Subsidiary reorganization or modifying the existing subsidiary hierarchy is one of the risky process in Netsuite. Netsuite has provided a license agreement that includes the consequences of the subsidiary hierarchy modifications and we can see this when we change the subsidiary hierarchy modifications preference.
We need to follow several steps in the subsidiary hierarchy modifications. The steps are:
- Reports download
We have to change the subsidiary hierarchy in Netsuite. It will make changes in the reports also. When we create a new parent-subsidiary or change the level of existing parent or child subsidiaries, then the changes will be there in the reports. So we need to download and keep the important reports from Netsuite. The reports will vary according to the type of business and the business processes. Some examples of the important reports to download are added below:
- Profit and Loss
- Balance Sheet
- Cash Flow
- General Ledger
- Trial Balance
- VAT Reports
- AP Aging Summary
- AP Aging Details
- AR Aging Summary
- AR Aging Details
Download all the above reports at the consolidated level and for each subsidiary and keep them for validation after the subsidiary hierarchy change.
2. Consolidated exchange rates download
When we change the subsidiary hierarchy in Netsuite, then the current consolidated exchange rates will also change automatically. So we need to download and keep the existing consolidated exchange rates to validate the change in rates after the subsidiary hierarchy modification.
3. Create new subsidiaries
Once the reports and consolidated rates have been downloaded, then we need to create new subsidiaries if needed. It will be the child of the current top-level parent-subsidiary.
4. Subsidiary hierarchy change
For changing the subsidiary hierarchy, we have a preference in,
Set up > Company> General preferences> Allow subsidiary to be modified. We have to specify the date as today’s date. The figure below shows the preference to modify the subsidiary hierarchy.
Once the preference has been set up, Netsuite will show a message box that shows the license agreement and it includes the consequences of the subsidiary hierarchy modifications.
5. Elimination subsidiary creation
If we have created new subsidiaries or changed the existing subsidiary hierarchy in a way to create a new consolidation group that has no existing elimination subsidiary, then we have to create an elimination subsidiary for that consolidation group.
6. Financial report layout
If we are using customized financial reports and have customized layouts for the subsidiaries in the report, then we have to update this layout for the newly created subsidiaries. To change the financial report layout,
- Go to, Reports>Financial>Row Layout Assignment.
- Click the “Edit” button at the top.
- Click on the layout of the report which we need changes and select the custom layout.
- The layout will change once we have selected the next layout. Then validate the report for which layout has been changed.
7. Update consolidated exchange rates
If you have manually calculated the consolidated exchange rate, then we can update the rates after reopening the accounting period. Then close the periods without running any period close tasks, as it may make changes in the closed periods’ reports.
8. Data validation
After all the above steps, we can validate our reports which are in the new subsidiary hierarchy, by comparing it with the reports downloaded before the subsidiary hierarchy modification.
Notes
- The process of subsidiary hierarchy change needs to be tested first in the sandbox and then after validation of the result, we can move it to production.
- Provide the Subsidiary logo, website, Legal name, Return email address, and VAT Registration number while the creation of the top parent subsidiary. After subsidiary creation, these fields cannot be added or edited. It is only in the case of the top parent entity.