Validating the financial reports is important to ensure they include all G/l accounts and balances. Validating your financial reports is accomplished by comparing three key reports: the Trial balance, the Balance Sheet and the Income Statement..
Inform contains the following financial reports:
- Trial Balance: this is a listing of all General Ledger accounts and balances at a point in time; usually the last day of the requested accounting period.
- The Trial Balance will always serve as the basis for all other reports. In the absence of a completed Balance Sheet or Income Statement use the Trial Balance as the foundation.
- Producing the Trial Balance requires that a single accounting period be selected for all accounts and source codes
- To generate a trial balance, in the G/L inquiry screen.select the accounting period, select SEARCH and TRIAL BALANCE
- Balance Sheet: this report indicates the ownership position at a point in time; usually the last day of the requested accounting period. The content represents the Accounting Equation:
- A balance sheet can be generated from this menu: Accounting>General ledger>Financial Reports. Select the spy glass to select the report.
- Income Statement: this report shows the performance of the business for a period of time, usually a single accounting period. Comparisons are often made from the current year to the prior year. Other metrics, such as percentage of overall revenue, are useful as well.
- An income statement can be generated from this menu: Accounting>General ledger>Financial Reports. Select the spy glass to select the report.
- Run a Trial Balance for a specific accounting period. Note the P&L amount on the last page of the report. The Trial Balance indicates a profit if the value is in the Credit column; otherwise it is a loss. The P&L amount is what needs to be validated on the balance sheet and the income statement.
- Ensure that assets = liabilities + stock holder's equity
- Ensure that the P&L amount from the Trial Balance agrees to the net income/loss in the retained earnings section.
- Ensure that the P&L amount from the Trial Balance agrees to the YTD net income/loss on the income statement.
Assets + Liabilities = Owners Equity
Validating the Financial Reports
2. Validate the Balance Sheet
3 . Validate the Income Statement
- The G/L Chart of Accounts should be structured in a logical order.
- If there are Balance Sheet accounts numbered higher than the P&L Break account, or Income Statements accounts with a lower number, the results will be inaccurate.
- The account used as the P&L Break Account must occupy a value higher than the last Balance Sheet account and lower than the first Income Statement account. This account should never have any transactions or balance.
- Each G/L account must live in a group for placement on the report. If an account is omitted from a group, or included in more than one active group, the results will be unfavorable. Run a report in the GL account screen to review the G/L accounts and GL groups.
- Balance Sheet accounts must have a category group to define report position.
- Income Statement accounts must have a category group to define report placement, plus the “IS” summary group to calculate income or loss for the period and update the Balance Sheet.
In the report structure of the financial report (setup tab>report settings)
- Check the financial report structure for missing or duplicated groups
- Check the report structure for missing levels in the formula hierarchies. If you are inconsistently using Subtotals, Totals and Grand Totals, the results may be unfavorable.
- Ensure all groups are included in the financial statements by running a report in the G/L group screen that includes the G/L groups and the reports.
- If there are unresolved differences, try exporting each report to Excel. You can then compare the year to date values for all accounts to find the duplication or omission.
- To export unformatted content (.csv), run the report to the screen and choose Print. Choose Save and select .csv format.
- To export formatted content (.xls), run the report to the screen. Right-click anywhere in the data portion of the window (known as the “grid”) and choose Export to Excel.
- Navigate to Accounting > General Ledger > G/L Account to edit a single account at a time. Use the Report button to view a list of accounts and groups. Select EDIT to update the GL group.
- To edit several accounts at a time, go to Accounting > General Ledger > G/L Group. Select EDIT to update the GL group.
- To produce a list of Groups with member accounts, click Report.
Adding a group to a financial report
For information on updating the financial reports see Create financial reports