In a NetSuite OneWorld environment, the design and configuration of the Chart of Accounts (COA) directly impacts how transactions—including intercompany transactions (ICTs)—are processed and reported. A properly structured COA is essential to ensure that all subsidiaries can operate independently while still allowing for unified, consolidated financial reporting.
🔹 1. Understanding the Role of a Common COA
In NetSuite, when multiple subsidiaries are involved, particularly where intercompany trading (buying, selling, cost allocation, or expense transfers) occurs, it’s critical to establish a Common Chart of Accounts (COA). Common COA refers to a shared set of general ledger accounts that are accessible to two or more subsidiaries. This setup ensures:
- Consistency in financial reporting
- Accurate mapping of intercompany postings
- Seamless elimination of intercompany balances during consolidation
For example, if Subsidiary A sells goods to Subsidiary B, both must use matching Intercompany Receivable and Intercompany Payable accounts to ensure the system can match and eliminate them during consolidation.
🔹 2. Why COA File Analysis is Crucial Before Import
The COA file acts as the foundation for your accounting setup. If misconfigured:
- Transactions may fail due to inaccessible accounts.
- Financial statements could be misaligned across subsidiaries.
- Intercompany balances might remain uneliminated, skewing group-level reports.
Hence, analyzing the COA file before importing ensures:
- All necessary accounts exist and are assigned to the correct subsidiaries.
- Intercompany accounts are configured to support both operational and reporting needs.
- The COA respects both NetSuite system rules and client-specific accounting policies.
🔹 3. Detailed Analysis Areas & Scenarios
✅ a. Account Type Verification
Each account must be mapped to an appropriate NetSuite account type. This is especially important for intercompany accounts:
- Intercompany Payable/Receivable → Other Current Liability/Asset
- Intercompany Revenue/Expense/COGS → Income, Expense, or COGS
- Make sure these are not set as non-posting (like Header or Summary accounts) unless intentionally designed.
✅ b. Subsidiary Accessibility
Accounts must be enabled for all subsidiaries that need to use them:
- A common Intercompany Payable account should be available to every subsidiary involved in sales or procurement across the organization.
- If subsidiaries use localized accounts, then the same logical intercompany account may need to be duplicated and uniquely named per subsidiary—but this increases complexity.
Best practice: Use one shared intercompany account per function and assign it to all relevant subsidiaries.
✅ c. Account Numbering & Naming Conventions
A clear and consistent numbering system helps prevent duplication and eases reporting:
- 1XXX = Assets
- 2XXX = Liabilities
- 3XXX = Equity
- 4XXX = Revenue
- 5XXX = Expenses
- 9XXX = Reserved for Intercompany/Elimination Accounts
Naming conventions should clearly identify intercompany accounts, e.g.,:
IC - Payable - Subsidiary AIC - Revenue - Cross-Sale
✅ d. Handling of Currency Restrictions
Make sure that intercompany accounts are not currency-restricted unless required. If subsidiaries transact in multiple base currencies, intercompany accounts should be flexible enough to accommodate multi-currency postings.
✅ e. Hierarchical COA Structure
Accounts are often nested:
- Parent:
4000 - Sales Revenue - Child:
4001 - Domestic Revenue,4002 - Intercompany Revenue
Ensure that:
- The parent account is enabled for all required subsidiaries.
- Child accounts follow the same subsidiary scope or are properly broken out.
Orphan accounts (child without an accessible parent) will cause hierarchy and reporting issues.
✅ f. Elimination Readiness
For NetSuite to eliminate intercompany transactions during consolidation, it must identify:
- Matching debit and credit values between subsidiaries.
- Identical (or mapped) GL accounts on both sides of the transaction.
If Subsidiary A uses IC Revenue and Subsidiary B uses Purchases from Interco, but these aren’t linked or shared, NetSuite won’t eliminate the balance.
Recommendation: Use identical intercompany GL accounts and validate that both sides of the transaction point to the same internal account ID.