Skip to main content
Documentation
Documentation
Administrator Guide
Last Updated: 2023-06-23
Setup Considerations: Consolidations and Eliminations

Setup Considerations: Consolidations and Eliminations

You can use this topic to help make decisions when planning your configuration and use of consolidations and eliminations. It explains:
  • Why to set it up.
  • How it fits into the rest of Workday.
  • Downstream impacts and cross-product interactions.
  • Security requirements and business process configurations.
  • Questions and limitations to consider before implementation.
Refer to detailed task instructions for full configuration details.

What It Is

Consolidation aggregates financial transactions from multiple companies in a hierarchy into a single financial statement. You create rules to eliminate these transactions when consolidating:
  • Intercompany transactions.
  • Investments in subsidiaries.
  • Noncontrolling interest (NCI).

Business Benefits

You can:
  • Consolidate 2 or more companies as a single entity to meet global statutory and tax reporting requirements.
  • Eliminate intercompany transactions to prevent double counting.
  • Run consolidated reports throughout the period and include elimination information in your reporting at any time.
  • Create journals that record the NCI for subsidiaries.

Use Cases

When a parent company either directly or indirectly controls a majority interest in a subsidiary, you can consolidate the affiliated companies and run consolidated financial statements. A consolidated financial statement eliminates equity, intercompany, and NCI transactions, and displays the parent and its subsidiaries as a single entity.

Questions to Consider

Questions
Considerations
Are the subsidiaries wholly owned or partially owned by the parent company?
For partially owned subsidiaries, define the ownership percentage.
What intercompany ledger accounts do you want to eliminate during consolidations?
Include the intercompany and interworktag ledger accounts you want to eliminate when you configure elimination rules.
Use the first tab of the elimination rules for these types of eliminations.
How will you settle intercompany transactions?
To settle by cash, ensure that you create organizations as companies in Workday.
Otherwise, you can create a custom organization or another type of organization such as a cost center as a primary balancing worktag. Interworktag eliminations can’t settle with cash and will only eliminate for the primary balancing worktag.
What sort of interest does the parent company have in subsidiaries?
When the parent company has a controlling interest in a subsidiary, configure elimination rules to eliminate the parent company investments from the subsidiary.
If a third party has a noncontrolling interest in a subsidiary, define elimination rules for NCI.
Which accounting method will you use when consolidating?
If you use the equity method, automate equity pickup calculation by defining rules on the
Equity Pickup
 tab of the elimination rules.
Will you be reporting consolidated results for an alternate fiscal schedule?
Create a separate hierarchy for the alternate fiscal schedule and select the alternate fiscal schedule on the
Edit Consolidations Details
 task.
When you're planning to calculate and record NCI eliminations using the
Run Noncontrolling Interest
 task, consider:
Questions
Considerations
What currencies and hierarchies do you perform consolidation reporting for?
Create:
  • NCI journals for each currency and hierarchy that you're reporting in.
  • Translated beginning balances for each translated reporting currency you're consolidating in.
Example: If you perform consolidation reporting in USD and EUR, ensure that you have NCI journals for both currencies, and for all hierarchies that you're performing the consolidation reporting for.
Who should opt in when they want to perform reporting using NCI journals?
If you currently derive NCI, you can opt in to run persisted NCI reports.
If you don't opt in, you won't be able to report using NCI journal lines.
If you're new to Workday, Workday opts you in automatically.
At what level do you want to approve NCI results?
You can approve or deny NCI results at:
  • Hierarchy level, reducing the number of business process events that need your approval.
  • Company level, providing you with more visibility and control over your NCI results.
When are you going to run NCI?
You can run NCI now or schedule to run it in the future.
What type of NCI ownership does your company have?
You can set up NCI to calculate for direct ownership on the
Maintain Elimination Rules
 task. Workday calculates NCI for indirect and direct ownership by default.

Recommendations

  • When you’re configuring elimination rules for intercompany and interworktag ledger accounts, select a unique account as the variance ledger account. A unique account ensures that Workday tracks differences if the intercompany and interworktag accounts don’t net to zero upon consolidation.
  • When you’re recording NCI, set up an elimination rule for each ledger account or ledger account summary that you want to calculate NCI on.
  • When you’re configuring elimination rules for equity pickup:
    • Select a provision account. If you don’t select an account, Workday tracks losses but won't record them.
    • Record equity pickup results in the subsidiary base currency to record eliminations accurately, and to automate revaluation of the investment in subsidiary.
  • Add NCI and equity pickup journals to new or existing period close activity groups.

Requirements

To ensure that Workday calculates consolidations accurately:
  • Complete the company hierarchy.
  • Ensure each company in the hierarchy shares the same account set, and either a primary or an alternate fiscal schedule. The companies can have different ledger (base) currencies.
  • Complete the company ownership details for every company in the hierarchy.
  • Configure eliminations and equity method consolidation rules.
  • Opt in to report using NCI journal lines if you've been deriving NCI.
  • Enable the
    Translated Currency
     prompt when you're creating a custom report to perform consolidation reporting. Workday uses this value to perform eliminations for NCI, and investment in subsidiary and subsidiary equity.

Limitations

No impact.

Tenant Setup

You can use the
Edit Tenant Setup - Financials
 task to enable options to:
  • Include worktag types for retained earnings.
  • Add the intercompany affiliate worktag type.
  • Reverse operational and NCI journals.

Security

Domain
Consideration
Set Up: Consolidation
 in the Financial Accounting functional area.
Can configure elimination rules.
Process: Equity Pickup
 in the Financial Accounting functional area.
Can run and calculate equity pickup.
Set Up: Financial Accounting
 in the Common Financial Management functional area.
Can create ownership details.
Process: Noncontrolling Interest
 in the Financial Accounting functional area.
Can create journal entries.
Process: Noncontrolling Interest Opt-in
 the Financial Accounting functional area.
Can opt in to report NCI using NCI journals.
Only applies to unconstrained groups.

Business Processes

Business Process
Consideration
Equity Pickup Event
You can approve and deny equity pickup entries.
Noncontrolling Interest Group Run Event
You can approve and deny NCI group results. Workday creates 1 NCI group result per hierarchy that you run NCI for.
Noncontrolling Interest Run Event
You can add
Noncontrolling Interest Run Event
 as a subprocess of the
Noncontrolling Interest Group Run Event
 business process.
This enables you to pre-approve and deny NCI results for individual subsidiaries or companies in a hierarchy.

Reporting

You can run the
Consolidated Trial Balance
 report to review these eliminations:
  • Intercompany and interworktag.
  • NCI.
You can use these reports to view NCI results and journal lines:
  • Find Consolidation Journal
  • Find Consolidation Journal Lines
You can use the
Find Noncontrolling Interest Results
 report to view and cancel NCI results.
You can view equity pickup journals in a:
  • Standard trial balance report.
  • A composite consolidated trial balance report.

Integrations

Web Services
Considerations
Get Company Ownership Details Full List
Retrieves information about company ownership, including all related snapshots for the company.
Get Consolidation Details of Company Hierarchy
Retrieves consolidation details on company hierarchies.
Get Noncontrolling Interest Results
Retrieves all NCI results.
Put Company Ownership Detail Full List
Uploads snapshots of company ownership details.
Put Consolidation Details of Company Hierarchy
Uploads the consolidation details of company hierarchies.
Put Noncontrolling Interest Result
Mass creates NCI balances when you perform reporting using persisted elimination journals.

Connections and Touchpoints

Features
Considerations
Company Intercompany Profile
You use this profile to define relationships between companies in Workday.
The profile enables you to specify which companies can initiate transactions and which companies can only settle transactions.
Set Up a Single Legal Entity
You share this feature with a Workday Payroll (USA) implementation. Define the company relationship to enable multiple companies to roll up to a single company.
Worktag Balancing
You can eliminate primary worktags, but you can't eliminate optional worktags.
Workday offers a Touchpoints Kit with resources to help you understand configuration relationships across your tenant. Learn more about the Workday Touchpoints Kit on Workday Community.