Webclass 106: Trial Balance Revisited: How do you analyse it?

Q1. Are most “financial” or “normal” auditors interested in the total movements per account or the balance per account?

The balance per account

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The total movements per account

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Q2. Why might we want to use the Trial Balance rather than the Financial Statements for our analysis?

The Trial Balance is more objective (independent data source); the Trial Balance gives full list of accounts (so we can drill-down to a particular account within a category, as well as any accounts that might be hidden in a total); the Trial Balance can allow us the flexibility to see the balances per month (which can allow us to see treds/ adjustments around year-end/ closing); the Trial Balance can be linked on a dashboard to the General Ledger to allow drill-down to the total values.

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Financial Statements provide the full detail of all the movements on all the accounts and are closer to what the business considers to be the real numbers, so it is better to use the Financial Statements in order to avoid any discrepancies between the numbers used by the auditor and those used by the auditee

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Q3. If I see a rise in revenue compared to COGS (Cost Of Goods Sold) what might this indicate?

Revenue might be inflated or recognised too early

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COGS are inflated or recognised too early

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Q4. If I see a rise in Accounts Receivable versus revenue, what might this indicate?

Collections for Accounts Receivable might be poor, and this could even be due to some fictitious billing documents

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The entity is making advance payments to customers

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Q5. Why might the entity be interested in investigating a significant rise in fixed assets balance compared to operational costs?

Because this could indicate that there are too many fixed assets (disproportional to the needs of the entity compared to the past) and so it could be that fixed assets are purchased but used for a parallel business (for example, a trucking company that has half of the trucks being used by a business owned by an employee)

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Because this would indicate that the fixed assets are being written-down early after their acquisition, as part of a misappropriation scheme

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Q6. If I see a very large increase in net sales in the last month of the year and this happens historically as well as the fact that the entity is in a European FMCG maket, what might we conclude?

That there is seasonality, for example due to Christmas holiday sales

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That the entity is entering extra sales at year-end to receive illigitimate commissions

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Q7. If I see that current assets/ current liabilities is increasing, does this definitely mean that the accounts receivable collections are poor?

Not necessarily, because it could also be due to the inventory balance, since inventory is included in current assets

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Yes, it would indicate that payments are not being received on time from customers

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Q8. How could we change the Trial Balance dashboard in order to help us to quickly see the accounts that are responsible for peaks over time?

Enable the drill-down on the graph so that we can drill-down on one month from the view by category (such as total assets) to the view by account

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Create a separate dashboard that shows the values per account

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Q9. Would it be better to use a mappnig from finance of the categories (Hierarchies) of the accounts or would it be better to only use the automated SAP categories?

Use the categories/ account hierarchies from finance in order to be on the same page concerning the values, but also review these categories to check they appear reasonable and include all accounts found in the general ledger

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Use the SAP categories because it is more independent/ objective

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Q10. Why did we talk about using a calendar table with all months in it?

Because before we calculate the opening and closing balance per account, we need to make sure that there is a record for every month for each account, so that we still see, for example the AR balance in May, even if there is no AR movements in May.

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Because the dates in SAP are fiscal dates, whereas the auditor would find it more convenient to use calendar dates

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Q11. Why do we need the GLT0_HSLVT field?

Because it is the carry forward value that gives us the opening balance at the start of the fiscal year

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Because it is the carry forward value that gives us the opening balance at the start of the fiscal period (month)

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12. Why might we consider inversing (*-1) the value of the accounts that relate to Liabilities, Profit or Equity

Because the accounting equation Assets = Liabilities + Equity, would mean that Assets usually have a positive balance and Liabilities usually a negative balance and furthermore, Revenue is kind of like a liability because we have to pay tax on the Result

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We should not inverse the values but absolute all values so that the dashboard is easier to read

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Q13. For which types of accounts should we use the balance at the end of the month, and for which types of accounts should we use the net of the month (debit – credit)?

For Balance Sheet accounts we should use the balance and for Profit & Loss accounts we should use the net

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For Profit & Loss accounts we should use the balance and for Balance Sheet accounts we should use the net

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WC106 – Trial balance revisited: How do you analyse it?

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Webclass 106: Trial Balance Revisited: How do you analyse it?

admin June 9, 2026

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