Enhancing Intercompany Trading through Digitalization: Case company Johnson Controls International
Nhi, Le (2020)
Nhi, Le
2020
All rights reserved. This publication is copyrighted. You may download, display and print it for Your own personal use. Commercial use is prohibited.
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2020120325820
https://urn.fi/URN:NBN:fi:amk-2020120325820
Tiivistelmä
Intercompany is the term used in Finance and Accounting field. It refers to business trades and activities of two subsidiaries within one corporation. Intercompany exists in various forms, from trading materials to services and human resources. All intercompany transactions need to be recorded in the accounting books of both involved entities. Before conducting the consolidated financial report for the whole group, intercompany transactions are required to be eliminated. This practice is to ensure the consolidated financial statements only represent the group financial result from business activities with external parties.
In reality, intercompany transactions recorded in the books of two subsidiaries often mismatch. These discrepancies required manual checking and resolving, which consumed a considerable amount of time and effort. The aim of the thesis is to identify, to simplify, and to enhance the accuracy of intercompany transactions through digitalization.
The research had two phases. The initial phase was to identify the existing problems in the current process of the case company, through general opinions of the process executors. This was conducted through face to face interviews with accountants in the case company. The second phase was data analysis of intercompany journals that had been recorded during the period of 6 months in the case company. The purpose of this phase was to visualize the overall performance of the intercompany procedure through explicit figures and data.
The results of the research were converted to proper criteria for assessing the software. In addition, the PSO (Purchase Software Operation) vendor scorecard from New York University was used as the framework for selection criteria. Additionally, a set of illustrated scores were given to popular accounting vendors for demonstrating how the framework can be applied.
Followed by this was a proposal suggested how the case company should adjust its internal governance in terms of frequency of reconciliation, internal control, and audit trail in the inter-company procedure to adapt the new selected software. This was the demonstration of how the case company could use the data analysis and the framework to evaluate the vendors and integrated the software.
In reality, intercompany transactions recorded in the books of two subsidiaries often mismatch. These discrepancies required manual checking and resolving, which consumed a considerable amount of time and effort. The aim of the thesis is to identify, to simplify, and to enhance the accuracy of intercompany transactions through digitalization.
The research had two phases. The initial phase was to identify the existing problems in the current process of the case company, through general opinions of the process executors. This was conducted through face to face interviews with accountants in the case company. The second phase was data analysis of intercompany journals that had been recorded during the period of 6 months in the case company. The purpose of this phase was to visualize the overall performance of the intercompany procedure through explicit figures and data.
The results of the research were converted to proper criteria for assessing the software. In addition, the PSO (Purchase Software Operation) vendor scorecard from New York University was used as the framework for selection criteria. Additionally, a set of illustrated scores were given to popular accounting vendors for demonstrating how the framework can be applied.
Followed by this was a proposal suggested how the case company should adjust its internal governance in terms of frequency of reconciliation, internal control, and audit trail in the inter-company procedure to adapt the new selected software. This was the demonstration of how the case company could use the data analysis and the framework to evaluate the vendors and integrated the software.