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Intercompany Eliminations

Last updated: 27 May 2025

Intercompany Reconciliation & Eliminations

When companies are consolidated to show the results of an entire operation, perhaps on a global basis, it is not sufficient just to aggregate the financial results for all entities. They must first be translated into a common reporting currency (sometimes more than one). Even then, they cannot be simply aggregated. If entities within the organization trade with each other, as is very common, these inter-company transactions must be eliminated or they will be counted twice. By posting eliminating entries to special elimination entities in the organization structure, this double counting can be removed.

Elimination Structure Example

Consider the following consolidation structure:

Consolidation structure diagram

In order to meaningfully consolidate, we must add elimination companies at each sub-consolidation level. In this case, we would add six elimination companies:

  • Worldwide Eliminations
  • Asia Pacific Eliminations
  • North America Eliminations
  • Europe Eliminations
  • South America Eliminations
  • USA Eliminations

These would be added to the primary organizational or company dimension in the Planning Analytics model.

The example below illustrates this structure, with elimination companies highlighted:

Elimination companies structure diagram

When ControlWORQ finds balances between entities, it will attempt to eliminate them within the lowest common consolidated parent element. Notice how EUS Eliminations US rolls into the consolidated element United States, ENE Eliminations Northeast rolls into Northeast, etc. Intercompany balances between Boston and New York will be eliminated in ENE Eliminations Northeast, whereas balances between Boston and South will be eliminated within EUS Eliminations US.

ℹ️ Note: There are no naming requirements for elimination companies (their names do not have to contain the word "elimination"). They are identified as elimination companies as part of ControlWORQ configuration.

After reviewing intercompany balances, ControlWORQ can automatically generate eliminating journal entries to the appropriate elimination company. This is a process that would otherwise require significant effort to develop within Planning Analytics Rules or Turbo Integrator, but in ControlWORQ can be done in a matter of minutes, once configured.