Welcome back to the news! Today we’ll be tackling Totals Miscalculation.
We get a few phone calls from clients who are struggling to get the totals in the income statements section of iXBRLMate to match the totals in the provided AFS. There are a few reasons for this, and a few fixes.
Reason 1. Miscalculation on the entity’s behalf
If your totals are 1 or 2 figures away from the “right” total, the most likely culprit is the entity who provided you with their AFS. I’ve been running into this problem quite a bit recently, and the conundrum is as such; Do I contact the entity to alert them of their error or can I add/subtract a figure by 1 or 2 to make them add up according to the AFS?
I usually choose the latter option, as it’s more important that the totals match up, and the information will still be materially correct. I like to double-check by adding all the figures up myself, but I’ve never come across an instance where the program has miscalculated.
However, some discrepancies are too large to change figures around. In the example below, I elaborate on this.
Consider the following image, we will be focusing on the 2021 column;
At first glance we can see that, generally speaking, ~R465 million – ~R4.5 million ≠ R1.5 million.
When we put this into the program as intended, we get;
As you can see, our ‘Gross profit” figures are wildly different.
I mess around, do my own maths to figure out what the “Cost of sales figure” should be, and come to the conclusion that the brackets were left out of the “Cost of sales” figure in the AFS PDF;
Thereby making it a positive figure, which then was used to calculate the ‘Gross profit” of 710,000,000, which was used to calculate “Operating profit”;
But once we get to “Profit (loss) before tax”, we see that the total has magically dropped to 1,500,000. If we simply add brackets to our “Cost of sales” figure to make it negative and do the maths again, we see that the totals add up correctly.
This would be a mistake on the entity’s behalf, and after finding the solution, I would contact them to enquire about the mishap.
If you go back to the program screenshot for a second;
You can see that there are no brackets in the “Cost of sales” figure (230,000,000) I put into the program. This leads me into…
Reason 2. Mixing up debit and credit
In our program, the debit and credit in the “Expect” column indicate to the calculator that the numbers are either positive (credit), or negative (debit). In AFS, brackets indicate a negative number. See below;
In the case of this image, the program is already reading “Cost of sales” as a loss, due to the “debit” expectation, so there is no need to add brackets.
It’s easy to miscalculate totals when you’re adding brackets exactly as they appear in the AFS, so if you find yourself struggling with totals, fiddle with the brackets, add/remove them on figures until it comes right.
Reason 3. Simple human error
The last, and most boring reason is the possibility that you’ve entered a figure wrong somewhere in the income statements. Perhaps you were manually entering the numbers and switched 356 to 365. It’s happened to us all. I recommend thoroughly checking each figure before trying any of the other solutions.
And there we have it!
If you’ve tried all of the above and you’re still struggling, feel free to email us at support@itmates.co.za , or call us at 021 852 2528. Follow us on LinkedIn at www.linkedin.com/in/carl-robinson-253b44165