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How To Guide

CaseWare Working Papers | How to balance the Financial Statements

Published:  13/12/2016
How to balance the Financial Statements and balance each of the indicators on the balance check.

  Instructions:

Before attempting to balance the financial statements, you should check 3 things first:
  1. That the Information Store is completed
  2. That the Working Trial Balance balances
  3. And that all the accounts have been mapped
If your CaseWare file has been rolled forward from the previous year and there are new accounts to be mapped; the latest template will show this on the balance check. To see these accounts and map them, double-click on the red triangle. This will take you to the “Assign Mapping Numbers” screen.

Now that your Trial Balance is fully mapped, navigate back to CaseView to go back to your Financial Statements. The Financial Statements will be recalculated and the balancing difference from unmapped accounts will disappear. Follow the recommended steps below to balance each of the indicators on the balance check.

Balance sheet

1. Balancing differences normally occur as a result of incorrect mapping and/ or rounding differences. Let’s first look at how you can address this by looking at rounding differences by placing focus on:
  • Rounding in the Statement of Financial Position (Balance Sheet)
  • Eliminating significant differences in the Statement of Financial Position due to incorrect mapping
2. In some instances, the Statement of Financial Position will be slightly out of balance. This is because the line items in the statement are all rounded off to the nearest currency unit (like Rands, Dollars or Naira) that excludes cents. If the Trial Balance is imported with cents these differences are unavoidable. To eliminate these differences in the Statement of Financial Position, you can switch on the rounding configuration.

3. To switch on the rounding configuration, click on Document | Configuration | Rounding.

4. Select the checkbox to switch on Automatic Rounding.
  • Set the limit for rounding from the drop down list. This limit is interpreted with the rounding relation selected under Options | Rounding. For example, a limit of 15 will automatically round off differences of up to R15 in the SOFP if “R1” is selected under the rounding relation.  Note that the rounding difference has to be lower than the rounding limit for the automatic rounding to be applied.
  • Lastly, select the account that these differences must be posted to, to complete your rounding settings.  Click “OK” to save these settings.
5. As mentioned, if the rounding difference is less than the rounding limit, the Statement of Financial Position will be rounded to zero and the balancing indicator will turn green.

Statement of Cash Flows

Balancing the Statement of Cash Flows 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
• This includes:
o Property Plant and Equipment
o Investment property
o Intangible assets
o Biological assets
o Financial assets, and
o 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.
1. To access the reconciliation Property Plant and Equipment note, type F5 on your keyboard.
2. This will prompt the “Go to Bookmark” dialogue box. Either type or scroll down to find Property Plant and Equipment note.
3. Ensure it is selected, then click OK
4. 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.
5. Click on the expand sign to open the Reconciliation of property, plant and equipment section.
6. 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.
7. 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 Statement of Cash Flow

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 Statement of Cash Flow


To eliminate rounding differences in the Statement of Cash Flow, you can add a rounding configuration as a non-cash flow line item in the cash generated from operations note. Expand the line items and you will be able to view the underlying makeup of the balance as reflected in the Statement of cash flows.

If the templates have been edited by yourself in any way, check that the calculations and inputs are correct.

Net Income per the Income statement does not agree to the 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.

These accounts need to be remapped to mapping numbers that the template recognises.

Opening Retained Income does not equal prior year’s closing

1. Ensure that the Opening Balance for Retained Income in the relevant year matches the Closing Balance of the Retained Income for the prior year.
2. Confirm this in the Assign Mapping Numbers screen.
3. Go to the CaseWare file |Click on ‘Account’ | ‘Assign Mappings’.

User-added image

4. Ensure that the Opening Balance for Retained Income in the relevant year matches the Closing Balance of the Retained Income for the prior year.
5. Confirm this in the Assign Mapping Numbers screen.
6. Go to the CaseWare file |Click on ‘Account’ | ‘Assign Mappings’.

User-added image

7. If the Opening Balance does not match the closing balance, account for the difference by either:
  • Posting an adjusting journal entry
  • Importing the correct trial balance
8. If the Opening Balance does match the closing balance, please attempt to repair the file by performing a repair file
  • Tools | Repair File | Tick all the boxes | Select yes to back up the file
  
 
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