[RESOLVED] end of year accrual methodology

[dw85745]

Currently the user can enter a begin and end date and a query is executed to return the recordset., At year end there may be charges that belong in the following year. If the user queries for just the followon year (say 1/1/2011 - 12/31/2011) then those charges that were made in 2010 that belong in 2011 are not returned.

Any suggestions on how best to handle these records??

Some thoughts for how best to isolate these records so they can be found by a query rewrite are:
1) maybe copy and hold these records in a separate "year end" table -- or
2) a flag field noting these belong to the next year (I believe beside a flag, a followon year field would also be needed( -- or
3) ???

Thanks
David

[baja_yu]

I'd go with an additional field. For example, let's say you have financial records with data: transactionID, account, amount, date, comment... Instead of querying for a date range, add an additional field fiscalYear which would group all records belonging to that year, and query by that field.

[Doogle]

I'm not too sure how this problem arises.

I thought that the 'rules' were that for revenue items the 'charge' applies to the date the invoice / order was raised and therefore that Fiscal Year. In some areas it is possible not to release profit to the bottom line where there is a high risk that payment will not be made or there's a hgh risk that additional unexpected costs may be incurred (eg a new Software Project that's just been completed - especially one associated with a Government Department ).

These decisions are normally made and justified by the Accountants and are put into a 'Reserved' Account which rolls on from year to year. Note that this requires manual intervention, to identify the items / projects where profit is to be 'reserved' and the amount to be held over.

This implies you would need an additional Table, or Nominal Ledger Account, to hold the 'reserved' details and a user interface to select the items and amounts to be held which would be transferred into next year's Ledger.

The only other area where costs are 'held over' is depreciation of Capital Items (eg Buildings where the total cost can be distributed over something like 25 years). In these cases the 'normal' method is to charge each year's accounts with 1/25 of the total cost. The Accounting Laws in each country define the items that can be depreciated and the number of years.

If you have this sort of issue you'll need a Table containing all the Capital Expenditure details of qualifying items and a bit of maths to dertermine the total Depreciation costs for the year and the Net Book Value. (ie a running total of the value once depreciation for this year has been subtracted)

In my experience the 'problem' is the other way round and some businesses issue Invoices for the next fiscal year on the last day of this fiscal year, and 'freeze' ordering for the last month of the fiscal year, to boost this year's figures, keeping their fingers crossed for next year !

Accountancy is an Art Form not a Science (IMHO, of course)

[dw85745]

Thanks baja_yu and Doogle, for responding.