Learn about setting up an analysis when your company data contains multiple subsidiaries or entities. For example, if you are analyzing data for a group entity or subsidiary. The article talks about how to run an analysis with multiple entities.
Note: The subsidiary or entity ID in an accounting system is commonly shown as a Company ID field. In this article, we will refer to this field as "Company ID".
If your organization has financial data spanning multiple subsidiaries, there are 3 methods available to complete the analysis.
1. Analyze the complete general ledger data set with all subsidiary data in one combined file, with the Company ID column for filtering and sampling
For this method, your transactional data (e.g. general ledger) must have a Company ID column for each entry as this will be used as a filter for analyzing and sampling your data.
Under this method, your engagement will:
- Show a combined risk assessment of the fiscal year activity across the entire parent company
- Compile the different subsidiary data into one pool for sampling
- Show combined subsidiary trends and ratios
2. Analyze the data for each subsidiary or entity under separate analyses (within the same engagement)
For this method, you must have the Company ID column in your transactional data and you will have to create a unique ID in your data. This unique ID can be created using Company ID and general ledger Account ID, for example:
- Company A_GL Account # = Alpha_1000
- Company B_GL Account # = Beta_1000
- Company C_GL Account #= Gamma_1000
This method requires the subsidiary companies to have either identical or completely different account mappings, as each unique ID can only have one mapping assigned to it per engagement. We suggest the following steps to create the account mapping file:
- Create a master account mapping file that maps all unique general ledger Account IDs across the subsidiaries. This will ensure consistency and comparability across your subsidiary transactions.
- Create an account mapping that multiplies the Company ID by the general Ledger Account ID to create a mapping file to catch all permutations of the Unique IDs. If you have 5 companies and 100 General Ledger Account IDs, your new account mapping should have 500 Unique IDs.
- Import all your data into the engagement and delete any unused mappings using the "Delete Unused Mappings" in the "Additional options" in the Account Mapping Settings.
This method produces separate risk assessments for each subsidiary and will allow you to segment subsidiary General Ledger Accounts into separate sampling pools, trends, and ratios. Do note that the overall MindBridge score will be calculated for the group entity.
Note: This is the most popular choice for analyzing a single parent company with different subsidiaries.
3. Analyze each subsidiary as a separate engagement (within the same parent organization)
This method produces separate financial statements, risk assessments, trending reports, and audit plans for each subsidiary.
You must use this method if account definitions interchange between different subsidiaries. For example:
- Company A: Account 1000 = Definition A
- Company B: Account 1000 = Definition B
Anything else on your mind?