Control account: Difference between revisions

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(Created page with "<strong>Control accounts</strong> can be used to keep track of balances. They are also referred to as <strong>running balances</strong>, <strong>corkscrews</strong>, and <strong>roll-forward calculations</strong>. A control account is a special case of a cascade. A common implementation span four rows in the following order: # <strong>Opening balance</strong>. This picks up the closing balance from the previous period. # <strong>Additions</strong>. This picks up the val...")
 
(Included examples and more information)
 
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<strong>Control accounts</strong> can be used to keep track of balances. They are also referred to as <strong>running balances</strong>, <strong>corkscrews</strong>, and <strong>roll-forward calculations</strong>. A control account is a special case of a cascade.
<strong>Control accounts</strong> can be used to keep track of balances. They are also referred to as <strong>running balances</strong>, <strong>corkscrews</strong>, and <strong>roll-forward calculations</strong>. A control account is a special case of a [https://finmod.wiki/wiki/index.php/Cascade cascade].


A common implementation span four rows in the following order:
==Simple example==
# <strong>Opening balance</strong>. This picks up the closing balance from the previous period.
A common implementation that span four rows, with
# <strong>Additions</strong>. This picks up the values within the period that tend to increase the balance - for example deposits into a bank account.
*<strong>opening balance</strong> picking up the closing balance from the previous period;
# <strong>Reductions</strong>. This picks up the values within the period that tend to reduce the balance - for example withdrawals from a bank account.
*<strong>additions</strong> picking up the values within the period that tend to increase the balance;
# <strong>Closing balance</strong>. This is calculated based on the opening balance, additions and reductions.
*<strong>reductions</strong> picking up the values within the period that tend to reduce the balance; and
*<strong>closing balance</strong> calculated based on the opening balance, additions and reductions.
 
For example:
 
<div style="text-align: center;"><iframe key="WhiteBoxFinancialLB" path="509&authkey=%21AOICh9VlafB-IBo&em=2&AllowTyping=True&ActiveCell='Example'!F10&Item=ControlAccount&wdHideGridlines=True&wdDownloadButton=True&wdInConfigurator=True" height="187" width="1000"></iframe></div>
 
==Variants==
 
=== Historical balances ===
Operational models often require balances to be input in each historical period. It is generally prudent to ensure that control accounts pick up these historical balances, rather than assume that they will naturally match calculated balances.
 
Here is an example with the closing balance containing a formula that picks up the input closing balance in each of the historical periods, and it is otherwise a calculation that uses the opening balance and movements.
 
<div style="text-align: center;"><iframe key="WhiteBoxFinancialLB" path="511&authkey=%21ALc5y1ozyvOEyTw&em=2&AllowTyping=True&ActiveCell='Example'!F13&Item=ControlAccount&wdHideGridlines=True&wdDownloadButton=True&wdInConfigurator=True" height="237" width="1000"></iframe></div>
 
It is possible to calculate any inconsistency. Potential uses include:
* Populating an output report. This might help a finance team decide where to focus reconciliation effort, or inform management of uncertainties.
* Presenting the inconsistency within the output financial statements - this should only be considered if you have a way of reliably attributing inconsistencies to particular financial statement areas.
 
<div style="text-align: center;"><iframe key="WhiteBoxFinancialLB" path="513&authkey=%21AD3zoWXot_GOaao&em=2&AllowTyping=True&ActiveCell='Example'!F15&Item=ControlAccount&wdHideGridlines=True&wdDownloadButton=True&wdInConfigurator=True" height="275" width="1000"></iframe></div>
 
=== Intermediate balances ===
Sometimes it is useful to know intermediate balances. For example knowing the inventory balance before sales can help you avoid selling beyond your capacity to deliver.
 
<div style="text-align: center;"><iframe key="WhiteBoxFinancialLB" path="515&authkey=%21ALzFsnF8SyR6hIk&em=2&AllowTyping=True&ActiveCell='Example'!F12&Item=ControlAccount&wdHideGridlines=True&wdDownloadButton=True&wdInConfigurator=True" height="218" width="1000"></iframe></div>
 
When intermediate balances are useful, it is often worth considering changing from a control account to a more general [https://finmod.wiki/wiki/index.php/Cascade cascade].

Latest revision as of 18:14, 21 December 2021

Control accounts can be used to keep track of balances. They are also referred to as running balances, corkscrews, and roll-forward calculations. A control account is a special case of a cascade.

Simple example

A common implementation that span four rows, with

  • opening balance picking up the closing balance from the previous period;
  • additions picking up the values within the period that tend to increase the balance;
  • reductions picking up the values within the period that tend to reduce the balance; and
  • closing balance calculated based on the opening balance, additions and reductions.

For example:

Variants

Historical balances

Operational models often require balances to be input in each historical period. It is generally prudent to ensure that control accounts pick up these historical balances, rather than assume that they will naturally match calculated balances.

Here is an example with the closing balance containing a formula that picks up the input closing balance in each of the historical periods, and it is otherwise a calculation that uses the opening balance and movements.

It is possible to calculate any inconsistency. Potential uses include:

  • Populating an output report. This might help a finance team decide where to focus reconciliation effort, or inform management of uncertainties.
  • Presenting the inconsistency within the output financial statements - this should only be considered if you have a way of reliably attributing inconsistencies to particular financial statement areas.

Intermediate balances

Sometimes it is useful to know intermediate balances. For example knowing the inventory balance before sales can help you avoid selling beyond your capacity to deliver.

When intermediate balances are useful, it is often worth considering changing from a control account to a more general cascade.

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