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AX 2012 Consolidations for Multi-company and Multi-currency scenarios

February 19, 2014

Many growing companies have subsidiaries and locations all over the world. Some of those companies are tracked as separate legal entities and are required to be reported at a consolidated level in a different currency than its transactions. Here's how to do this in AX 2012.

First, make sure your consolidation company is setup correctly under Organization Administration > Setup > Organization > Legal Entities, with the "Use financial consolidation process" checkbox marked. Eliminations can be tracked separately in a different company or the same consolidation company. When consolidating under General Ledger > Periodic > Consolidate [Online], go through each tab in detail the first few times (outlined below). Then, subsequent consolidations only need small changes like Date range and Description—everything else is saved from the previous consolidation.

TAB 1: Criteria:

Account range and type of consolidation (Main account or Consolidation account group). If the subsidiary's Chart of account is mapped to a single Global GL account, then using Main account is sufficient. However, if the subsidiary's account can be mapped to two or more GL accounts for two different types of consolidations (e.g., EMEA consolidation vs. Global consolidation, then use Consolidation account group and set it up at the Chart of accounts table).

Actual amounts and budget amounts. These are best ran separately in two different consolidations. That way, consolidation process takes less time, and if the consolidation needs to be removed or re-run, then you would only need to re-run Actuals again since Budget amounts rarely change during consolidating. Also select your Budget models and Budget rate type if consolidating budgets for Budget vs. Actual reporting.

Rebuild balances. Rebuild balances can be unchecked if consolidation speed is slow. This is rebuilding all dimension sets to insure that the GL > Common > Trial Balances and other Trial balance reports have the latest data once the consolidation is complete. If you are ready to take a look at reports immediately after consolidation process and speed is not an issue, then rebuilding balances can be checked.

Tab 1 Criteria for multi-currency and multi-company consolidations in Microsoft Dynamics AX 2012

TAB 2: Financial dimensions

Aside from the standard Financial dimensions used or Group dimensions grouping the financial dimensions one level higher, Company account is most often used so that the subsidiary's company code can be included in the consolidation details.

The Financial dimension for Legal entity will need to be included in your list of Financial dimensions (ideally it is entity-backed and linked to the Legal entities table), but it doesn't need to be in any Configure account structures nor does it have be to be on any transactions in the subsidiary. Then pick the Segment order for which you'd like to see the dimensions GL account can also be selected in the ordering sequence.

Tab 2 Financial dimensions for multi-currency and multi-company consolidations in Microsoft Dynamics AX 2012

TAB 3: Legal entities

Pick the subsidiaries that are being consolidated and define the % share the parent owns this subsidiary. For integrated subsidiaries where the parent is actively involved, pick "Profit and loss" and make sure the Accounts for automatic transaction has the correct GL account defined for "Profit and loss account for consolidation differences." Otherwise, if the company is a self-sustaining subsidiary that operates independently, pick "Balance," and make sure to define the appropriate GL account for "Balance sheet for consolidation differences" under Accounts for automatic transactions. These GL accounts are posting the differences resulting in translating multiple currencies.

Tab 3 Legal Entities for multi-currency and multi-company consolidations in Microsoft Dynamics AX 2012

TAB 4: Description

Depending on how you group your consolidations, it's best to put the Consolidation name, Month, Year in the Description. That way it is easier to tell apart under GL > Inquiries > Consolidations.

TAB 4 Description for multi-currency and multi-company consolidations in Microsoft Dynamics AX 2012

TAB 5: Elimination

If using intercompany accounting with defined "due to" or "due from" accounts, first set up elimination rules under GL > Setup > Posting > Ledger elimination rule. Then, you can generate journal entries either through Proposal only (where the user has to verify and post the elimination journal) or Post only with a specified release date (where the system automatically posts the elimination journal entry for you on that date). The currencies of the destination and source companies must be identical for elimination rules to work properly.

NOTE: If using a separate elimination company, then skip this step in the consolidation company, but make sure to include your elimination company in the Legal entities tab.

TAB 5 Elimination for multi-currency and multi-company consolidations in AX2012

TAB 6: Currency translation

For each subsidiary operating in a different Accounting currency from the consolidation company's, define the From and To account ranges.

A trick here is that the drop down shows the subsidiary company's GL account code, but they can be overridden with the consolidation company's GL account codes. The system will not recognize the correct exchange rate unless the GL account codes match the consolidation company's chart of accounts. For each range of accounts, specify the Exchange rate type and the correct rate between the Subsidiary currency—Consolidation company currency will appear in the Exchange rate field. It can also be overridden, but best practice is to maintain the currency exchange rate table with the correct rates.

TAB 6 Currency translation for multi-currency and multi-company consolidations in MS AX 2012

Finally, the results can be found under General ledger > Inquiries > Consolidations or visible in the Trial Balance or Financial Statement Reports setup in Management Reporter. Subsidiary companies' local currencies will be translated to the Consolidated currency based on the exchange rates selected in Currency translation. More importantly, you now have a high-level view of your multiple companies from around the world in a single currency, visible in reports within Dynamics AX 2012 or using Financial statement reporting in Management Reporter.

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