UK Financial Statements and Roundings

[lucygoose]

I've recently started my first Financial Accountant position, and the first sets of stat accounts that I have produced are with the auditors for sign off. The companies in question are very small, so numbers are rounded to the nearest £ rather than £k.

We use Excel to compile our statements and have ended up with some small rounding differences in the final numbers (e.g. £6.25 + £3.25 = £9.50 but £6 + £3 /= £10)

How does your organisation handle this? My boss wants us to go through the statements and the notes tweaking everything so that the numbers add up perfectly, even if it alters the values in question slightly. Because everything is so interconnected, and because there are relatively few lines available for amendment, this is taking *hours*. I personally find it akin to scraping nails down a blackboard

My approach would be to include a statement in the notes, something along the lines of "numbers are rounded to the nearest pound and as a result totals may display small discrepancies".

Clearly the correct approach in a professional context is to do what my boss wants whether or not I agree with it - it's not like adding 2 here or taking away 1 there results in a material difference that compromises my integrity - but I was curious as to what is common practice. I can't find anything when I Google the IFRS guidelines other than IAS 1 saying that you have to state what your rounding methodology is. Is there a technically correct answer here or is it up to the discretion of the individual accountant/ company policy?

I would welcome your thoughts.

 

[bklynboy]

We take each absolute amount and add to get the line total and then round that line (in your example 6.25+3.25 = 9.50 - round to 10), A footnote is added "Certain columns and rows may not add due to the use of rounded numbers." However, for totals that need to match (assets vs liabilities+equity) we make sure those match. I think this approach is fairly common.

You can check other financial statements and use materiality as the reason to round and get your boss to understand why this makes sense (saves time, effort, easier, less prone to errors).

 

[Fidget]

Hubble bubble rounding trouble! It's a pain in the arse.

But, something you can try if there's much to do on account of roundings, is excel's 'precision as displayed'. What that will do is make absolute any numbers displayed on a spreadsheet as whatever number it is being displayed (so if it's 2.65 on display, but behind the scenes excel sees it as 2.659946725, then precision as displayed takes away the excess rounding of umpteen decimal places and will treat the number as 2.65. If those numbers are then feeding into a main sheet, then happy days! But...

In my own experience, it doesn't always work. But it's worth a go to see if works for you.

Word of warning: Mess around with this on copy spreadsheets first - you can't undo it once done. So please be aware of that.

 

[lucygoose]

Thank you both for the replies (albeit belatedly). In the end, I left the source numbers as they were and just added or took away one from the various totalling formulae until it all worked. On one set I had to ask for help and my boss was surprised at quite how difficult it was!

Having got the damn thing done, I did then make the case for just including a note saying that totals may appear slightly different due to roundings. My boss is all about saving time and making efficiencies in processes so I came at it from that angle

Time will tell whether we have to keep doing it...