---
name: intercompany-balance-confirmation
description: Reconciles reciprocal intercompany receivable and payable balances by entity, counterparty, account, currency, and period, explaining timing, FX, and settlement differences. Use for month-end close, group reporting, and intercompany confirmation preparation.
license: Apache-2.0
metadata:
  adlass.categories: "finance-accounting/closing-reporting"
  adlass.industries: ""
  adlass.tags: "intercompany,reconciliation,balances,fx,close,confirmation"
  adlass.adaptation: "reference-doc"
  adlass.source: "original"
  adlass.version: "1"
---

# Intercompany balance confirmation

## Purpose

Produce a counterparty-by-counterparty confirmation view of intercompany balances. It identifies whether both entities report the same transaction population and isolates timing, currency, coding, and settlement differences.

## Scope

Reconcile intercompany AR/AP, loans, management fees, recharges, interest, invoices, credit notes, settlements, and entity confirmations for one closing period.

**Excluded:** posting elimination entries, approving confirmations, changing ledgers, and contacting counterparties.

## Data basis

- Entity ledger extracts with entity, counterparty, account, document number, posting date, due date, currency, debit, credit, and closing balance.
- Counterparty confirmation files, intercompany invoice and settlement registers, FX rates, and prior reconciliation.
- Group chart of accounts and intercompany matching rules in scope.

## Result

A reconciliation sheet with both sides of each balance, difference amount and currency, match status, cause, source citations, and proposed follow-up, plus a close memo.

## Quality criteria

- Entity A and entity B balances are shown with sign and currency conventions.
- Exact document matches precede amount/date matching and every match is traceable.
- Differences reconcile to timing, FX, coding, missing-document, or unresolved categories.
- The closing population and net difference tie to the ledger extracts.

## Instructions

Normalize signs into receivable-positive and payable-positive presentation without overwriting ledger values. Match on entity pair, counterparty document number, currency, amount, and posting period. Do not net different currencies or accounts. Treat a one-sided item as unmatched even when the amount is similar. Explain FX differences using the supplied rate and rate date. Mark confirmation status separately from accounting match status.

## Adapt before use

- Map entity, counterparty, account, document, currency, debit, credit, and settlement fields.
- Add the group matching policy, sign convention, FX rate source, and materiality threshold.
- Define entity-pair naming and reconciliation-status values.

## Process detail

### Set the closing population

Select the period and extract every intercompany debit and credit by entity pair and counterparty.

**Data basis:** Ledger extracts, closing date, intercompany account list, and entity master.

**Result:** Signed balance population with entity-pair totals.

**Acceptance criterion:** Ledger totals tie to the selected accounts and period for each entity.

**Exception:** Keep late-posted or out-of-period rows visible and flag them.

### Normalize reciprocal balances

Convert debit and credit columns to receivable-positive presentation and preserve ledger currency and document identifiers.

**Data basis:** Entity ledger debit, credit, currency, account, and document fields.

**Result:** Comparable balance columns for both sides.

**Acceptance criterion:** For every entity pair, presented balance equals source debit minus credit under the stated sign rule.

**Exception:** Do not translate currencies without a supplied FX rate and date.

### Match transaction populations

Match invoices, credit notes, loans, fees, and settlements by document number, then by amount, currency, and posting date.

**Data basis:** Intercompany transaction registers and both ledger extracts.

**Result:** Matched, one-sided, duplicate, and candidate-match rows.

**Acceptance criterion:** No document is matched twice and each match cites both entity rows.

**Exception:** Put similar amounts with different currencies or document types into unresolved candidates.

### Explain balance differences

Classify residuals as timing, FX, coding, missing transaction, settlement-in-transit, or unexplained.

**Data basis:** Matched transaction table, confirmations, FX rates, settlement register, and prior reconciliation.

**Result:** Difference analysis with amount, currency, cause, and evidence.

**Acceptance criterion:** Difference categories sum to the gross reciprocal variance for every entity pair.

**Exception:** Use unexplained when evidence does not distinguish timing from missing posting.

### Prepare the confirmation view

Summarize balances by counterparty and present confirmation amount, confirmed amount, difference, status, and evidence.

**Data basis:** Reconciled balances, counterparty confirmations, and materiality threshold.

**Result:** Confirmation sheet and close memo ranked by unresolved value.

**Acceptance criterion:** Summary totals tie to the entity ledger and every difference has a citation.

**Exception:** Keep unconfirmed balances separate from confirmed zero differences.

### Document what could not be assessed

List missing counterpart extracts, absent FX rates, unreadable confirmations, duplicate documents, and unmatched balances.

**Data basis:** Reconciliation exceptions and source inventory.

**Result:** Open-points section with entity pair, account, currency, and amount.

**Acceptance criterion:** Every open point is traceable to a ledger or confirmation row.

**Exception:** State no open points only when both sides and all currencies were checked.