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Definition · multi-entity

Entity hierarchy

Entity hierarchy is the ownership structure and thresholds that determine whether an investment is consolidated, equity-method, or held at cost/fair value. For entity hierarchy, the important details are the accounting period, source evidence, reviewer, materiality threshold, and control purpose that make the treatment auditable during close, reporting, and later review.

Also known as legal entity hierarchy, ownership hierarchy, corporate structure hierarchy

Written by Pluvo TeamReviewed by Pluvo Team
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Why it matters

Understanding entity hierarchy matters because close, reconciliation, and audit work depend on consistent timing, source evidence, review thresholds, and ownership. A loose definition creates avoidable rework. Pluvo models the ownership structure in its ontology, so consolidation, equity-method treatment, and NCI allocation follow the actual hierarchy rather than a hard-coded mapping.

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In practice

  • Close example

    Teams use entity hierarchy during close, review, or audit support when a balance or transaction needs evidence. The controller should be able to trace the number to source records, timing, reviewer, and control threshold.

  • Pluvo example

    Pluvo models the ownership structure in its ontology, so consolidation, equity-method treatment, and NCI allocation follow the actual hierarchy rather than a hard-coded mapping.

In practice, teams should define entity hierarchy with a clear source, owner, time period, and decision before they use it in reporting, planning, or operating reviews.

Understanding entity hierarchy matters because close, reconciliation, and audit work depend on consistent timing, source evidence, review thresholds, and ownership. A loose definition creates avoidable rework. Pluvo models the ownership structure in its ontology, so consolidation, equity-method treatment, and NCI allocation follow the actual hierarchy rather than a hard-coded mapping.

A strong workflow for entity hierarchy separates the definition from the action: first agree what the term means, then decide how it is measured, when it changes, and who is accountable for the next step.

Pluvo models the ownership structure in its ontology, so consolidation, equity-method treatment, and NCI allocation follow the actual hierarchy rather than a hard-coded mapping.

04

FAQ

What is an entity hierarchy?

Entity hierarchy is the ownership structure and thresholds that determine whether an investment is consolidated, equity-method, or held at cost/fair value. For entity hierarchy, the important details are the accounting period, source evidence, reviewer, materiality threshold, and control purpose that make the treatment auditable during close, reporting, and later review.

How does ownership percentage affect consolidation treatment?

To use entity hierarchy, start with the decision, then confirm the source data, timing, calculation logic, and owner. The analysis is strongest when a reviewer can trace the answer back to the records that produced it.

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Sources

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