How to eliminate rounding differences and adjust rounding of figures in the financial statements

Published: 17/03/2021

How to disclose figures rounded to the nearest 1,000's or 1,000,000's and how to eliminate balancing differences that are the result of rounding.

Instructions:

Disclose figures rounded to the nearest 1,000's or 1,000,000's

Options | Rounding and select the desired rounding relation.
- This menu can also be used to choose to display the the relation either next to or beneath the year.

Eliminating balancing differences that are a result of rounding

Statement of Financial Position

Switch on automatic rounding for the statement of financial position by going to Document | Configuration | Rounding.
The screen below will appear. Switch on rounding by ticking the checkbox. Then select the limit that should be applied. Differences in the balance sheet that exceed the limit will not be rounded. Then select where these differences should be taken to.

Statement of Cash Flows

To eliminate rounding differences in the cash flow statement, add a non-cash line item in the Cash Generated from Operations Note. In the example below, you would have to add a R1 in the current year and nothing in the prior since there are no rounding differences to eliminate.

Net Income per IS equals the NETINC account & Opening Retained Income equals PY balance

To eliminate rounding differences for these two indicators, you will need to pass a journal that will ensure the NETINC rounds up or down just enough to show the same net income as the income statement.
Remember CaseView does not show cents; this means the Income Statement rounds off each line item to the nearest rand.

The NETINC account on the other hand carries cents up until the very last moment and then only the final net income amount is rounded off to the nearest rand. This is where the rounding difference occurs.

Adjusting the NETINC account by increasing or decreasing an expense will present one side of the journal. This can be left as such or the contra-account can be made to be retained income.

A journal is also used to eliminate rounding differences in the last indicator. So if the two balance indicators are out by the same amount; making retained income the contra-account as suggested above will eliminate the balancing difference.

NOTE: An alternative resolution to this would be to import a trial balance that is already to the nearest rand and also ensure all adjustments are also to the nearest rand.

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