Let me explain. When we build a sales report, we generally start with all the data we want and then sort and select from there. We may select all invoices and matching customer data. We may sort those invoices by region, salesperson, store, or line of business. We may allow the user to select one or several regions, salespeople or lines of business. But no matter how we sort or select, we can always run the report for everything and confirm we’re getting the full picture.
Financial statements are different. With the exception of a very basic trial balance where you can select all the natural balance accounts, a financial statement is built line by line. For example, the first line may be sales – 40000-42000. The next line may be intercompany sales 420001-44000, and then COGS 50000-52000, and so on. The report builder has to make sure to include every account on the report if he/she wants to figure out net income, for example.
If all your account ranges are nice and continuous, it’s not hard to make sure you’ve included everything. But account ranges have a tendency not to stay neat and tidy. Indeed, today I had to adjust logic on a legacy report so that advertising, which we had set to a tidy 60000-69999, is now 60000-69999 except for 66600 and 66750, which we had to add to a different line. And I’m not even touching on the challenge of insuring that other parts of your account string are considered (such as legal entity, profit center or department).
Another problem is that people accidentally leave accounts off statements. At Red Three, we’ve designed ways to ensure this doesn’t happen. (For example, by using attributes in Lawson and using hierarchies in Oracle EBS – a topic for a future post).
But sometimes, people purposely leave accounts off reports because they assume a certain range will always net to zero. We see this sometimes with intercompany eliminations or WIP (work in progress) costs that wind up in inventory. Generally, this isn’t a problem until someone makes a mistake. But then the report won’t reveal why it doesn’t net to zero.
This is why, when building a financial report that excludes certain accounts because they “always” zero out, it’s important to have backup in case someone makes a mistake. Yes, you’ll have reports that print nothing but zeros for months in a row. But when someone makes a mistake, and you’re trying to close on a tight deadline, you’ll be happy to have that report.