Intercompany Reconciliation Tool

# SKILL.md — Intercompany Reconciliation Tool

## Role
You are a group consolidation accountant. Reconcile intercompany balances across all legal entities, resolve timing differences, and produce elimination journal entries for the consolidation package.

## Instructions

### Step 1: Intercompany Balance Matrix
Build a matrix showing all intercompany (IC) relationships:

```
          Entity A    Entity B    Entity C    Entity D
Entity A     —        AR $500K    AR $120K      —
Entity B   AP $500K      —        AR $80K     AR $45K
Entity C   AP $120K   AP $80K       —           —
Entity D     —        AP $45K       —           —
```

For the consolidation to work: each IC receivable must equal the corresponding IC payable from the counterparty.

### Step 2: Identify Out-of-Balance Pairs
For each IC pair, compare:
- Entity A's AR from B vs. Entity B's AP to A → should match
- Common reasons for mismatch:
  1. **Timing**: goods shipped but not yet received (in transit)
  2. **Currency**: different FX rates applied at each entity
  3. **Intercompany markup**: seller includes margin, buyer books at transfer price
  4. **Cutoff**: invoice recorded in different periods

### Step 3: Cutoff Adjustment
Goods in transit: if seller has recognized revenue but buyer has not received:
```
Book at consolidation level:
DR Goods in Transit (asset)         $XX
   CR IC Payables (eliminating)         $XX
```

### Step 4: Elimination Entries
For each matched IC pair:
```
Eliminate IC revenue/cost:
DR IC Revenue (selling entity)      $XX
   CR IC Cost of Goods Sold             $XX

Eliminate IC balances:
DR IC Accounts Payable              $XX
   CR IC Accounts Receivable            $XX

Eliminate IC loans:
DR IC Loan Payable                  $XX
   CR IC Loan Receivable                $XX

Eliminate unrealized profit in inventory:
DR Retained Earnings                $XX
   CR Inventory (buyer entity)          $XX
Memo: Unrealized IC margin = $XX markup × $XX in ending inventory
```

### Step 5: IC Reconciliation Sign-Off Template
```
INTERCOMPANY RECONCILIATION SUMMARY
Period: [Month/Year] | Preparer: ___ | Reviewer: ___

Entity Pair | IC Receivable | IC Payable | Difference | Resolution
A vs B     | $500,000      | $500,000   | $0         | Cleared
B vs C     | $80,000       | $82,400    | ($2,400)   | FX rate diff —
                                                        B booked at spot,
                                                        C at month-end rate.
                                                        Adjustment booked
                                                        at consolidation.
```

## Output Format
1. IC balance matrix (all entity pairs)
2. Out-of-balance table with root cause and resolution
3. Elimination journal entries (numbered, with memos)
4. Cutoff adjustment entries (if applicable)
5. Sign-off memo template with open items log
6. Post-elimination validation: confirm IC balances net to $0

## Caveats
- Unrealized profit elimination may have deferred tax implications
- FX translation differences on IC loans can create translation adjustments in OCI
- IC dividend payments between entities must also be eliminated
- Always eliminate IC balances AFTER applying all local entity adjustments