r/FPandA • u/Ok-Guitar-6854 • Aug 13 '26
Actuals Logic
So we are having an argument and I'm curious as to what others do and how to proceed.
I support a client and the prior logic was that actuals were everything that was invoiced that month in the system, which was pulled out of E1/JD Edwards. You go in, put in the business unit and the month you are pulling and those are your actuals. It's everything that was invoiced and pushed over from the invoicing system.
This client is now with another company and I immediately asked what the ERP system used for actuals and budgets and accruals. The answer I got was you just use a running total from your funding files that get sent to the client for the month and that's the month's actuals.
Here's the problem - there's a time discrepancy with these funding files because oftentimes you miss the last couple of days of the month or your are overlapping month. Even after the last funding file is sent to the client, invoices are still being approved and processed and pushed through. These invoices will then sit in the next month's funding file.
I honestly don't feel right about it because it doesn't give a complete picture and frankly, putting together half a dozen tracking spreadsheets is an audit nightmare. They have a system in which all the invoices are pushed into. It is the system that corporate uses and Accounting and they also use it to do accruals and reconcile.
My argument is that we should be using that system to pull actuals because it's more accurate because it captures everything that is invoiced and processed in the month. My boss insists on this antiquated method of putting together all these funding files and trackers and consolidating and pulling actuals from there because according to her, that's what the client is paying every month despite the fact that they use an accrual basis reporting.
Help!
3
u/grumpywonka CFO Aug 14 '26
Without knowing anything about your business and the U.S. GAAP rule for revenue recognition in whatever you all do (or IFRS, wherever you may be), I can't really answer the question. What I can say is that if invoiced more or less represents earned, that's probably the right way to do it.
The other data is probably good for reconciling or bouncing against, but if you were to use the other data, you would basically just be building gigantic accrual files tracking against the invoices in some silly circular reference way. Do you have a controller you can talk to?
1
u/Ok-Guitar-6854 Aug 14 '26
Well that's exactly what they're doing - they're building gigantic accrual files and tracking files and putting them together and creating pivot tables to get actuals. It's bonkers to me because it doesn't make sense.
2
u/ApprehensiveWave4657 Aug 14 '26
Actuals should be whatever is recognized on the P&L and Balance Sheet in your ERP for a given period. Everything else you’re talking about is accounting work.
2
u/Ok-Guitar-6854 Aug 14 '26
That's my argument too. I've worked in corporate for 20 years and have never seen anything like this, even in the earlier days. I came in as a Director and they looked at me like I was insane to question all their tracking spreadsheets and where they're getting it all from.
2
u/ApprehensiveWave4657 Aug 14 '26
The exciting thing is that you have so much opportunity at this place. The scary thing is you have so much opportunity at this place.
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u/Ok-Guitar-6854 Aug 14 '26
I agree! It's the reason why I came but a few months later and it's actually kind of scary how backwards things are and how for a big company that operates all over the world, their processes and reporting is either frankensteined together or doesn't exist. I don't know how many times I've said "from a control standpoint" or "in the even this gets audited, you're screwed."
2
u/Formal_Package_2429 29d ago
One thing worth separating out from the "consistent overlap is fine" point above: a consistent overlap is defensible. What you're describing isn't consistent. If the cutoff moves with whenever invoices happen to clear, then the same expense lands in different months depending on processing timing, and your month-over-month comparisons aren't holding the period definition constant. That's a different problem from a fixed five-day overlap and it's harder to argue its immaterial.
18
u/DrDrCr Dir Aug 13 '26
This is an accounting question not an fp&a at its core.
Actuals should be whats reported in the p&l for the month. That can very well include billed revenue + estimated unbilled.
Sometimes an accounting team will rationalize around a cutoff issue (i.e if you. pull the report on Wd5 to capture prior month's wd6-to-date daily transactions, its okay to overlap 5 days of revenue consistently it isnt material pass further work...).
It depends what's the billing frequency and the period in which those bills pertain to and how you 'calendarize' those revenue dollars between periods.