Year-End-for-Groups---Consolidation-in-Sage-200c

Year End for Groups – Consolidation in Sage 200cloud

In > All Sage Blog Posts, Sage 200, Sage 200cloud by Andrew Jones

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The year end roles around again. It entails more than enough work when dealing with a single company entity, right? Imagine having to repeat the year end process multiple times for different subsidiaries, then correctly consolidate all that information into a parent entity. Suddenly, the hill has become a steep mountain during a heavy snowstorm. Okay, maybe I’ve exaggerated the doom and gloom a bit, but it is a lot of extra work!

Medium sized enterprises, as a minimum, must prepare group accounts. Thankfully, the whole process is made much simpler by Sage 200c. I’ll be accompanying you from the initial setup, right through to the year-end – one step at a time. Before we continue, there are some important preconditions that you need to have in place:

  • The base currencies of the parent and the subsidiaries must be the same.
  • Accounting periods of the subsidiaries should be the same as the parent to avoid discrepancies.
  • Be sure to implement the same or mostly similar chart of accounts across both the parent and subsidiaries.
  • Create cost centres within the parent to represent the subsidiaries.
  • Transactions shouldn’t be posted to the parent company directly. It’s best practice to treat the parent company as a non-trading entity.
  • You must set the Suspense account as a default nominal within the parent.

Setting up for Consolidation

If you’ve followed the conditions as set out above, then setting up the companies for consolidation becomes much easier. It’s important that the following setup is done for the consolidation to work. Let’s break it down into 3 steps:

Define a parent

Allocate the subsidiary company to the parent. Follow:

Through Sage System Administration, select Companies from the menu and choose the subsidiary. Select the parent from the Parent Company drop-down list, then Update > Apply > OK.

Turn on consolidation

You will need to permit consolidation in the subsidiary. If there are multiple subsidiaries, then the following process will need to be repeated for each. Select:

Nominal Ledger > Utilities > Ledger Set Up > Ledger Settings 

Select the Consolidations tab and tick Employ Consolidation.

Year End for Groups - Consolidation in Sage 200cloud - Sage UK

Link the nominal accounts

Lastly, the nominal accounts of the subsidiaries and the parent will need to be linked. The easiest way to achieve this (providing that the chart of accounts is the same across the parent and subsidiary), is to automatically link the accounts. Select:

Nominal Ledger > Utilities > Ledger Set Up > Ledger Settings 

Select the Consolidations tab and select Apply Defaults. Tick Use default cost centre and select the cost centre you created in the parent to represent the subsidiary.

Start Consolidating

Now that the setup is complete, it’s time to run a consolidation periodically as you wish. Be sure to repeat this process for each individual subsidiary:

Open Period End Routines > Consolidation.

Year End for Groups - Consolidation in Sage 200cloud - Sage UK

The next step is to define a period to consolidate up to, which you may wish to do as part of a month end routine or year end. You then need to select a posting date, but it will default to the last day of the selected period.

The total value of unconsolidated nominal transactions, up to the selected period, is posted to the parent. This will also auto-populate the narrative with the subsidiary name to make it easier to identify. You can change the references and narratives as required.

Year End Routine

It’s now time to tackle the year end for groups accounts. There’s a bit more to consider compared to the normal year end routine.

The normal result of the year end is the transfer of the P&L balances to a retained earnings account, with the balance sheet amounts being carried over into the new financial year. The complication occurs because the balances from the most recent consolidation remain to prevent duplicate transfers. Therefore, the P&L balances will need to be cleared at the beginning of the new financial year. The balance sheet amounts will need to remain. To the run the year end:

1 – Subsidiary – Finalise all transactions up until the year end and run the consolidation.

2 – Subsidiary – Run the year end. Repeat this for each subsidiary.

3 – Parent – Repeat the year end process for the parent after completing the subsidiaries.

4 – Subsidiary – Reset the consolidated amounts for each subsidiary back to zero:

  • Nominal Ledger > Utilities > File Maintenance > Clear Consolidated Amounts

5 – Parent – Clear the year to date values from the parent:

  • Nominal Ledger > Utilities > File Maintenance > Zero Balances

 Year End for Groups - Consolidation in Sage 200cloud - Sage UK

DO NOT apply this step to any subsidiaries as it clears the transaction data from the company.

6 – Subsidiary – Run the consolidation process again for each subsidiary.

The preceding steps ensure that the balance sheet amounts are posted back into the parent entity. No P&L amounts are carried forward and all companies are ready for new financial year postings.

Conclusion

Consolidation and the year-end can seem like a lot all together, but configuring Sage 200c correctly is key to processing your group accounts efficiently. Get in touch with our team who can help you get the most out of Sage 200c for consolidation and year-end.

Year End for Groups - Consolidation in Sage 200cloud - Sage UK

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Andrew Jones