consolidate-entities

name

consolidate-entities

description

Roll up N entity trial balances (same period) into a group consolidation — reuses statement_engine per entity, then applies a BALANCED intercompany-elimination journal so IC receivable/payable and IC revenue/COGS net to zero, emits an entity-columns + eliminations + consolidated worksheet, and flags (does not remeasure) non-functional-currency entities for CTA. Runs scripts/consolidate.py. 'Eliminate before you consolidate.' Used by `controller`.

Skill: consolidate-entities

Purpose: Turn several single-entity trial balances into one group view. The hard part of consolidation is not the addition — it is the elimination. Two legal entities each book their side of an intercompany transaction (a loan, an internal sale), so a naive sum double-counts it. Consolidated statements must show only what the group transacted with the outside world.

Engine: ../../scripts/consolidate.py (stdlib only, Python 3.8+). It imports statement_engine.py — consolidation adds no new accounting-sign logic; it composes the engine that already gets classification and the SECTION-based presentation sign right (so an intercompany line, like any contra-account, is signed by its section's natural side, never by the account's normal_balance).

The discipline: eliminate before you consolidate

This is the auditor's mantra and the order the engine enforces:

1. Produce each entity's statements via statement_engine.run — same blocking classification discipline, one column per entity.
2. Sum by statement line into a worksheet. This pre-elimination total still contains the intercompany balances on both sides — the worksheet surfaces the double-count rather than hiding it.
3. Eliminate from an intercompany-transactions CSV expressed as a balanced elimination journal (Σ debits == Σ credits — asserted, rc4 if not). Each amount is converted to a presentation sign with the same section convention, so every IC line nets to 0.00 in the consolidated column. Because the journal balances, the consolidated balance sheet still balances to 0.00 — asserted (rc6), not assumed.
4. Flag currency translation. See the honest caveat below.

Honest note on currency translation (CTA)

An entity whose functional currency differs from the group's presentation currency needs a real remeasurement: assets at the closing rate, income at the average rate, equity at historical rates, with the plug landing in a cumulative translation adjustment (CTA) component of equity / OCI. This engine does NOT perform that remeasurement. It flags the entity and emits a CTA note; the provided trial balance is treated as if already stated in the presentation currency. That is a stated simplification, not a multi-currency close. A rigorous translation and its CTA must be prepared separately — this output is decision-support, not an audited consolidation (see ../../CLAUDE.md §3, §12 "GAAP/IFRS vs. management view", §4 "currency mixing without explicit FX rate disclosure").

Invocation

python3 scripts/consolidate.py \
  --config skills/consolidate-entities/examples/atlas-group-2026-06.json \
  --out consolidated.json

The config JSON lists the entities (each: profile, coa, tb, optional role), the presentation_currency, the fiscal_period, and the eliminations CSV — all paths relative to the config file. The engine blocks if any entity's period disagrees with the group period, if an entity profile is invalid, if an entity has unmapped accounts (unless --no-strict), if the elimination journal is unbalanced, if an elimination line matches no worksheet line, or if the consolidated balance sheet fails to balance.

The intercompany-eliminations CSV

Columns: ic_id,description,statement,section,line,debit,credit. Model each elimination as the reversing journal entry that removes the intercompany balance, and let the whole file balance (Σ debit == Σ credit). Worked example — a parent→sub loan and a parent→sub internal sale:

ic_id	statement	section	line	debit	credit
IC-LOAN	BS	CurrentAssets	Intercompany receivable	0	100000
IC-LOAN	BS	CurrentLiabilities	Intercompany payable	100000	0
IC-SALE	IS	Revenue	Intercompany revenue	200000	0
IC-SALE	IS	COGS	Intercompany cost of goods sold	0	200000

The IC sale is revenue-neutral to the group: consolidated revenue and COGS each drop by 200k, so gross profit and net income are unchanged — the group simply didn't sell to an outside customer. (An intercompany sale with unrealized profit still sitting in ending inventory would need an extra margin elimination; this fixture deliberately has none, and that limitation is called out here rather than silently assumed away.)

Correctness discipline

• The golden fixture examples/expected-consolidated-2026-06.json is hand-derived from the two source trial balances by independent arithmetic, NOT frozen from an engine run.
• The acceptance suite ../../scripts/test_consolidate.py asserts the load-bearing claims: the pre-elimination sum double-counts each IC amount, the consolidated column nets each IC line to zero, the consolidated balance sheet balances, subtotals equal the goldens, an unbalanced elimination journal is blocked, and the non-USD subsidiary is flagged for CTA.

Reuse per group

Entities and the group are data — a different set of profiles + trial balances + one eliminations CSV consolidates a different group with zero code change. Authoring a correct per-entity COA mapping is the real per-entity work (see ../author-coa-mapping/SKILL.md); authoring the elimination journal is the real per-group work.

What this is not

Not an audit opinion, a GAAP/IFRS consolidation determination, or a multi-currency remeasurement. Non-controlling interests, step acquisitions, goodwill, and unrealized-inventory-profit eliminations are out of scope for this slice — flag them for a human preparer. Outputs are decision-support (see ../../CLAUDE.md §3).