Transparency in Transformation: How Everest Sheds Light on Global ERP Accounting

A common refrain that I’ve heard from customers and accountants in the field is that the workings of their ERP are a bit of a mystery to them. Why did the unrealized gain/loss fluctuate so much from last quarter? What consolidation rate was used to translate my international subsidiaries’ income statement accounts into the parent companies’ books? What happens if there are multiple levels of consolidations occurring? After drilling into the general ledger and transaction details for several hours they can find some of these answers, but that’s only if they can commit the time and effort into searching through the vast ERP data set. All of these questions regarding FX and consolidations can have a material impact on your bottom line and can muddle leadership’s understanding of the financials and the business overall. 

From our point of view, one of the main benefits of a modern ERP is to provide transparency and traceability into the processes that make global accounting challenging, rather than putting all the magic into a black box. So what should your ERP do?

• Consolidation details on your general ledger

Display clear conversion logic of every transaction from the source ledger to the parent consolidation ledger with the chart of accounts and currency transformations shown side-by-side.

• Currency revaluation report

Detail the unrealized gain/loss for each currency revaluation run. Each unrealized gain/loss journal should link to the source revaluation report, which should show the transaction converting from the transaction FX rate to the current FX rate. 

• Intercompany reconciliation

Aggregate all the transactions subject to intercompany elimination, and illustrate how these transactions eliminate with each other after revaluation and consolidation. These transactions can have valid CTA differences, but can also have invalid differences due to setup or process errors. 

Everest is working hard to make clear the hidden magic of the ERP. Your ERP should be your most important tool in explaining how FX and global accounting rules are impacting your bottom line, not sending you to spreadsheets to figure this out. 

Andrew Corral