Money
The group, and what you planned
Several entities as one set of figures, translated from rates somebody chose — and a budget that posts nothing and constrains nothing.
Consolidation
A group is a different set of lines, not a different statement, so it uses the same renderer as one entity's statements. A second renderer would eventually disagree with the first about a subtotal, on two screens somebody can open side by side.
The currency is a choice rather than a guess. A group with entities in two currencies has two consolidations, and picking one for you would put a figure on screen whose denomination nobody chose.
Translating an entity that keeps its books elsewhere
| Statement | Rate | Because |
|---|---|---|
| Balance sheet | Closing | A position is worth what the currency was worth on the day |
| Profit and loss | Average | A period is worth what it was worth over the period |
Translating both at one rate makes the statements agree and both of them wrong. Translating them properly leaves a residue, and that residue is the translation reserve — a real line in equity, put on the balance sheet where an accountant expects to find it rather than reported beside a statement that does not add up.
Rates are supplied, never fetched
Which rate applies is an accounting policy decision with a tax consequence, and a figure pulled from a market feed is one nobody chose and cannot defend. An average in particular is not computable from closing rates — an average of what, weighted how, is exactly the question the accountant answers — so a closing rate is never substituted for a missing average. The entity stays out, and the screen says which rate is missing.
- The most recent rate on or before the date, never interpolated. A rate between two dates is a figure nobody supplied.
- Each entity converts at its own rate before anything is summed. Summing first and converting the total would apply one entity's rate to another's figures.
- Which rate each entity came in at is shown. A translated figure somebody cannot reproduce from a rate they can see is one they will not sign.
What the entities charge each other
A group total that counts intercompany balances counts the same money twice — one entity's receivable is another's payable. Mark those accounts as intercompany and they are eliminated.
Which accounts those are is your decision
Nothing in a chart says so by itself, and guessing from a name is how a real customer balance disappears out of a group figure.
Two sides should net to zero across the group. When they do not, the residual is reported rather than absorbed — something is recorded on one side and not the other, and that is a real error worth seeing. It is the point of eliminating rather than merely hiding.
Every group figure traces back to an entity: the period result per entity, after eliminations, adding to the group's own result. A consolidated number nobody can trace is one nobody argues with and nobody trusts.
Budgets
A budget posts nothing and constrains nothing
No entry is ever refused for taking an account past its budget. A ledger that would not record what happened because it exceeded a plan is one nobody can use. It is only ever a second column beside the first.
A figure per account per month, never a year divided by twelve. Seasonality is the whole point: December and August are different businesses, and spreading an annual figure evenly makes every quiet month look like a failure and every busy one like a triumph.
- A missing line is unbudgeted, not zero
- An account nobody put a figure against has not overspent by infinity — nobody said anything about it. It is reported as its own state with the accounts named, because folding it into *over budget* puts every unplanned account at the top of the overspend list, and that is how a variance report stops being read.
- A zero deletes the line
- *We planned to spend nothing here* and *nobody said anything* are different facts that produce different reports, and an empty cell in a spreadsheet almost always means the second.
- Favourable and adverse are named
- Spending less than planned is good and earning less is bad, and the same subtraction produces both. A column of signed numbers is reliably misread by whoever is skimming it, which is everybody.
- Compared over the same months
- A whole year's plan against three months of trading is how a variance report gets shown to a board and argued about for an hour. The default is year to date.
Only the profit and loss is budgeted. Budgeting a balance-sheet account means forecasting a balance, which is a cash-flow exercise with its own arithmetic — and a figure typed against a bank account would appear in no report and quietly do nothing, so it is refused rather than accepted and ignored.
A negative figure is allowed: a contra line, an expected credit note, a rebate. And a budget carries a name, because more than one version of a year is ordinary — an approved one and a June revision — so which one a report compares against is a choice rather than an assumption.