In today's complex business environment, auditors and accountants working in Financial Due Diligence (FDD) face the challenge of managing and analyzing financial data from multiple entities under a parent company. This task, known as multi-entity reporting, is crucial but often cumbersome, especially when dealing with different accounting systems like NetSuite, Sage, and QuickBooks. Fortunately, we offer software that simplifies this process, making it easier to pull consolidated financials and analyze subsidiary data.
Multi-entity reporting, or multi-entity accounting, is the process of preparing financial statements and reports for organizations that consist of multiple business units, subsidiaries, or divisions—often operating in different locations or under separate legal structures. It’s common for each entity to maintain its own set of financial records, and multi-entity reporting involves consolidating these records into a single comprehensive set of financial statements. While doing this consolidation, it’s important to maintain compliance with accounting standards such as ASC 842, IFRS 16, or GASB 87.
An example of multi-entity reporting is the company Marriott. Marriott has many subsidiary brands and companies, such as Bonvoy, Courtyard, or Marquis. These entities, since they fall under the parent company Marriott, report their financial data to Marriott in order to create a consolidated financial statement.
Multi-entity accounting is particularly important for organizations that have different subsidiary companies or divisions, which all might manage their own contracts, such as lease agreements. Multi-entity accounting enables each entity to account for leases independently while also allowing the parent company to consolidate lease data for financial reporting purposes.
Accounting for multiple entities involves the aggregation of financial data from several subsidiaries into a single, consolidated report for the parent company. This process allows for a comprehensive overview of the company's financial health, helping stakeholders make informed decisions. However, this task is far from straightforward.
Auditors and accountants must navigate different accounting standards, currencies, and reporting timelines, which can be time-consuming and prone to errors. Additionally, the lack of standardized reporting across various entities complicates the consolidation process. For those working in FDD, the accuracy and efficiency of multi-entity accounting are critical, as any discrepancies can lead to significant risks and potential financial losses.
Audit tools are designed to address these challenges head-on, offering a robust solution that streamlines multi-entity accounting for auditors and accountants. Let's explore how audit tools optimize this complex task, making it easier to perform across different accounting systems.
For companies using NetSuite and Sage Intacct, audit tools shine in their ability to pull consolidated financials for the parent company while also providing detailed reports for underlying subsidiaries. This feature is particularly valuable in FDD, where accountants need to assess the financial health of each entity as well as the health of the entire organization.
Audit tools assist with this by automatically integrating with NetSuite and Sage Intacct, pulling data from each entity and consolidating it into a single, easy-to-read report. This eliminates the need for manual data entry and reduces the risk of errors. Moreover, audit tools deliver data in Excel, enabling users to drill down into subsidiary data, providing a clear picture of each entity's financial performance. This level of detail is essential for auditors and accountants who need to ensure that all financial data is accurate and up-to-date.
QuickBooks is a popular accounting software among small and medium-sized businesses, but it has limitations when it comes to multi-entity accounting. One of the main challenges is the lack of a built-in feature for consolidating financials across multiple entities. This can make it difficult for auditors and accountants to obtain a comprehensive view of a parent company's financials.
Audit tools address this issue by offering consistent mapping across all entities within QuickBooks. This means that users can create standardized charts of accounts, making it easier to consolidate financial data from different entities. With audit tools, what would otherwise be a manual and error-prone process becomes seamless and efficient. The software ensures that all data is accurately aligned, enabling auditors to produce reliable consolidated reports without the hassle.
Another way to optimize accounting for multiple entities is by utilizing advanced reporting, a feature of certain audit tools, which offers capabilities beyond what QuickBooks' native reporting can provide. Class reporting allows users to categorize transactions, income, and expenses by department, location, project, or any other classification that is meaningful to the business. This is especially useful for multi-entity organizations that need to analyze financial data across different segments.
With audit tools, users can generate reports that provide deep insights into each segment of the business, helping auditors and accountants identify trends, spot anomalies, and make data-driven decisions. This level of reporting is crucial in FDD, where understanding the financial performance of each segment can impact the overall valuation and risk assessment of the business.
Audit tools offer several key benefits for auditors and accountants in FDD that help them streamline and optimize the multi-entity accounting process:
Multi-entity reporting is a critical task for auditors and accountants working in FDD—but it doesn't have to be a daunting one. With audit tools, the process of accounting for multiple entities becomes streamlined, efficient, and accurate.
Whether you're working with NetSuite, Sage Intacct, or QuickBooks, audit tools offer the software you need to consolidate financials, analyze subsidiary data, and produce reliable reports. By using audit tools, you're not just simplifying your reporting process—you're enhancing the quality of your financial analysis, which is essential for making informed business decisions.
Embrace the power of audit tools and take your multi-entity reporting to the next level. Contact us today for a demo and free pilot.
What is Consolidated Financial Reporting?
Consolidated financial reporting is the process of combining the financial statements of a parent company with those of its subsidiaries into a single set of financial statements in order to provide a comprehensive view of the financial position, performance, and cash flows of the entire corporate group as if it were a single economic entity.
