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MARPOSS Group

Inter-company Reconciliation Procedure (I.R.P.)
for 2010 financial closing

Index
1. Introduction page 2
2. Accounting principles page 2
3. Procedure and due dates (FAQ) page 2
4. Consolidation area and reference people page 4
5. Example of inter-company report with practical tips page 4
6. Particular cases page 8
7. Conclusion page 9

For these purposes. to allow the holding company to prepare consolidated financial statements for the Group. 2. Double entry bookkeeping has to be consistent with these principles (for further details. please see the accounting manual). you are required to carry out the inter-company reconciliation procedure as described in the following paragraphs. Accounting principles As far as inter-company transactions are concerned. these are the applicable accounting principles: a) an inter-company transaction has to be booked in the same financial year by each company involved in that transaction. Introduction Inter-company transactions must be booked consistently by all of the companies within the Group for the following main reasons: . . b) Bookkeeping is based on the accrual principle as follows: . . for goods: revenues and costs are accrued/recognized when the property right is actually transferred from the seller to the buyer. 2 . 2010 about “2011 Group Administrative Procedures – Calendar”). Remember that. 2011 1. for services: revenues and costs are accrued/recognized as soon as the service has been completed. the seller). to prepare the local statutory financial statements. 3. An example of inter-company report is given in paragraph 5. to prepare the reporting packages (Excel files) for Italian consolidation. Who must send the inter-company report? An inter-company transaction has to be reported by the company which has booked the revenue and the related account receivable (i.e. . Procedure and due dates (FAQ) Each company within the Group is required to follow the procedure and respect the due dates stated below (see also the mail dated Dec 17.MARPOSS Group Inter-company Reconciliation Procedure for 2010 financial closing January. you have to reconcile both Profit and Loss and Balance Sheet accounts (as explained in paragraphs 3 and 5). for 2010 closing.

MARPOSS Group Inter-company Reconciliation Procedure for 2010 financial closing January. What do I have to do if a transaction is not reconciled? Based on the rules set out in paragraph 2 (see also the accounting manual). 2011: the report must have all the inter-company balances duly reconciled. Andrea Cangini). Within Feb 18. Alessandra Gavioli and Mr. you will use the amounts as converted into your local currency. Of course. 2011: each company having booked inter-company revenues during 2010 or having outstanding inter-company accounts receivable at the end of 2010 is required to send the report to the company having incurred the corresponding costs or having outstanding accounts payable. The report is not reconciled until all the differences have been settled and both companies have booked the same amounts (based on the original currency of each transaction). Alessandra Gavioli and Mr. 2011 When does the report have to be sent? Within Feb 7. If the disagreement cannot be overcome. What does it mean to match a report? The report is reconciled if and when both companies have booked in 2010 the same amount of revenues (and accounts receivable) versus the same amount of costs (and accounts payable) based on the original currency of each transaction. the case is submitted to the holding company (mail to Ms. Andrea Cangini). the case is submitted to the holding company (mail to Ms. Alessandra Gavioli and Mr. 3 . Andrea Cangini). for example: Marposs GmbH (Germany) vs Marposs Corporation (USA). For particular cases. 2011: the report has to be agreed upon by the receiver. see paragraph 6. Within Feb 25. Alessandra Gavioli and Mr. What do I have to do if a late transaction is booked once the report has already been sent out? You have to update your report and send it again in order to get reconciled with your counterpart (copy to Ms. the two companies involved should try to fix the problem. Andrea Cangini). The subject of each mail has to clearly state the name of the sender and the name of the receiver. you have to find a solution with your counterpart. In case of any differences. Copy of each report has to be sent to the holding company (mail to Ms. Make sure that your inter-company balances (as converted into your local currency) comply with this basic rule: Reconciled inter-company balances = inter-company balances set out in the statutory financial statements = inter-company balances set out in the reporting package. What do I have to do with the reconciled reports? The balances set out in the reconciled reports are the only ones that can be used to prepare the local statutory financial statements and the reporting package (Excel file) for Italian consolidation. If the disagreement cannot be overcome.

4 . China MGWUXI Ms. Lin Li. Mauro Tarozzi Marposs Italia S. Roberto Rivera Marposs B.A. 2011 4. South Korea MTE Mr. Brazil MGEXIM Ms. Jessica Zhu Marposs (Nanjing) Automation Co. copy to Mr.it).p. China MEGS Ms. Jude Abreo 5. Jessica Zhu Marposs s.. Ltd. Alfred Yuen Marposs India Pvt. Ltd. Shigeo Kodaira Marposs. Jin Kook Lee Marposs T&E Co. Magda Melo MG Exim Técnica Ltda.A. Alessandra Gavioli MG S. Please find below an example of inter-company report. Control Gaging. Hervé Labourée Mr. Netherlands NL Mr. Marposs Australia Pty. This group of companies is called consolidation area. copy to Ms. Cherrie Zhang. have to be sent. copy to Mr. copy to Ms.com). Cyrille Niepceron.de).de) MG Asia Limited Hong Kong MGASIA Mr. Italy MG Ms.p. China MST Ms. India IN Mr.V. COMPANY COUNTRY File name People in charge of I. Jude Abreo Millennium Automation USA MILL Mr. S.r. Example of inter-company report with practical tips Along with these instructions. Helium Technology S. Matthias Block (block@artis. copy to Ms.A. USA ARTISUS Mr. Italy HETECH copy to Mr. Inc. Hervé Labourée and Ms. Sabrina Lombardi (sabrina.A. Inc. Christian ARTIS GmbH Germany ARTISDE Emde (emde@artis. Find also the names of the people to whom the reports. S. Amelia Crespi Marposs Canada Corporation Canada CA Mr.R.. Ltd. Cyrille Niepceron. Australia AU Mr. Amelia Crespi Marposs K. China MNA Ms. Jude Abreo ARTIS Systems. Matthias Frey SAS Marposs France FR Mr. follow-ups and other communication relating to I. copy to Mr. Shigeo Kodaira Marposs Austria GmbH Austria AT Mr. Jessica Zhu Marposs (Shanghai) Trading Co.V.p.r. Ltd. SAS TRACE France TRACE Amelia Crespi SAS Kern France KERN Ms.A. Thomas Bieler Marposs Company Limited Taiwan TW Ms.. de C. Ltd. Italy ITA Mr. Japan JP Mr.P. Brazil BR Ms. Matthias Frey Marposs Company Limited South Korea KR Mr. Nicolò Bonaccorsi Marposs S. Emilie Botineau Marposs GmbH Germany DE Mr. Jude Abreo Marposs Corporation USA US Mr.Jan 2011”) which must be used to prepare inter-company reports.. Inger Leimalm Marposs AG Switzerland CH Mr. Stefano Minguzzi. Jessica Zhu MG (Wuxi) Co. Jin Kook Lee Marposs. you have received an Excel file (“IRP . CZ Mr. Amy Hsu Marposs Limited UK UK Mr.K. USA CGI copy to Mr. Eugenio Reales Marposs AB Sweden SE Ms. Ltd. Matthias Frey Mr.l. Robert Beddoe Ms. Mary Hammond (mhammond@controlgaging.MARPOSS Group Inter-company Reconciliation Procedure for 2010 financial closing January. Ltd.Aparelhos Eletronicos de Medicao Ltda. Czech Rep. Spain ES Mr.. Matthias Frey Marposs .lombardi68@fastwebnet. Mexico MX Mr.o. Italy SPA Mr.P. Jude Abreo Marposs Electronic Gauges (Shanghai) Co. Vrindaban Khandelwal Ms. Consolidation area and reference people Find below the list of companies within the Group that are required to carry out the inter-company reconciliation procedure.R.

73 Oct 31. If you need more rows.451. # local currency original currency currency local currency (EUR) currency (to be matched) (EUR) (to be matched) Invoice was booked in 2009 and is still 1 19-Dec-09 523 USD 200.500.000. Total USD 0.500.73 6 30-Apr-10 5/I USD 500. as agreed upon 11 31-Dec-10 EUR 500. 2 12-Feb-10 45 USD 1. which has been booked to the P&L in 2010.00 1. Invoice will be 8 31-Dec-10 USD 250.00 1. “Doc.00 500.101. The contract was signed on 5 31-Dec-10 USD 30.000. This amount has to be reconciled with your counterpart.00 187. Choose the name of your company from the drop-down menu which becomes available by clicking on the cell next to “FROM (revenues)”. #”: to state the number of an invoice or other document (if any).00 1.00 22. 2010. 9 31-Dec-10 EUR 1.500.500.00 Accrued WCF for Q4 2010.00 -224.500.81 3 19-Jun-10 130 USD 2.500. “Date”: to state the date of an invoice or other document (if any).18 250.00 via e-mail on Feb 5.00 500. Choose the name of the company you want to send the report to from the drop-down menu which becomes available by clicking on the cell next to “TO (costs)”.00 500.52 Credit note.000.68 outstanding as of Dec 31. . .000. Total USD 1. 2009.614.10 Payment in advance was made on Oct 9. .451. There are 200 rows available in the file.00 375.500.42 900.00 1.00 1.000. . Interest at 5% is invoiced on a six-monthly basis (on Apr and Oct).00 187.00 0.00 1. .46 -300. .56 Accrued interest for 2 months. This amount is needed for consolidation purposes and has to be stated in the reporting package (and statutory financial statements). Total USD 2. . “Amount in local currency”: this is the same amount stated in the previous column converted into your local currency.500. 5 . please contact us. 2011. State the date in the cell next to “Date”.00 3.39 4 18-Sep-10 12C USD -300.00 538.55 Short-term loan.10 250. Total EUR 0.00 10 4-Sep-10 443 EUR 3. “Amount in the original currency (to be matched)”: to state the amount of an invoice (or accrual). 2011.000. enable macros.00 149.00 22.121.700.000.00 673. The “Local Currency” is automatically selected based on the name of your company.00 3. the currency of the invoice).000.500.07 1.00 1.000.00 2. Total EUR 3.00 748.00 1.00 2010. “Original currency”: to state the currency in which the transaction was originally carried out (for example. .00 1.00 -229. The columns are to be used as follows: .10 issued on Apr 30. MARPOSS Group Inter-company Reconciliation Procedure for 2010 financial closing January.52 7 30-Oct-10 6/I USD 750.00 To use the Excel file you have to: .00 0. in its original currency.00 30.00 187.00 736. 2011 2010 Inter-company Reconciliation Report FROM (revenues) : COMPANY A (ITALY) Local Currency : EUR TO (costs ) : COMPANY B (USA) Date : 7-Feb-11 * * * ENABLE MACROS * * * REVENUES ( 2010 Profit & Loss ) RECEIVABLES ( 31/12/10 ) Outstanding Amount in the Outstanding Amount in balance in the Comments Original original balance in Date Doc. .

At the end of 2010 there is a financial account receivable which is outstanding for 30.3362) is equal to 149. 130 was issued on Jun 19.R. “Outstanding balance in local currency”: this is the same amount stated in the previous column converted into your local currency and booked to your Balance Sheet at the end of 2010. The value in local currency (with the ER as of Dec 31. At the end of 2010. Transaction no. The invoice was partially collected during 2010 and 1. 3 Invoice no.3362) is equal to 224. For this reason. therefore. 2010 at 1. 2010 at 1. from Company A to Company B. 2010 and expressed in USD. Interest accrues at 5% and is invoiced on a six-monthly basis at the end of Apr and Oct of each year. 6 Invoice no.73 EUR. The credit note has not yet been paid or offset during 2010 and 300 USD is still outstanding (account payable or negative account receivable) at the end of 2010. The value in local currency (with the Exchange Rate as of Dec 31. It has been booked to 2010 P&L for 500 USD (the actual amount of this invoice was 750 USD but 250 USD was already accrued/booked to 2009 6 . 2010 at 1.000 USD. The value in local currency (with the ER as of Feb 12. 2010 and expressed in USD. 2010 at 1. 12C was issued on Sep 18. 5 A 30. The example above reads as follows. 2010 at 1.07 EUR. 200 USD is still outstanding as account receivable. 2 Invoice no.39 EUR. nothing has been stated in the column “Amount in the original currency (to be matched)”. 5/I was issued on Apr 30. The value in local currency (with the ER as of Dec 31. Transaction no. This amount has to be reconciled with your counterpart.P. 2010 and expressed in USD. The invoice was collected during 2010 and.2391) is equal to 1. 2010 at 1.3572) is equal to 736.000 USD.614.3362) is equal to 748. 2011 . Transaction no. Transaction no. It was booked to 2009 P&L. . This amount is needed for consolidation purposes and has to be stated in the reporting package (and statutory financial statements). 2010 to charge six months of interest (from Nov 2009 through Apr 2010). 2009. “comments”: to give explanations when deemed necessary.3362) is equal to 22. Company A (Italy) has inter-company transactions to be reconciled with Company B (USA). no account receivable is outstanding at the end of 2010. Subject of the mail: I.000 USD short-term loan was granted by Company A (lender) to Company B (borrower) on Oct 31. 2010 at 1.000 USD. The value in local currency (with the ER as of Dec 31.3074) is equal to 229.52 EUR.46 EUR. It has been booked to 2010 P&L for 2. Transaction no.MARPOSS Group Inter-company Reconciliation Procedure for 2010 financial closing January. 4 Credit note no.81 EUR.68 EUR. The value in local currency (with the ER as of Sep 18. “Outstanding balance in the original currency (to be matched)”: to state the outstanding balance of accounts receivable at the end of 2010 in the original currency of the transaction. The value in local currency (with the ER as of Jun 19. It has been booked to 2010 P&L for 300 USD (as a cost or negative revenue). 45 was issued on Feb 12. Transaction no. It has been booked to 2010 P&L for 1. 2009 and expressed in USD. The invoice is expressed in USD.000 USD is still outstanding (account receivable) at the end of 2010. . 523 was issued on Dec 19. 1 Invoice no.451.

therefore. The invoice is expressed in USD. The value in local currency (with the ER as of Oct 30.000 EUR. Tips Find below some practical tips taken from the example: .3926) is equal to 538. Transaction no.10 EUR).10 EUR. The value in local currency (with the ER as of Dec 31. no account receivable is outstanding at the end of 2010. At the end of 2010 this account receivable is still outstanding in the same amount of 1. 2011. receivables of both trade and financial nature must be included in the report. 2010 and expressed in EUR.500 EUR. 443 was issued on Sep 4. 2010 a payment in advance was made to Company B in the amount of 1. 10 Invoice no.56 EUR. 9 On Oct 9.MARPOSS Group Inter-company Reconciliation Procedure for 2010 financial closing January. On the Balance Sheet the same amount is booked (outstanding) as accrual. The subject of each mail has to clearly state the name of the sender and the name of the receiver. The invoice was collected during 2010 and. 2011. no account receivable is outstanding at the end of 2010. revenues and receivables of the same nature (trade or financial) and expressed in the same currency can be summed up. payments in advance and loans are to be considered as financial receivables and stated in separate lines (one line for each transaction). Transaction no. 8 At the end of 2010. 2011. 7 Invoice no. The related accrual is hence booked to the 2010 P&L for 500 EUR (while the invoice will be issued by the end of Feb 2011). . Company B must reply to Company A no later than Feb 18. .500 EUR. 11 On Feb 5. The invoice was partially collected during 2010 and 1. The value in local currency (with the ER as of Apr 30. It has been booked to 2010 P&L for 3.3315) is equal to 375. The invoice was collected during 2010 and. 2011 P&L for the period from Nov 2009 through Dec 2009). Procedure Company A must send this report to Company B no later than Feb 7. Disagreements must be settled no later than Feb 25. On the Balance Sheet the same amount is booked (outstanding) as accrual (250 USD or 187. the interest income already accrued (from Nov 2010 through Dec 2010) is booked to the P&L for 250 USD (the corresponding invoice will be issued at the end of Apr 2011). 2010 at 1. It has been booked to 2010 P&L for 750 USD (entire amount of the invoice). .3362) is equal to 187. 7 . 2010 to charge six months of interest (from May 2010 through Oct 2010). 2011 it has been agreed that Q4 2010 revenues for WCF (recognized by Company B) are equal to 500 EUR. credit notes are entered as negative revenues/receivables. Transaction no. 2010 at 1. 6/I was issued on Oct 30. Transaction no.52 EUR. therefore. Transaction no. 2010 at 1. for example: Marposs GmbH (Germany) vs Marposs Corporation (USA).000 EUR is still outstanding (account receivable) at the end of 2010.

and/or MG S. routed through Confirmec.p.p. Particular cases Transactions with (purchases from) Marposs S. and/or MG S. for purchases (P&L) you have to reconcile 100% of the cost1. for accounts payable you have to reconcile the amount booked locally (net of discount) and explain (in the accompanying mail) the difference with the amount showed by Marposs S.K. .K. Fintec.p.p. 2011 6.A. a branch of Marposs K.p.p.A. (Japan). Fintec.A. SIDCO S.A. There are sometimes particular circumstances where the reconciliation is not possible due to local rules with specific requirements (to be explained and verified with the holding company).75 8 . there should be no differences and all inter-company balances should be reconciled between companies within the Group. You will receive for those transactions reports from Marposs S.A.K.A. AZ Comisionaria Industrial and Associated Contractors are booked as follows: DEBIT Purchases (or Inventory) 100 CREDIT Accounts Payable 98. You have to proceed as follows: .A. Cut-off differences due to local rules From a theoretical point of view. AZ Comisionaria Industrial and Associated Contractors must be considered as inter- company transactions and therefore have to be reconciled.A.. routed through the intermediaries Confirmec. AZ Comisionaria Industrial and Associated Contractors Purchases from Marposs S. (Switzerland) is a third party to the Group and therefore it is not included in this procedure. which do not consider (before) the discount applied by the intermediaries. has to be reconciled with Marposs K.MARPOSS Group Inter-company Reconciliation Procedure for 2010 financial closing January. From a theoretical point of view. any difference must be explained (in the accompanying mail) and stated in the reporting package as adjustment between statutory and package. The company SIDCO S. In these situations.A. there should be no differences and all inter-company balances should be reconciled between companies within the Group.25 Other income (discount) 1.p.p. (before discount). and/or MG S.A. which should be equal to the discount applied to those invoices still outstanding at the end of the year. Fintec. 1 Remember that purchases through Confirmec. Japan) Any transactions with Marposs Singapore.p. and/or MG S.. Marposs Singapore Branch (Marposs K.A. Financial cut-off for companies included in the Cash Pooling scheme of Marposs S.

sometimes there could be a gap/delay between the day when the transaction is booked by the local bank and the day the same transaction is booked by the Italian bank managing the centralization (cash pooling). Alessandra Gavioli and Mr. any difference must be explained (in the accompanying mail) and stated in the reporting package as adjustment between statutory and package. In these situations. 2011 As we have seen. Remember that only the reconciled balances can be used for the preparation of reporting package and statutory financial statements: Reconciled inter-company balances = inter-company balances set out in the statutory financial statements = inter-company balances set out in the reporting package.p. Andrea Cangini at Marposs S.MARPOSS Group Inter-company Reconciliation Procedure for 2010 financial closing January. Should you need further information. January 2011 9 . please contact Ms.A. Bentivoglio. Conclusion For 2010 financial closing you are required to reconcile both Profit and Loss accounts and Balance Sheet accounts. 7.