Business Area Financial Statement - BS/PL not balance

[Former Member]

Hi Experts,

Our client has various business areas. When they run their BS/PL report per business area, their PL(net profit) value is not tied up with the value in the Balance Sheet under the Stockholder's Equity.

They have done balance sheet readjustment. When they run the report with blank business area, there was a value in the stockholder's equity but where there's zero value in the PL (net profit). The value there corresponds to the total difference they get when running the report per Business Area.

They also run the trial balance for blank business area and found out that the differences are coming from Tax clearing (after running the sales and purchase tax return) and from BS readjustment for the tax.

Hope you could help me with the issue.

Thank you.

[Former Member]

Hello

Business area balance sheet extracts are not legally or statutorily complete because there are certain GL account balances like, reserves, equity, some unsecured loans which are difficult to be assigned to a specific business area.

Ideally, business area analysis is restricted to profitablity and an overview of assets & liabilities specific to BA.

So your requirement is tough and even if you shift to PCA, these issues still arise.

Since they are internal to the client, better look for workaround solutions.

Reg

Suresh

[Former Member]

Hi,

So it means that we can never get the BS/PL balance for those business areas? Have you encountered such and what is the best practice to solve this?

Thank you.

[Former Member]

Yes,

In my own experience, the users extracted the BA balance sheet and analysed specific assets and liabilities of that BA.

They understood that the common assets & L cannot be split nor represented.

Similarly, the profitability was more or less correct and they understood that tax amounts or price differences can be posted after adjustment run.

Overall, the management used them for ad hoc decision making and made manual additions to make a concrete decision on a particular BA

Reg

Suresh