Intercompany Reconciliation in the UAE — Practical Guide

Intercompany reconciliation is essential for group-level accuracy, audit readiness and correct financial reporting. This guide explains a clear process for businesses in Dubai and the wider UAE, lists required documents, highlights common issues and outlines next steps you can take with AL SAHRAA Businessmen Services LLC.

Key points at a glance

What it is: matching balances and transactions between related entities to ensure books agree.

Why it matters: eliminates intercompany drift, supports consolidation, GST/VAT compliance, and audit trails.

Typical scope: receivables/payables, loans, management fees, cost allocations, inventory movements and intercompany financing.

Outcome: reconciled schedules, identified differences, suggested adjustments and an action plan.

Typical intercompany reconciliation process

1. Scope and plan - Identify related entities, currencies and periods. - Define accounts to reconcile and reconciliation frequency. 2. Data collection - Pull AP/AR subledgers, trial balances, bank statements and supporting invoices. 3. Matching and exception listing - Match transactions by date, amount, reference, invoice number or netting arrangements. - Prepare an exceptions report for unmatched items. 4. Investigation and resolution - Trace origin (posting errors, timing, foreign exchange, missing documents) and propose corrections. 5. Adjustment and confirmation - Post agreed journals, obtain counterparty confirmations where required. 6. Reporting and controls - Deliver reconciliation schedules, variance analysis and recommendations for process improvements.

Documents commonly required

General ledger and trial balance for each entity

AP and AR sub-ledgers

Intercompany invoices, credit notes and supporting contracts

Bank statements and payment advices

Loan agreements, promissory notes, and interest schedules

Cost allocation memos and management fee calculations

Foreign exchange rate documentation (if applicable)

Common reconciliation issues and practical fixes

Timing differences: agree cut-off dates and include adjustment entries where appropriate.

Missing documentation: request invoice copies or payment advices and document follow-ups.

Currency conversion variances: fix policy for FX rates and post revaluation journals when agreed.

Duplicate or misposted entries: trace to source entry and correct underlying ledger posting.

Timelines and deliverables you can expect

Small scope (one intercompany pair, one period): 3–7 working days for a first-pass reconciliation.

Medium scope (multiple entities, multiple months): 2–4 weeks depending on data quality.

Deliverables: reconciliation schedules, exceptions list, proposed adjusting entries, summary report and recommended control actions.

FAQs

What is intercompany reconciliation and when should I run it?

Reconciliation is matching intra-group balances and transactions. Do it monthly for active trading relationships, quarterly for low-volume relationships, and before consolidation or audits.

Who should be involved?

Finance teams of the affected entities, group accounting, treasury (for loans/payments) and, where applicable, tax or transfer-pricing specialists.

How long does it take and what affects timing?

Data quality, number of entities, transaction volume, and responsiveness of counterparties drive timing.

Will AL SAHRAA post adjusting entries or only produce schedules?

AL SAHRAA can prepare reconciliation schedules and recommend journal entries; we can also assist with posting under agreed engagement terms. Exact scope is defined in the engagement agreement.

Next steps

1. Gather the documents listed above for the period(s) to be reconciled. 2. Decide scope (which entities/accounts/periods). 3. Request a scoped quote so AL SAHRAA can propose timeline and deliverables.

Call to action

Request a quote from AL SAHRAA Businessmen Services LLC to get a tailored plan for Intercompany Reconciliation in Dubai and across the UAE. Contact us via our website or office to discuss scope, timeline and fees and arrange an initial review.