What is the Best Practice to Avoid Problems in Multi-Entity Accounting?
Multi-entity accounting is the process of managing accounting records and reporting across multiple legal entities within a group. It often includes producing both entity-level accounts and group-level reporting (including consolidated financial statements). Complexity increases with intercompany activity, multiple currencies, different tax regimes, and varied reporting requirements.
- Multi-entity accounting requires consistent structures, policies, and close routines across entities.
- Intercompany transactions and consolidations are the most common complexity drivers.
- Standardised dimensions, mappings, and governance significantly reduce close delays.
What multi-entity accounting involves
Key activities include:
- Recording transactions in each entity’s books
- Maintaining consistent chart of accounts and/or mappings across entities
- Handling intercompany trading, recharges, loans, and eliminations
- Managing currency translation and revaluation where needed
- Producing entity statutory accounts and group management reporting
- Performing consolidation adjustments (e.g., goodwill, eliminations, group journals)
Why it’s challenging
Multi-entity close can slow down due to:
- mismatched intercompany balances across entities
- inconsistent cut-off rules and late postings
- differences in accounting policies or coding practices
- currency effects and FX rate inconsistencies
- lack of standard templates for journals and reconciliations
Even when each entity closes “fine” individually, the group close can fail if structures and processes aren’t aligned.
Best practices
- Use consistent reporting structures (CoA design + shared dimensions)
- Agree group accounting policies and documentation standards
- Reconcile intercompany frequently and resolve disputes early
- Standardise month-end schedules and close checklists
- Establish ownership for entity close and group consolidation steps
- Maintain clear audit trails for consolidation adjustments
Common pitfalls
A common mistake is over-customising each entity’s reporting setup, creating heavy mapping and reconciliation effort later. Another is relying on spreadsheets for intercompany and consolidation without controlled governance.
Do all entities need the same chart of accounts?
Not always, but consistent mapping is essential for group reporting.
What typically slows the group close most?
Intercompany mismatches and inconsistent cut-off timing.
Find out more about multi-entity accounting with AccountsIQ.
