I propose a change to the calculation made when running consolidation from a subsidiary company to another (called a &head office& for clarity in this proposal. The new method is as follows: -
A) Take the current financial y-t-d balance on the subsidiary account to be consolidated;
B) Convert this amount to the base currency of the head office company where the consolidated amount is to be posted, using the currency exchange rate applicable on the date of consolidation from the rate tables in the head office company dataset;
C) Subtract from this amount the amount consolidated the last time so as to obtain the 'movement';
D) Post the movement to the head office dataset;
E) Update the subsidiary company balance consolidated (but calculated as the base currency of the company where the consolidation was posted). I believe that this will work properly for P&L and Balance Sheet accounts, and avoid the problem where, in consolidated head office accounts, where multiple currencies and volatile exchange rate fluctuations occur, the balances on balance sheet accounts do not add up to the sum of the subsidiaries - because the existing formula produces an 'average' exchange rate result. On a existing customers consolidation for an £85m turnover, the consolidated balance sheet has been as much as £20,000 out - even though they are only consolidating two companies data.
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