Accounting Best Practices, Fifth Edition

14–10. Have Subsidiaries Update Their Own Data in the Central General Ledger

A lengthy task for any general ledger accountant who must consolidate the results of subsidiaries is to input the general ledger of each one into the general ledger of the corporate parent. This can be a lengthy and arduous task, as well as one that is easily subject to error. The typical consolidation requires a very large journal entry for each subsidiary, possibly requiring over a hundred accounts. If there is any problem with the data entry, the entire entry must be reviewed to find the mistake. If there are many subsidiaries, there are many entries to make; if there is a time crunch associated with producing financial statements, it is extremely likely that all of the data-entry work required of the general ledger accountant will be a bottleneck for the timely production of those statements.

A solution is to hand the data-entry chore over to the subsidiaries. They can be given access to the computer system of the corporate parent, as well as password access to the general ledger, and then enter their financial results directly into the computer system. The general ledger accountant thereby avoids all data-entry work related to the subsidiaries and only has to analyze his or her own data inputs to see if there are any unusual items. By having each subsidiary enter its own information, the data can be entered much more quickly, resulting in the elimination of the workflow bottleneck associated with ...