Subsidiary Hierarchy Planning

Before creating the subsidiary, we must have planning regarding the hierarchy of the subsidiaries. We must define the parent, child, and its structure.

The important points we have to note before going to create the subsidiary are,

1. The country we select while creating the subsidiary is automatically determines the first tax nexuses and NetSuite edition which is associated with that subsidiary.
2. The base currency is the currency which a subsidiary manages. After defining a currency in the subsidiary, you cannot change it.
3. A nexus is a tax jurisdiction. You can add and change the nexuses on the subsidiary.

After creating the diagram of subsidiary hierarchy, you must include one elimination subsidiary as a child of each parent subsidiary. The elimination subsidiary should use the same base currency as the parent subsidiary. Also note that we cannot change several fields of the subsidiary after save the record for the first time.

Multiple currencies in the one world

The Multiple Currencies feature provides support for transactions with entities that use currencies other than the currency in which the company manages its financials. The currency used to manage company’s financials is called the base currency. Other currencies used by customers and vendors are referred to as foreign currencies.

The Multiple Currencies feature is required for NetSuite One World. With One World, each subsidiary can have a separate base currency, which is used to manage the subsidiary’s financials. We cannot change a subsidiary’s base currency after the subsidiary record has been saved for the first time.

                                                        Modifying the subsidiary structure will make a significant impact on the financial part.

The aftereffects on subsidiary modification are,

1. The financial statements, various reports may be lost with no possibility of recovery
2. Subsidiaries may get inactivated
3. Consolidated exchange rates may be irreversibly calculated
4. Elimination Subsidiaries may assign to different parent Subsidiary
5. Auto-Elimination Journals may post to the incorrect Elimination Subsidiary
6. The Include Children (Subsidiaries) option may include a different set of Subsidiaries than before
7. Granted restrictions on roles may change
8. Reporting may not provide correct results if crossing Subsidiary Hierarchy Modification change date
9. Customization and scripts utilizing Subsidiary may begin to fail.

If we want to make changes which is necessary for the company, Enable Allow Subsidiary Hierarchy to be Modified preference general preference.

The main reasons for changing the subsidiary structure are,

1. Company must establish a new head quarter subsidiary.
2. Company need to change the head quarter subsidiary to another subsidiary.
3. Elevate the subsidiary in the hierarchy.

The permission required for modifying the subsidiary hierarchy

Go to Setup > Users/Roles > Manage Roles.

1. On permission subtab > click on lists subtab

You must have edit/ full level subsidiary permission to modify the subsidiary hierarchy   structure.

       And, you must have the full access to all the subsidiaries.

2. On the permission subtab > click on setup subtab

You must have full level Set Up Company permission to set the Allow Subsidiary Hierarchy to be Modified preference.

      You must have access to all subsidiaries.