Start with activities and responsibilities
Clarify who enters into agreements, approves expenses and holds the records. This helps establish the flows between local operations and head office.
Distinguish local and group calendars
Group closing deadlines may differ from local reporting deadlines. Agree an input cut-off and a process for adjustments received after closing.
Define the reporting package
Agree accounts, cost centres, presentation currency and required explanations in advance. The mapping between local records and the group format should remain traceable.
Document allocations
Costs and settlements with head office need a business rationale and supporting records. Accounting and tax treatment depend on the structure and actual operations. Do not assume that a branch and a permanent establishment have identical treatment in every situation.
This guide provides general orientation. A transaction’s treatment is established after reviewing its records and applicable rules.