as long as the participating companies belong to the group.

A consolidation parameter (CNSPAR) must also be stored for SD.

Tip: if there is no separate account for dividends, the profit carried forward account can also be defined as an IC account (with partial details) and allocated to the PD.

5 Delete of Debt Consolidation Bookings

For reasons of transparency, it is not possible to delete consolidation vouchers or postings from the consolidation of debts. If you still want to delete all automatically generated vouchers, you can do the following:

5.1 Delete About the Consolidation Parameters (CNSPAR)

Any change in parameters (usually the threshold value) will lead to the request before the final save whether the debt consolidation postings for the selected CNSFNC should be deleted. If the request is confirmed, only the consolidation postings of the selected CNSFNC will be completely deleted and the status indicator in the "CD" column will be reset in the associated group monitor. The consolidation of debts can then be restarted via the group monitor.

5.2 Delete of IC Consolidation Overview (CNSLST)

As an alternative to these global deletion processes, the postings in CNSLST can be reset selectively for individual corporate languages. This option will always be used when the consolidation of debts is actually ready, but when it is necessary to change the IC balances for one or a few companies. If the selection is expanded accordingly, all CD vouchers can also be deleted.

ATTENTION: Both deletion functions naturally result in manual supplement postings or comments stored in the IC clearing overview not being automatically inserted again.

6 Automated Clearing by Transaction Currency (TC)

6.1 General

Transaction currencies deposited in IC balances can be used to automatically post differences arising from the different currency conversion of receivables/payables from the country to the group currency to the accounts posted for exchange cost/income. For clearing to give correct results based on transaction currency values, it is necessary that transaction currencies are provided for all IC balances. In the CNSFNC application, the "IC Clearing transaction currency" option can be used to control whether information for the respective IC account balances has to be provided in transaction currency or not.

If an entry is made in the field "Threshold Difference TC" or "Threshold Percentage TC", the program checks whether a difference in transaction currency values per transaction currency is below the threshold TC. If the value falls below the threshold, the difference in group currency is automatically posted as the exchange rate difference. A threshold value entered for group currency is ignored. The subsequent processing is therefore not different from that for coherent transaction currency values.

Note: It is not possible to set thresholds per transaction currency.

If the TC values do not match and the difference exceeds a specified threshold value, the difference is further processed as a Non-cash difference and either entered automatically according to the specified threshold value or remains as the difference and must be further processed manually.

If several transaction currencies are used at the same time in a company language, the clearing is done per transaction currency and the postings are made in different book-record numbers. The same thing happens when there is both input with and without transaction currency.

6.2 Effect of the Differential Treatment Transaction Currency (TC Diff) Switch

When this option is selected, the IC balances are not disconnected according to the specified transaction currency. Instead, the difference is determined by company (and possibly by business unit) and all postings are made in the same record number. All specified TC values will be converted to the group currency, and the calculated values will be displayed in a separate column "Value transaction currency in GC" in the language view of the IC balances. The total amount thus determined represents the Non-cash difference and is treated in accordance with the information provided in accordance with CNSPAR, while the residual amount for the total difference in group currency is posted as the exchange rate difference.

6.3 Incomplete Disclosure of Transaction Currencies at Group Currency Companies

If one of two companies whose local currency is equal to group currency has maintained a TC value while the other has not, this TC value is no longer taken into account. Under these conditions, both IC balances are treated as if no TC value had been specified.

7 Special Features of the Consolidation of Debts

7.1 Introduction of a New CNSFNC in the Current Group Financial Statement / CONDUCT

If the user decides to set up an additional consolidation processing method and add this CNSFNC to the corresponding group accounts (e.g. replace "CD 00" with "CD 01" in COADFN), the following must be taken into account. A new triggering of the consolidation of debts leads to posting documents only for this new CNSFNC. However, the "old" postings remain unchanged, so that the same IC amounts are taken into account twice. So in this constellation, the whole consolidation of debts must always be repeated.

The same problem can arise when data is exchanged within the group using the group/sub-group Data Exchange (CONDAT) application. If a new CNSFNC has been created at a subsidiary of the Group but not at the parent company, this initially results in the data transfer via CONDAT leading to an error message. The investment of CNSFNC also at the parent company then results in that GRPSUBEX runs without errors. However, if the parent company forgets to change the LPA in the relevant accounts, this will result in the consolidation of debts at the parent company that the amounts in question will be cleared again, this time in CD vouchers.

7.2 Quota-consolidation

In consolidation of debts, in the fully consolidated company, the prorated share (according to quota of the prorated IC company) of the IC balances is eliminated directly. The resulting difference in postings between the two companies is therefore reconcilable and can be further processed in accordance with the rules for threshold and TC clearing.

The remaining share of the IC balances of the fully consolidated company (100% quota) will then be transferred in a further posting record from the IC account to the Quota reference account indicated in the account master data, if available. Thus, from the Group report's perspective, 100% of the IC balances of the fully consolidated company and the prorated share of the IC balances of the prorated company are eliminated so that the IC accounts with the Group balance are reported at 0.00.

If the investment processes are the same as a quota company in the main group and a sub-group below it, the consolidation of debts only takes place in the sub-group. In the main group, the companies are represented with "T= sub-group" in the CNSLST. If the percentages deviate, the consolidation of debts is performed again at the upper level, with the postings from the sub-group initially canceled and in a second step the postings with the new percentages created.

7.3 Re-opening the Consolidation of Debts (Without Delete)

If there is already a CNSLST set for a social language from a CR run, a new call to the consolidation of debts from the GRPMNR does not result in the creation of a new CNSLST set and therefore a new consolidation posting. This also applies if the IC balances of one or both companies have changed. An existing CNSLST record "prevents" the rebuild. If new pairs are found that were not previously available, the corresponding CNSLST records are generated for them.

7.4 Special Features of End-of-Period Carry-Forward for SC Vouchers

Vouchers assigned to the reference CNSFNC CR receive the posting type WX and are also carried forward accordingly. This means that any differences that were booked out affecting net result in the previous period will be reversed on the same P/L statement accounts in the carry-forward voucher.

In principle, postings are not made to accounts assigned to the SC. This also applies to the effectiveness of results from RC accounts assigned to the SC. Similarly, postings are not carried forward on the CNSPAR account "Investment income".

7.5 Amortization Current Year on Receivables/Loans

Due to the special feature with the carry forward described in the previous chapter, the following problem arises with the elimination of amortization current year on receivables in the context of the consolidation of debts: if the effect on earnings is correctly eliminated in period 01, it will be canceled again in accordance with the carry-forward logic in period 02. This means that depreciation would also have to be eliminated in the subsequent period as part of the consolidation of debts, which is annoying and prone to error.

This situation can be made easier if the write-down of the receivable is canceled in company financial statement via a posting document on a lower fact. This accounting voucher is also carried out correctly in the subsequent periods (accounting type WU) and the IC balances that are then coherent can be automatically eliminated by the consolidation of debts.

7.6 IC Provisions

When eliminating intercompany provisions, it should be borne in mind that the formation of carryforwards for debt consolidation postings may lead to undesired results. If a provision is consolidated affecting net result within the consolidation of debts: Provision on assignment provision, then the carry forward leads to the posting in the following period: Allocation of provision to profit carried forward. But in this case the correct answer would be: Provision to profit carried forward. Recommendation: provision to be refunded manually during consolidation of debts: Assignment of provision to provision and creation of a manual consolidation voucher (MB). The MB voucher must then be recorded with "WU", so that the presentation is formed for the desired result: Provision to profit carried forward. In such a case, it makes sense to refer to the MB voucher in the SC posting and the SC posting in the MB voucher.

7.7 Residual Value Analysis

If amounts remain in a sub-group or the entire group with the receivables, liabilities or loans from affiliated companies according to the consolidation of debts "leftover", users and auditors want to know how this remainder is composed. IDL Konsis meets this requirement with the so-called residual value analysis. This residual value analysis, which is called up from the group report, is made possible by the fact that every Intercompany balance processed in the context of the consolidation of debts receives an entry in the fields "BelKTk" and "voucher no." IC balances without such an entry in ICACBAL were therefore not processed in any consolidation posting and are therefore part of the rest in the respective position. Note: If IC balances are increased to the consolidation data type by NEWFCT, the IC balances are completely deleted and reconstructed. Entries in the two above mentioned Fields are no longer there, and the residual value analysis yields incorrect results.

8 Consolidation of Debts Error or Warning Messages

8.1 "KON0985E Consolidation function CD 01 is not permitted here"

This message appears if the field "KV" (consolidation function) of an account (COADFN) is to be filled in with CD 01, but the consolidation processing method (CNSFNC) "CD 01" is not defined.

8.2 "KON0194E No consolidation parameters CD CNSPAR available"

This message is displayed for each field marked "V" or "Q" in GRPMNR in the consolidation method (K) for which the consolidation of debts has been triggered if no consolidation of debts parameter has been created in the CNSPAR application.

8.3 "KON1325H Attention! IC balances on statistical accounts"

This message appears when statistical accounts have the same CDS as the "real" accounts, resulting in a mix in the consolidation posting. Processing can be canceled or resumed.

8.4 "KON0963H Voucher(s) contain partial postings on statistical accounts"

This message appears when note 1325H was confirmed with "ok" during the consolidation of debts and the voucher was generated. Since statistical accounts do not go into the formation of totals in either the account balances or consolidation postings, the statistical account in a posting document does not result in any additional difference or difference.

8.5 "WHY IS NOT REQUIRED" (CNSLST)

A prerequisite for error-free consolidation of debts is that the IC account balances must be in group currency. If the currency conversion has not yet been carried out or erroneously for a foreign currency company, the debt consolidation would give inconsistent values. For these companies, no vouchers and postings are generated and in the CNSLST overview of IC consolidation they are shown with a red state and the additional "WHY IS missing" message. After currency conversion in the company financial statement, the debt consolidation of these companies must be carried out again.

9 IC Balance Reconciliation in Company Financial Statement

The vote for the consolidation of debts can already be carried out in the company financial statements + monitor (CFSMNR). This application is particularly useful if IC balances are to be tuned at an early stage, possibly before the account balances are read in, so that corrections can be made before the actual consolidation of debts. In particular, for Citrix installations, individual users can clear themselves with the counterparties without interfering with the actual consolidation.

The respective consolidation parameters are used via the field fact group structure (to be set in the application FCT). Thresholds entered there are taken into account, but the other parameters are not taken into account because no consolidation postings are generated at the shareholder data type level (typically I1 to I3). Consequently, the IC balances are not stamped with the corresponding voucher numbers and group/sub-group.

The IC balance reconciliation only generates an IC balance reconciliation overview (ICREC). If the report data has not yet been converted into the group currency, an implicit currency conversion is carried out as part of this "pre-clearing" (prices are found via the fact group structure), which converts the IC balances using the account calculation instructions of the fact group structure. Closing individual postings affecting IC balances are taken into account in the reconciliation. Accordingly, you can branch from the IC balance reconciliation overview not only into the IC balances, but also into the "ICSALBUCH" application, which is especially convenient for balance reconciliation. Individual end-of-contract postings are also displayed here in addition to the IC balances.

The balance reconciliation can also be performed on the fact on which the consolidation is performed. However, if the consolidation of debts has already been performed in the group companies + monitor, the balance reconciliation can no longer be started.

10 Clearing

Especially when there is a large number of IC balances, the level of detail helps to keep track and to show subsidiaries where there are differences.

The IC balance reconciliation in the company financial statement shall be marked automatically as follows:

• Both companies have reported IC balances with the same reference voucher number and the values in GC/TCS are netted at 0.00 or are below the threshold
• Both companies have reported IC balances with the same reference voucher date and the values in GC/TCS are netted at 0.00 or below the threshold
• IC balances of the same transaction currency balance to 0.00 (even without reference voucher number or date)

All of the remaining IC balances without transaction currency or reference information will be automatically calculated when they balance to 0.00. The machine digging assigns the digit out indicator '1'. All IC balances that are then left are the cause of a possible difference and must be checked. They can be quickly filtered out, processed or sent to the subsidiaries for checking.

It is also possible to add the figure manually: The ICACBAL overview can be accessed for this purpose in the language view with the AZ selection option. The context menu "Digit Out" assigns the next free digit indicator, which is not '1'. Statements on the decimation can be made using the comment function, which may make it easier for the consolidator to make a posting a difference.

If the IC balances are processed in this way, they should be blocked against further changes. The figures are retained in the transition to a new fact and are therefore also available at the consolidation level. If activated in the master data of the facts (FCT), the IC balances thus classified can also be carried forward to the next period. This can reduce the monthly coordination effort, especially with the IC balances of the RC.