Cashflow statement

In my case both the Direct and Indirect are wrong; both have incorrect starting cash for the period…yet arrive at the correct ending balance :thinking:. This would seem to infer there is something amiss in the reconciliation as I would expect the ending balance to be incorrect if the starting balance is incorrect (although there could be errors in both the starting balance and reconciliations).

As I believe @Joe91 alluded to, I also noticed an entry for a regular cash expense account when running the Indirect method, which I would not expect since this should already be captured in the Net Profit (Loss) for the period.

I had not thought about that particularly, but I see some examples of that, also. In my case, they happen to be for accounts with no transactions.

The implementation still has some rough edges, but it’s promising. We will just have to wait and see.

But one thing that intrigues me is that will we be able to map accounts to cash flow lines or create special cash flow lines?

In my testing I have found that the indirect method is correct (compared against the Receipts & Payments summary) and the direct method is not correct. It appears that the error is related to debit notes (and possibly credit notes) somehow.

I have a business with errors that has neither debit nor credit notes.

I have tested 5 reports (5 years) and compared the variance between direct and indirect, with the total of debit notes for each year, and for all years, except one, the variance matches the total of debit notes. I think this may explain part of the problem but perhaps not all.

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The latest version (21.2.16) is fixing most of the issues I’ve seen so far. If your report was wrong, check the results in the latest version.

As for other ideas to enhance the report, it will come later. The most important thing right now is to make it bug-free.

I have the same errors in the latest version 21.2.17

I haven’t been able to understand how it calculates the figures.

For example, at the start of the financial year the Accruals balance was € 3,683.75
During the year, a number of journal entries, payments and expense claims were entered and changed the Accruals balance to € 0 on 31st Jan 2021.

So I would expect the Changes in Working Capital/Accruals to read € (3,683.75)
However the Cash Flow report shows a value of € (1,700.00)

Also, I do not understand why there are adjustments in the expense lines in the report?

@AJD I can reproduce the issue with debit notes and credit notes. Working on fixing this.

Net journal entries total $1983.75 which is the difference between 3683.75 and $1700.

Not sure why it is presented this way though.

@Joe91 cash flow statement explains where the cash is coming from and being used in. In your case, 1,700 EUR of cash has been used in accruals. I consider payments, receipts and expense claims to be cash transactions for the purpose of cash flow statement while journal entries non-cash transaction.

Argument could be made to add option to journal entries where you can check the box on specific journal entries and say they are cash transactions too.

Perhaps the portion of these transactions that is posted to a balance sheet account should be excluded as cash (for indirect Cash statement purposes) and then take the full movement of the BS account to the iCFS report .

Working from a report with 5 years of comparative columns, I still see these problems:

  • The indirect method now places operating activities last, which is contrary to convention. It should be first, and originally was.
  • In the direct method, net increase (decrease) in cash held is sometimes correct, but sometimes incorrect. When it is incorrect, cash at the end of the period is similarly incorrect.
  • Also in the direct method, although cash at the end of one period may be incorrect, cash carried forward to the beginning of the next period is correct (although it does not match the cash at the end of the previous period). Since the net increase (decrease) is inconsistently incorrect, so is this error.
  • The two bullet points above seem to be related to a journal entry writing off a bad debt. That is, the difference between net increase (decrease) in the two methods is the same magnitude as the write-off. On the indirect method report, that write-off is shown as a positive adjustment to net profit, which is correct (the expense of the write-off did not involve movement of cash, so it should be added back to net profit). But on the direct method report, it seems there should be some way to take up the reduction in Accounts receivable.

I fixed all known issues regarding incorrect figures in the latest version (21.2.19)

On 21.2.19 I am still finding a disconnect between the “Cash at the beginning of the period” amount and the Balance Sheet.

When I run an Indirect Method Cash Flow Statement for the period of 1/1/20 to 12/31/20, the beginning cash is reported as below;

I would expect the cash at beginning (1/1/20) to match the balance sheet amount as of 12/31/19 but the balance sheet reports as below;

Do you have any liability control accounts made of bank or cash accounts, such as credit cards?

Cash balances are now correct except for what I think is rounding difference on the direct method report. I have witnessed differences of up to 0.04 cents.

Yes; I was just about to report that is the amount of the difference :smile:. While this obviously is not what I was expecting, now that I know the cause, I can say the total change in cash matches exactly to the US GAAP amount manually prepared.

I would suspect this may also be related to why cash expense accounts are showing up as line items, but am still working through that aspect.

@p4unger compare your cash figures to Receipts & Payments Summary report.
@AJD direct or indirect method?