Regarding the legal entity

[amicguys]

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Hi All,
Iam working for central bank (like the RBI in India).
They are located at ****X which is a head office, and they have three branches at different places.
They have a school as well, which is owned by the bank.
Before that I would like to bring few points to your notice.
#61656; The school is registered separately
#61656; School has its own ledger books
#61656; School has its own COA.
#61656; School files its own tax returns
#61656; School owns the bank accounts.
#61656; They also said that it is registered as a separate entity. (But Bank had 99% hold)
#61656; The school also performs several other activities such as catering services, hotel management (means lodging & hotel Business) and even they are into laundry services and all these information is captured in school books as they are the part of school activities.
#61656; The school files the financial reports separately and audited separately by the external auditors.
#61656; Students pay the fee to school which was drawn in the favor of School name and even those bank accounts are owned by the school which was opened in other commercial banks.
#61656; If a student wants to sue the school means it will done at school level only. They cannot sue the Bank.

<u>About Employees:</u>

#61656; The employees were paid by the Bank (but thing is that they are the employees of Bank even the offer letter is also issued by the bank) and are performing the duties in school as a seconded employee
#61656; When the part-time employees comes to school they are paid by the School it -self. I mean the school issues check.

<u>About Purchase orders</u>
#61656; When school need goods they raise the requisition from the school and will forward the same to Bank to do the next process.
#61656; The bank will raise the purchase order on behalf of them.
#61656; When the goods come it will be sent to school.
#61656; When the goods are purchased and delivered they will decrease the same from the budget allocated for the school.
#61656; And even if any legal obligations are there (relating to purchase order means the bank will take the responsibilities cause the purchase order was raised from bank).


<u>Assets:</u>

#61656; All the assets are owned by the Bank.
#61656; If any other assets are there means they will shown them in school books but they won't show them in Bank
#61656; IF any donors donate the assets means that also they will not show in bank and will show in School which is true.


<u>Obligations:</u>

#61656; If i define it as a separate legal entity, then do I need to consider the school as a cost center in bank books or not (i.e. in COA?)
#61656; If not then how does the bank fund school?
#61656; Do I need to define it as an operating unit
#61656; And more important thing is that all the purchase order and payments for school are made by the bank. So every transaction they do would be recorded as intra or inter-company transaction. So at the time of reconciliation it would be more complicated.
#61656; How do I consider the school is that to be defined as branch and define it as operating unit? If it is then what is the justification we can give
#61656; Can I define it as a separate entity, if I define that as separate entity means then do I need to define a separate ledger or not
#61656; Do I need to define the same CoA for both the school and Bank; the most important thing which we have to consider is as most of the accounts which bank need may not be required for school and vice-versa.
#61656; And also should consider the financial reporting for school and bank.
#61656; If we go by different COA we meet the requirements of both. Then we can do the consolidations.