How the check works
Francis subtracts the ending balance on the cash asset line item (mapped to your GL) from the ending cash on the cash flow statement:Check fails for actuals months
Work through these steps in order. The earlier steps catch structural errors; the later steps catch journal-entry-level issues.P&L and balance sheet prerequisites
1
Check account mappings
Have all P&L and balance sheet accounts been mapped? The cash flow statement depends on these mappings.
2
Check for manual overrides
Are there manual overrides in the P&L or balance sheet that cause calculated values to diverge from your accounting system?
3
Check P&L subtotals
Are the P&L subtotals set up correctly, producing an accurate net profit line? This line feeds directly into the cash flow statement.
4
Resolve the BS check first
Is the balance sheet check passing? Resolve that first.
5
Check for non-GL line items
Does the P&L or balance sheet contain line items with values not sourced from your accounting system?
Cash flow statement line items
1
Confirm all cash movements are included
Are all line items that represent cash movements included in the cash flow statement?
2
Confirm non-cash items are excluded
Are all non-cash line items excluded? Common items incorrectly included:
- Depreciation (P&L) and accumulated depreciation (contra-asset)
- Income from subsidiaries (P&L) and investment in subsidiaries (asset)
3
Check multi-currency adjustments
If you use multiple currencies, have you made the relevant adjustments? See the Currency integration.
Cash flow statement formulas
1
Check for missing formulas
Are any formulas missing? Check for cells that are blank where a formula should be.
2
Check signs
Are the signs correct? Asset formulas need a minus sign; liability and equity formulas need a plus sign. An increase in liabilities or equity means you’ve gained or kept liquidity. An increase in assets means you’ve tied up liquidity.
3
Check balance sheet movement deltas
Are balance sheet movement deltas set up correctly (this period minus previous period)?
Journal entries
1
Check for cash journals in non-cash lines
Have any cash journal entries been posted to non-cash line items, causing them to be excluded from the cash flow statement? Look for journal entry descriptions that suggest cash activity: invoice allocation, expense.
2
Check for non-cash journals in cash lines
Have any non-cash journal entries been posted to cash line items, causing them to be incorrectly included? Look for descriptions that indicate non-cash activity: depreciation, subsidiary, adjustment entry.
If the check is off in only one or a few months rather than consistently, the issue is likely a specific journal entry rather than a structural error.