Resolve a disputed intercompany service charge before group close

Ask the charging entity and recipient to identify whether the disagreement concerns work performed, the approved rate, allocation, period, currency, or tax treatment. Keep these questions separate in the reconciliation. An entity refusing a charge because it lacks supporting detail needs a different resolution from one that disputes the group's allocation policy.

Obtain the service agreement or approved internal policy and the calculation actually used. Identify the legal entities involved and the owner authorized to resolve the commercial disagreement. The accounting team can reconcile records and explain differences, but it should not invent a rate simply to make the group balances match before the reporting deadline.

List the costs or service quantities included, exclusions, allocation driver, and rate. Tie the source total to the supporting records and confirm that the same period is used. Check whether costs already charged directly to the recipient were included again in the shared pool. Duplicate inclusion can create a balanced intercompany posting and still misstate each entity's results.

For an illustrative $60,000 shared-service pool, an approved 40% allocation to one recipient produces $24,000 before any separately assessed components. If $5,000 of that pool had already been charged directly to the same recipient and should be excluded under the policy, the calculation needs review. The example demonstrates the reconciliation issue, not a transfer-pricing conclusion.

IFRS 10's consolidated statements present a parent and its subsidiaries as one economic entity. That group view does not remove the need to support the entries in each entity's books. Determine the approved charge and entity treatment before relying on a consolidation elimination to hide the disagreement.

Prepare a bilateral bridge showing the charging entity's balance, recipient's balance, timing items, and disputed components. Record which side needs an approved correction and whether the group report needs a separate adjustment. Keep tax and transfer-pricing questions with the relevant specialists; a mechanically matching charge does not establish compliance with those requirements.

The decision record should identify the service, accepted amount, allocation basis, accounting period, and evidence. If the commercial owner changes the rate or scope, retain the original calculation and approved revision. Ask the accountant to assess whether the change corrects an error, updates an estimate, or represents a new agreement with different period consequences.

IAS 24 includes related-party services and outstanding balances within its IFRS disclosure context. Provide the relevant agreement and transaction information to the disclosure owner even after the numerical difference is resolved. The entity-level disclosure assessment and the group elimination process may use different populations.

Agree the source file, allocation driver, review owner, and acceptance deadline for future charges. Send recipients enough detail to review the basis before posting becomes urgent. Keep disputed items identified separately from undisputed activity so one unresolved component does not make the entire monthly population opaque.

After the approved correction, compare both entities' ledger references and the group's elimination entry. Verify that the same charge has not been corrected twice through a credit and a journal. Retain the agreement, calculation, resolution, and final bilateral bridge. The next close should start from an accepted balance and a defined method for the next service period.