Overview
This guide explains how Working Paper Validation can be used within Intercompany Reconciliation to help identify and understand foreign exchange (FX) differences that may appear during multi-currency consolidation.
The workflow demonstrates how:
Intercompany transactions may reconcile correctly at transaction level
FX translation methods used during reporting may still create differences within consolidation outputs
Auto FX journals can be used to address resulting FX-related reporting variances
This guide uses an illustrative example involving intercompany sales and purchases between entities operating in different currencies.
Example Scenario
In a typical intercompany reconciliation scenario:
One entity contains an intercompany sales balance
The counterparty entity contains the corresponding intercompany purchases balance
The transactions reconcile successfully at transaction level
For example:
Entity | Balance |
Holdco | 1,000 |
US Sub | 1,000 |
At transaction level, no reconciliation discrepancy exists.
However, when the same balances are translated using average monthly FX rates within Working Paper reporting outputs, translated balances may differ.
Example:
Entity | Translated Balance |
Holdco | 1,000 |
US Sub | 995.62 |
This creates a remaining reporting variance of 4.38.
This type of variance may arise from FX translation behaviour within consolidation reporting and does not necessarily indicate:
Missing transactions
Failed reconciliation
Operational mismatches between counterparties
Reviewing Working Paper Validation
Within Intercompany Reconciliation, users can open Working Paper Validation to compare:
Transaction-date balances
Consolidation reporting balances translated using reporting FX methodologies
This allows users to:
Validate whether transactions reconcile operationally
Identify differences introduced through FX translation logic
Understand how balances appear within consolidation reporting outputs
Typical review steps include:
Open the reconciliation workflow
Select the relevant pair and reporting period
Navigate to Working Paper Validation
Compare transaction-date balances against translated reporting balances
Review any remaining reporting variances
Reviewing Auto FX Journals in Working Papers
Where Auto FX journals are configured, users can review how FX-related reporting differences are reflected within Working Papers and consolidation outputs.
Within Working Papers, users may review:
Intercompany elimination entries
FX-related adjustment postings
FX Differences in Reserves balances
Resulting consolidation impacts
Example Auto FX journal behaviour may include:
One side posted against the intercompany elimination account
One side posted to FX Differences in Reserves
This helps address reporting variances created through FX translation during consolidation.
Purpose of Working Paper Validation
Working Paper Validation helps users understand why reporting differences may still appear even when intercompany transactions reconcile successfully operationally.
The process provides visibility into:
Transaction-level reconciliation outcomes
FX translation impacts within reporting
Consolidation-level reporting variances
Auto FX journal behaviour
This helps users distinguish between:
Genuine FX translation impacts, and
Underlying reconciliation or accounting issues
Summary
Working Paper Validation provides visibility into FX-related reporting differences that may arise during multi-currency consolidation.
In some scenarios:
Intercompany transactions may reconcile successfully at transaction level
Reporting variances may still appear after FX translation
Auto FX journals may be generated to address resulting consolidation differences
This workflow helps users understand the relationship between:
Transaction-level reconciliation
FX translation behaviour
Consolidation reporting outputs
Auto FX journal adjustments
Need help? Visit gather.nexus, click the chat icon in the bottom-right corner, or email us at [email protected] for assistance.