Data discrepancies in business systems that tend to occur at the end of the month

Cases of data discrepancies between departments

In the business system, each person in charge of each department of the company uses only the functions necessary for his or her business, and the input information is relayed from upstream to downstream, but in the process, there are cases where data discrepancies occur between departments.

However, data discrepancies are not caused by system failures, but are almost always caused by different input and output methods and timing in each department, which, when analyzed, can be summarized into the following causes

Receivables (A/R) obligations (A/P) balances on the ledger (G/L) differ from balances on the age table (Aging Report)

Theoretically, the beginning of the month A/R and A/P account balances carried forward in G/L should match the previous month's end balance in the Aging Report, but in practice, in most cases, they do not.

When A/R and A/P are occurring across multiple departments

Inconsistencies in business system data are often discovered when the A/P, A/R balance and G/L balance do not match, but there are cases where the total amount itself does not match, and there are cases where the total amount does match but the aggregate amount of each client does not match.

In order to reconcile A/P and A/R amounts by counterparty, an offsetting journal is prepared by splitting the account and cutting off at a specific month end, just as in the case of divisional transfers of assets.

Discrepancy between A/R and Sales when advances are processed on a completed-contract basis.

If you are a salesperson, you may want to check which A/Rs the current month's sales originated from, and then go back to the order from the A/R to see which order the sales originated from. However, naturally, the list of sales displayed on the G/L does not always match the list of A/Rs for the relevant month.

However, foreign exchange gains/losses and tax adjustments for foreign currency denominated A/R are made by the treasurer on a G/L transfer slip at his own discretion, and this is where the difference between the A/R information and the A/R account balance on the G/L occurs.

In addition, if the service is processed on a completed-construction basis, advances received from customers are processed in the Down Payment account rather than the Sales account, and this is converted to Sales the following month, the comparison of Sales and A/R on a monthly basis will not match (too much A/R).

Data adjustment after closing process

It is very common to hear "I forgot to enter this invoice even though it has been paid" after performing the revaluation process at the end of the month and the closing process.

In this case, it is necessary to cancel the closing process and the exchange rate revaluation process, and then the settlement process of Invoice is performed and the exchange rate revaluation process is performed again.

If you modify Invoice without cancelling the revaluation process due to the lack of clarity in this operational procedure, the modified input will not be reflected in the revaluation.

The closing process is mismatched and A/R and A/P settlement process was inputted first.

The A/P balance at the end of the month is revalued at the end of the month rate, but the closing process usually deviates until the next month, so if you do the write-off process during that time, the A/P balance at the end of the month will change.

Possible measures.

Separate realized and unrealized accounts

There are two types of foreign exchange gains and losses at the time of settlement: realized gains and losses based on the difference between the rate at the time of occurrence of A/P and the rate at the time of settlement, and unrealized gains and losses at the time of revaluation at the end of the month.

On the system, it is possible to distinguish whether the foreign exchange gains and losses journalization occurred in the settlement or in the exchange valuation exchange, but on the general account, it is normal to be able to filter only by the account or the customer, so it is better to divide the account itself as described above.

Clarification of operational procedures for irregular processing

When revising A/R and A/P data after closing, the revised amount will not be reflected in the valuation at the end of the month unless the exchange rate revaluation is also cancelled.