Age Analysis vs Detailed Ledger

[Valkiri]

A question for the academics. General accounting principles says that the debtors ledger should always agree to the debtors control account. However, is it a requirement that the debtors age analysis agree to the control account? The reason I am of the opinion it does not have to agree is because the detailed ledger and TB are printed as at the end of a specific financial period. However an Age Analysis can be printed as at a given date, and even if it is printed until the last date of a specific financial period, it should not include transactions that was captured after the date it is printed for. The age analysis should tell us the state of the debtors as at a given date. The same for customer statements for instance. Printing a statement as at the end of September 2015 should not include transactions posted after that date, for instance receipts posted in October, but dated before end September.

Agree/Disagree/Comments

thanks in advance

[CLIVE-TRIANGLE]

Hi Valkiri

"Sub-systems" generally speaking support the numbers produced by "main systems."

For example, if you are an independent accountant preparing financial statements, you would want the detailed customer ledger to prove the TB figure. If it were an audit, you would even augment that with a whole slew of other procedures, like debtors confirmation, subsequent payments and so on.

Then you would want to see an age analysis at the same reporting date to consider whether there is impairment. Having either of the sub-systems report at a different date would be pointless.

For a manager having to manage cash flow, he would almost certainly start with the TB, receive a shock on noticing his debtors are huge, then want to see the age analysis to identify which accounts are the cause. Having them at different reporting dates will not help.

A credit controller on the other hand would concern himself (usually) with the age analysis to the exclusion of the TB at least. But I am sure that he makes the assumption that it is representative of the TB and that if it were not, the system would come to a halt because it is out of balance.

[Dave A]

Whenever one is faced with two balances which purport to be represent the same thing, but are different values, I find myself asking two questions -
Which one is right, and
What idiot designed the system that allowed the reporting difference to occur?

OK. Add one more question -
What do I need to change to eliminate the error going forward? (Be that software, system or personnel).