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Subsidiary ledgers don't balance to GL but ledger control report does

I am closing 2018 and my ledger control and all the accounts that comprise each category to give me the GL total do not total the subsidiary ledgers. How am I supposed to function in my job in a responsible capacity if I cannot tie my subsidiary ledgers correctly to their GL counterparts? This is one of the first things our tax accountant looks for in his analysis ( as well as one of my first criteria for EOY as controller). I believe that the software should automatically take care of posting the transactions to the proper subsidiary ledgers within its AR, AP, Inventory, and MFG modules as long as we are not making general journal entries to interfere with the integrity of its processes, which I know better than to do. Where does Xtuple come up with its numbers? It frightens me as an accountant that these subsidiary ledgers do not match up. I’m certain others have had the same experience and I would love to hear how you addressed it. All I can think of right now to make our financials work is an end of year journal entry that compensates for the difference but I am loathe to do this from both an accounting standpoint as well as from a consumer standpoint. Why should I have to? We have chosen to put more money into Xtuple rather than change ERP’s and I’m really starting to regret this decision. I inherited this system a year ago and it was never a good fit at the company I work for. I have put thousands of hours into learning the minutiae of the software and I love challenges, but only challenges that can be overcome. I do not like to face a challenge that is impossible and futile. I am beginning to believe that Xtuple is incapable of functioning correctly and that I have wasted a tremendous quantity of time, as well as the company, money,

  1. How do you overcome the differences in subsidiary ledgers to the ledger control report?
  2. Do you really think this software will ever work correctly, or am I wasting time, effort, and money? Please be honest.

Thank you sincerely!

Hi carolapat:

First I would like to say that I have been implementing ERP systems for nearly 30 years and I too share your passion for having sub ledgers balance to control GL accounts. I will tell you that xTuple does in fact post things as configured. It does. Now certainly things go wrong that are outside of anyone’s control. Our developers use every possible technique to insure all transactions are committed or none are committed but sometimes network connections drop, power outages hit, etc. I say this just to be sure I am on record here as NOT saying nothing ever happens.

With that caveat out of the way this has been my experience in general. First were the sub ledger and control accounts ever in balance. You would be amazed how many systems are implemented and go up live with these records out of balance. I have had case where the client would say something to the effect of “well we never have balanced”. I do every thing in my power to see things are in balance before the first transaction in the new system. That isn’t always possible for lots of reasons.

You don’t mention in your post if the sub ledgers and control accounts have ever been in balance. I don’t mean to be critical of you and I hope you don’t take it this way, but the time to check this is NOT just at year end. It is at a minimum at the end of every month and I always suggest once a week. If for whatever reason they get out of balance the sooner we know it the easier it is to figure out why and how to correct. So I ask the question directly. When were the sub ledger and control accounts last in balance?

I can tell you I have made a career of dealing with these situations supporting multiple ERP systems. EVERY SINGLE ONE OF THEM HAVE AT SOME TIME ENCOUNTERED THIS OUT OF BALANCE CONDITION. The primary cause in order in my experience are they were never in balance when the system was first brought live, journal entries were made to the control accounts without any consideration of the detail, changes to the configuration and setups that caused some transactions to not post as expected, database knowledgeable people going into the “back door” and making changes for sometimes purposes of forcing balances instead of deep research and answering why, and then of course outright fraud and theft, hardware failures, and last on the list software bugs. To be sure BUGS DO EXIST IN EVERY ERP SYSTEM ON THE PLANET.

The research techniques do sometimes require digging into the data through the “back door” and I cannot tell you that I have been 100 % successful in always finding the cause, but in the vast majority of cases I have been able to answer “what happened”.

I will close by literally begging you to not take anything I wrote as critical of you personally.

Now the solution. Spend the time and money on research to figure out what happened. For that you have to have a starting point that was balanced. Secondly, if the variances are not very large, it may be advisable providing your auditors and tax accountant agree to force them to balance beginning 2019 and put in place a program that test the balance condition every week and if that uncovers some process, configuration, or bug it should be much, much easier to identify and fix.

I will add that AP and AR should match exactly. If you are using foreign currency conversions you can sometimes be off slightly because of rounding. Typically these are very, very minor. Inventory and WIP can vary a little bit if you have fractional units of measure and conversions, if you have costs out to over 2 decimal places or more. Again because of rounding. Also usually insignificant amounts easily explainable and adjustable.

I don’t know where you are located, but I have been an xTuple partner for nearly 13 years and I am located in Houston Texas. If you would like to discuss some more, I can be reached at larry_cartee@msn.com or 713-724-8763.

Larry Cartee

+100 What Larry said.

Also totally on side with what Larry shared. While no application is without a flaw, xTuple has always had a great track record re accounting integrity.

A couple of supplemental ideas. You may have already considered these but just to be sure:

  1. Look for transaction postings to the control accounts from sources other than the relevant subledgers. Look for any transactions from a ‘Source’ or “Doc Type” that does not originate from the appropriate subledger.

  2. Be alert to the potential that there can be more than one G/L control account for a subledger. For example, if you accept customer deposits and have configured a Deferred Revenue liability account in which to record these transactions, the A/R Open will house all transactions and will require that you consider both the designated A/R and Deferred Revenue accounts on the G/L side for reconciliation purposes.

  3. The following link https://xtupleuniversity.xtuple.com/library/articles/validating-your-ledger-accounts is a useful resource regarding subledger reconciliation … both as regards performing frequent reconciliations and as to methods / troubleshooting.