A consolidated group in Fathom can have inter-company eliminations configured. You can access the Settings for eliminations in the group Settings under 'Step 3: Chart of Accounts'.
Eliminations allow you to remove the impact of transactions between companies in a group, resulting in a more accurate view of consolidated performance.
Typical use of an elimination would be to account for inter-company loans or inter-company management fees within a group.
To perform account-level eliminations, simply hover over an account, and click on the 'Eliminations' button.
You are then able to eliminate this account for any or all underlying companies.
We recommend that inter-company transactions are isolated in specific accounts. This approach means that each elimination is applied once and is then maintained automatically for subsequent updates of the financial data.
You will be able to preview the order/structure of your accounts, as well as a summary of eliminations performed. To do so, scroll to the bottom of the screen and download the detailed consolidated financial statements for a recent period.
Within this report you can hover over any elimination amount to display the contribution from each company within the group.
Performing Specific Elimination Adjustments
Fathom allows you to import an excel spreadsheet which details specific elimination adjustments.
These adjustments must only be for consolidated accounts that appear in the consolidated group. It is not possible to add eliminations for custom headings or totals.
First, create an excel file to import. The spreadsheet MUST include the word "eliminations" as its name (Cell B1). The adjustments should be entered as a negative values. Each adjustment can be mapped to a specific account.
Here’s an example:
After creating these elimination adjustments, go to ‘Add a company’, then select ‘Excel’ as the source. After importing this spreadsheet, it will appear as another ‘company’ in Fathom. We refer to this as an ‘eliminations’ company.
You should then add this ‘company’ to your consolidated group. Click on ‘Manage group’ in 'Step 1' of the settings for the group.
Because the entity has ‘Eliminations’ in the company name, Fathom will add the adjustments contained in this import file to the eliminations sections of your reports. In the consolidated financial statements you will see these adjustments shown in the eliminations column.
Performing eliminations in a multi-currency group
For multi-currency consolidations, additional elimination adjustments are often required, to balance the balance sheet. The reason for this is that movements in exchange rates cause the inter-company related accounts to no longer contra each other out, after these amounts are translated using the current exchange rate.
In these situations, we recommend applying an additional elimination adjustment (loaded via Excel) to the eliminated account, which accounts for the difference and puts the balance sheet back in balance. For more information, see article: Multi-Currency Eliminations.
Performing specific group adjustments
Using group level adjustments, you are able to ‘Adjust’ inter-company amounts.
To do this, navigate to the group settings ‘Step 1: Update Data’ and navigate to the Adjustments area. From here, link your current and retained earnings accounts, and set up the adjustment by hitting the green ‘Create Adjustment’ button’ The Adjustment Module will ask for an adjustment name, the accounts, their increase or decrease, a month and year of adjustment and an optional description.
Once adjustments have been added, the excel report ‘Consolidated Financial results’ will update with a group adjustments column. This allows you to go ahead and view the adjustments individual impact, independent of the group eliminations.