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CaseWare Working Papers | Opening Cash and Cash Equivalents out of balance | How do I balance the Statement of Cashflows?

Published:  01/11/2016
How do I balance the Statement of Cashflows if it is out of balance?


Balancing the Statement of Cashflows

Balancing the Statement of Cashflows is reconciling the cash at the beginning of the year to the total cash at the end of the year. The biggest movement comes from the cash flows from investing activities. This is populated from the reconciliation notes in the financial statements. 

Completing the reconciliation notes 

What needs to happen to balance the Statement of Cashflowsv(SOCF)?
  • This includes:
    • Property Plant and Equipment
    • Investment property
    • Intangible assets
    • Biological assets 
    • Financial assets, and
    • Any other non-current assets 
Let’s look at an example. Here we will demonstrate how to populate the reconciliation in the Property Plant and Equipment note. 
  • To access the reconciliation Property Plant and Equipment note, type F5 on your keyboard. 
  • This will prompt the “Go to Bookmark” dialogue box. Either type or scroll down to find Property Plant and Equipment note. 
  • Ensure it is selected, then click OK
  • The Property, Plant and Equipment or PPE note consists of a summary table as well as reconciliation sections, one for the current year and one for the prior year. 
  • Click on the expand sign to open the Reconciliation of property, plant and equipment section. 
  • The reconciliation table can be automated by mapping the movement accounts on the Trial Balance. The client’s Trial Balance will have balances and not movements. 
  • You will have to manually reconcile the Property, Plant and Equipment note by typing in the correct balances in the yellow input cells. The client’s fixed asset register is mandatory in completing this note.  
  • The red differences will then disappear and should be reconciled to Zero

Completing the input fields

After you have completed the reconciliation tables and your cash flow statement is still not balanced, then you would move on to look at how you can complete the input fields in your Cash Flow Statement. 

Not all the fields on the statement will pull through automatically. Some may require manual input if their effect on cash balances needs to be specified. An example of this is the effect of foreign exchange gains (losses) on cash balances. The entire account balance is adjusted for as a non cash flow item in the Cash Generated from Operations note, but because it does affect the amount at which cash flows in or out of the business, you have to then disclose this effect separately on the face of the Cash Flow Statement. 

Completing the notes to the Cash Flow Statements 

Here, there are also figures in the notes of the cash flow statements that require manual population. These contribute to the undefined difference seen on your balance check. 

Rounding differences in the SOCF

To eliminate rounding differences in the Statement Of Cash Flow  you can add a rounding configuration as a non-cashflow line item in the cash generated from operations note

Net Income per IS not equal to NETINC account

This difference occurs when an Income Statement account has been mapped to the Income Statement but the class field has not been populated. This can happen with an outdated mapping number where the account appears as being mapped but because the template does not recognise the number, it cannot autofill the other account properties. It will assign it as “unnamed mapping” and not know to classify it in the Income Statement, preventing it from pulling through. 

Opening Retained Income does not equal prior year closing

When you import your Trial Balance into CaseWare, your closing balance for the prior year should always be the same as your opening balance for the current year. This indicator can be set off when the accumulated profit or loss balance in the Trial Balance gets overridden and does not pull through correctly to the Statement of Changes in Equity. This can be resolved by removing the override as mentioned earlier on. Take note that if you do not have the Trial Balance for the year prior to the earliest year disclosed in the Financial Statements this will always be an indicator. Here you can manually input this figure. 
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