This worked case is part of the intercompany reconciliation guide, which covers what to list before systems change. This page has one job: walk through a single hard case so a fractional CFO can spot the same pattern in a client's close files.
The case: a shipment that crossed month-end
Illustrative and invented for this page. A fictional 380-person distributor of building products has a U.S. parent and a Canadian subsidiary. Under the group's intercompany agreement, both entities invoice each other in U.S. dollars, so currency plays no part here.
On March 30 the parent ships a truckload of inventory north and, on March 31, invoices the subsidiary $84,500. The parent books the intercompany receivable in March. The goods cross the border and arrive on April 3, and the subsidiary books the payable in April, when it has both the invoice and the goods.
Neither entity made a mistake by its own rules. That is what makes the case hard. At the March close, one side of the group says $84,500 is owed and the other side says nothing is, and consolidation cannot finish until someone decides which view the group statements should show.
Seven decisions and the record each one left
The final column is what a reviewer would need to follow the case later without asking anyone.
| Step | Date | What happened | Who decided | Record that captured it |
|---|---|---|---|---|
| 1 | March 31 | Parent invoices the subsidiary and books the receivable | Parent accounts receivable | Intercompany invoice with its journal reference in the parent ledger |
| 2 | April 3 | Subsidiary receives goods and books the payable | Subsidiary accounts payable | Vendor bill carrying the same invoice number in the subsidiary ledger |
| 3 | March close | Matching shows the parent's receivable $84,500 higher than the subsidiary's payable | Group accountant | Open reconciliation item with both balances and the difference |
| 4 | March close | Difference traced to one invoice; shipping date and terms confirmed | Group accountant, with operations | Note on the item citing the bill of lading and shipping terms |
| 5 | March close | Controller chooses an in-transit accrual in the subsidiary, dated March 31 and reversing April 1 | Controller | Journal entry, its approval and the reason code "timing: goods in transit" |
| 6 | March close | Receivable and payable agree; elimination clears in full | Group accountant | Elimination entry for the period and the closed reconciliation item |
| 7 | April | Cut-off rule added: shipments in a month's last three days confirmed with the receiving entity before close | Controller | New line in the close checklist, with its version date |
Step 7 matters as much as step 5. The fix closed one gap; the rule was meant to stop the next one.
The branch the case did not take
At step 5 the controller had another option, and the records only show judgment because that option was turned down.
The shortcut. The group accountant could have posted a top-side adjustment at consolidation that removed the $84,500 from both sides, with no entry in either entity. The group statements would have balanced. Neither ledger would have changed, the reconciliation item would have closed with a vague note, and next month the same difference would have appeared again with no trail back to the shipment.
The recorded path. Booking the accrual in the subsidiary put the decision where it belonged: in the entity that had not yet recognized the goods, at the date the group treated as the transfer, with a reason code and an approver. When April's bill arrived, it matched the reversal, so the subsidiary's April ledger tells the same story.
The accounting standard explains why someone had to choose at all. Consolidation standards such as IFRS 10 require group statements to remove transactions between group members in full, which only works if both members tell the same story for the same month. Software helps unevenly. Oracle NetSuite documents that putting an intercompany account on an advanced intercompany journal line flags it for removal automatically, whereas ordinary journals used for intercompany work leave that pairing to people. A group whose history spans both styles will have stretches where the trail was built by the system and stretches where it rests on someone's memo.
Oracle
NetSuiteWhy this sequence is useful evidence
Because each record answers a question the next decision depended on. Read alone, the step 5 accrual is an unexplained entry. Read with steps 3 and 4, it is a reasoned response to a specific gap, supported by a shipping document and approved by someone with authority. Read with step 7, it shows a team learning from the case.
That chain, from a detected difference to a cause, an authorized action, a checked result and a process change, is what makes exception records useful for AI training and evaluation: a model or finance agent has to learn which fix fits which cause, not just that books should balance. The reconciliation exceptions data page explains the category, and how to identify logistics exceptions and their documented resolutions shows the shipment side of the same story.
The weak points are also worth knowing. Step 4 often lives only in an email. Step 5's reason code may be free text. Step 7 may be a checklist file overwritten each year. The system map for this workflow shows which keys hold the chain together.
How to recognize similar cases at a client
Ask about disagreements, not files. Five questions tell you whether a group holds cases like this one.
- How often do intercompany balances fail to agree at close? "Most months, a few times a year, or almost never?"
- What happens when they do? "Does someone trace the difference to an entity entry, or is it adjusted at consolidation?"
- Are differences coded? "Is there a list of reason codes, such as timing, pricing, missing invoice or currency, or a free-text note?"
- Who approves the correcting entry? "The controller, the entity's finance lead or the group accountant?"
- Did any case change a rule? "Has a recurring difference ever led to a new cut-off step, a mapping change or a policy?"
A group that answers "most months, traced, coded, approved by the controller, and yes" probably holds a deep run of cases. Groups preparing a close tool change, a new ERP or a sale often keep this history in a place about to change, and a FloQast close checklist export is one example of where step 7 records can sit.
FloQastWhat a partner notes, and what stays unknown
Note the pattern and rough volumes in plain words, for example: "Intercompany differences most months between three entities, traced and coded since about 2019, approved by the controller, reason codes in the reconciliation workbook." Never ask for workbooks, ledgers, invoice numbers or entity financials.
The introduced company needs 50+ full-time employees at peak (contractors excluded), a documented operating history, rights to license and an authorized contact. Companies in the U.S., Canada and the EU qualify, as do companies in the UK, Australia, New Zealand, India, Singapore, South Africa, Latin America, the UAE and Saudi Arabia when at least 90% of the data is in English. In a group, note which entities hold the records; who can license intercompany reconciliation records covers the signer. Partners sign the Channel Partner Agreement before submitting introductions.
What stays unknown until SourceX reviews it: which entity holds rights to each record, what de-identification approver names need, whether there is buyer interest and on what terms. SourceX licenses approved business data directly from companies for AI training and evaluation, and manages the agreement, rights review, data preparation, delivery and payout. Fractional CFOs can find the relationship side on the fractional CFO partner page.
Next step
Refer a company. Earn up to $100,000. Default reward: 25% of Actual Supplier Payout, capped at $100,000 cumulatively per referred company. Eligibility and payment conditions apply, and a signed Schedule A or addendum can differ. A lead, meeting or signature alone does not trigger payment.
If a client's controller can walk you through a coded intercompany difference from detection to the rule it changed, register as a partner, check the group against who qualifies and read the program terms before you make the introduction.