ASC 810-20: Navigating Control of Partnerships and Similar Entities Compliance

Posted In | ASC Accounting

Accounting Standards Codification (ASC) Topic 810-20, Control of Partnerships and Similar Entities, provides guidance on the consolidation of financial statements for partnerships, limited liability companies, and other similar entities. Ensuring compliance with ASC 810-20 can be complex, especially when dealing with intricate partnership structures and varying control arrangements. To address these challenges, companies are increasingly adopting modern accounting solutions and best practices to streamline their compliance efforts and enhance the accuracy of their financial reporting. In this article, we will explore some of the tools and strategies that can help companies navigate the complexities of ASC 810-20 compliance.

 

1. Implementing Advanced Consolidation Software

One of the key challenges in complying with ASC 810-20 is the consolidation of financial statements for partnerships and similar entities. Advanced consolidation software can assist companies in automating the consolidation process, ensuring accurate and consistent application of ASC 810-20 guidelines.

 

Key features to look for in advanced consolidation software include:
 

• Support for various partnership structures and control arrangements
   

• Integration with financial reporting and enterprise resource planning (ERP) systems
   

• Automated intercompany eliminations and reconciliations
   

• Comprehensive reporting and analytics capabilities

 

2. Developing a Robust Internal Control Framework

A strong internal control framework is essential for ensuring accurate and consistent application of ASC 810-20 guidelines. Companies should establish clear policies and procedures for the identification, assessment, and consolidation of partnerships and similar entities.

 

Key steps in developing an effective internal control framework include:
 

• Defining clear roles and responsibilities for each stage of the consolidation process
   

• Developing written policies and procedures for the identification, assessment, and consolidation of partnerships and similar entities
   

• Establishing a formal process for reviewing and approving consolidation decisions
   

• Implementing regular internal audits to assess compliance with ASC 810-20

 

3. Leveraging Expertise and Professional Services

Given the complexities of ASC 810-20, many companies choose to collaborate with external experts and professional services providers to help them navigate the intricacies of the standard. By working with experienced accounting professionals, businesses can access valuable insights and guidance to help them optimize their consolidation processes and ensure accurate financial reporting.

 

4. Adopting a Continuous Improvement Mindset

In order to stay current with the ever-evolving regulatory landscape, companies must embrace a continuous improvement mindset when it comes to ASC 810-20 compliance. This involves regularly reviewing and updating consolidation methodologies, staying informed about changes in accounting standards, and adopting new technologies and best practices as they become available.

 

Key steps to fostering a continuous improvement culture include:
 

• Regularly evaluating consolidation methodologies for accuracy and efficiency
   

• Staying informed about changes in accounting standards and regulations
   

• Encouraging ongoing education and training for accounting staff
   

• Implementing a robust internal audit process to ensure compliance
   

As businesses face increasing pressure to comply with complex accounting standards like ASC 810-20, the adoption of modern solutions and best practices has become essential. By implementing advanced consolidation software, developing a robust internal control framework, leveraging expertise and professional services, and adopting a continuous improvement mindset, companies can streamline their compliance efforts and enhance the accuracy of their financial reporting. As the regulatory landscape continues to evolve, staying current with these tools and strategies will be critical for companies seeking to maintain compliance and make informed decisions regarding their partnerships and similar entities.