This tool contains three sample policies that outline guidelines and procedures related to intercompany transactions. Sample 1 focuses on the procedures and guidelines for managing intercompany transactions within a corporate framework. The purpose of this policy is to ensure that assets, liabilities, revenues and expenses are allocated correctly to the appropriate legal entities based on the economic activities and obligations incurred. This is critical for accurate financial reporting and compliance with generally accepted accounting principles (GAAP).

Sample 2 outlines the responsibilities of both the invoicing and receiving parties within the company, detailing the process from transaction initiation to reconciliation. It emphasizes the need for timely and accurate processing of intercompany transactions to avoid financial discrepancies and resource wastage. Key roles, such as the intercompany gatekeeper, are defined to oversee the adherence to these policies, ensuring that all transactions are recorded correctly and disputes are resolved swiftly. This sample serves as a guide for companies to develop or refine their own intercompany accounting practices to maintain financial integrity and operational efficiency.

Best-practice procedures include:

• Intercompany transactions are an integral part of day-to-day operations, and proper attention must be given to the initiation, accounting and settlement of such transactions.
• Transaction communication and approvals must be accomplished prior to booking entries.
• Intercompany customer and vendor transactions require the same focus as third-party customers and vendors.
• Both parties in the transaction should share the responsibility of keeping the intercompany accounts in balance.