Day 19 (11 Nov 2022)

Today I perform the last step for the Envictus group which is to identify the cause of variances. However, before I started to go through the variance, I noticed the pattern of the generated result is weird, I showed it to my senior and after that, we realized the data is not fully cleaned yet, there are transactions arranged in a weird way and not aligned with the other transactions, so what I need to do is to redo the data cleaning. I spend several hours redoing the data cleaning then again I performed the nine steps as I did yesterday and it take another several hours. Then I got the result of the test, what the test does is will sum up all the debit and credit amounts and then will add them with the trial balance opening balance then to see whether it tally with the trial balance closing balance, if it is not matched, it will be flagged as a variance.

After that, I start to analyze the cause of the variance, to check whether the variance is due to our technical error or it truly the error from the client. I spend several hours checking and in the end, I classify the error into five types:

1. The trial balance’s opening and closing balances are 0, and there is no transaction happened during the year

2. Trial balance’s opening and closing balances are 0, but there is a transaction that happened during the year

3. Trial balance’s opening and closing are the same, but there is a transaction that happened during the year

4. Wrong (can't identify the causes)

For the type of error 1, it means that the account should not be included in the trial balance as the both opening balance and closing balance are 0 and there is also no transaction incurred, so that is no need to have those accounts appear on the trial balance. For type 2, it indicates that the trial balance does not account for the transaction, as it does if has a transaction that happened during the year but the closing is still 0. Type 3 is quite similar to type 2, it is just for type 2, the balance is 0 but for type 3, the balances are the same as its opening balance but it should not be the same. For the last type, I can't find the cause and it might be the client’s own error. After that, I will present the errors to my manager and wait for his instruction on what should I do next.

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Main things that have learned

• I learned how to identify the cause of variance for the general ledger test

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Comment/idea/opinion

• I realized that general ledger test, even though it is not a complicate test but it will take an extremely long time to process if the files are large in volume