One of the challenges for organizations with multiple branches in different countries is the variation in legal systems regarding financial bookkeeping. On one hand, this requires keeping books in accordance with local regulations, while on the other, it necessitates consolidating information from these books into a single chart of accounts common to the entire organization.
The Epicor ERP system is an advanced, proven solution used by organizations operating in many industries worldwide. One of its advantages is the ability to maintain multiple accounting books within a single system installation. This feature is known as multibooks.
Let’s take the example of a branch of a large foreign company operating in Poland. In our country, charts of accounts with specific numbering are traditionally used. For example, accounts starting with zero relate to fixed assets, ones to cash, twos to liabilities and receivables, threes to inventory, and so on. Although theoretically this is only a suggestion rather than a requirement imposed on companies by the Accounting Act, this numbering has become standard. Accountants readily use this standard, and most companies in Poland possess a chart of accounts consistent with this pattern. However, in other countries, it may be or must be different. Moreover, it is not just the numbering of the chart of accounts that can differ. Polish law precisely defines how certain events are to be recorded. The same events will be recorded quite differently under US GAAP or international accounting standards.
Thanks to the multibooks feature, the Epicor system can be configured to operate in parallel on two or more charts of accounts. This way, an accountant in the Polish branch will use a book with our chart of accounts, while an accountant at the American, French, or German headquarters will use another.
It is also possible to establish relationships between books, i.e., to map the chart of accounts. This means that what is recorded in one plan on account number X will go to account Y in another plan, and to Z in yet another. Furthermore, accounts can be linked in a many-to-one relationship. The Polish branch may need detailed information and use five accounts for something, but from the headquarters’ point of view, such a division may no longer make sense, and everything will go into one account. These could be, for example, office maintenance costs, which would consist of electricity, water, waste disposal, and similar items. For the headquarters, the total is important; for managers in Poland, detailed information provides greater control and optimization opportunities.
Moreover, account mapping is not everything. The system can automatically, on the fly, convert everything into appropriate currencies according to defined rules—based on the current exchange rate or average monthly rates derived from the budget. Accounting in Poland is conducted in PLN. A foreign headquarters will certainly prefer to see entries in dollars, euros, or any other currency.
In this way, multibooks significantly make life easier for everyone—everyone can operate as required by law, as they like, and as they are accustomed to, and it also facilitates audits or tax inspections.
Additionally, separate entries can be maintained within an additional book. This is important because, for example, international accounting rules or corporate policies may require making certain impairment write-downs, which may not be mandatory in Poland. By making such an entry in one book, we do not have to make it in the other.
Of course, not only division but also consolidation is possible. It works similarly. Thanks to mapping or integrating accounts, as well as currency conversion, it allows the headquarters to collect data from several units. For example, a company with Epicor installations in branches in different countries has data from each of them. Each company is a so-called ‘company’ entity. However, one can create an additional company that will merge all this data and visualize the results of the entire group.
This also allows for settling and presenting intra-group transactions between individual companies. For example, a Polish company buys something from an American company. Looking separately, we have a liability and a receivable. From the group’s point of view, however, we break even. Proper account mapping allows for balancing such intercompany transactions so that they do not obscure the overall picture.
In summary, multibooks is a clever feature that facilitates accounting in geographically dispersed organizations. Importantly, it is built-in, and its configuration or operation does not require great effort. Simple mapping and defining a few rules are enough, and you are ready to go. We achieve legal compliance while satisfying management’s financial information needs.
