AU2009100293A4 - Systems and methods for managing accounting information - Google Patents

Description

AUSTRALIA PATENTS ACT 1990 PROVISIONAL SPECIFICATION FOR THE INVENTION ENTITLED: SYSTEMSAND ME THODSFOR MANAGING A CCO UNTING INFORMATION The invention is described in the folowing statement: -2 SYSTEMS AND METHODS FOR MANAGING ACCOUNTING INFORMATION FIELD OF THE INVENTION [1] The present invention relates to accounting systems and in particular to methods of managing information in accountag systems. [2] The invention has been developed primarily as a method of managing accounting information by utilising transaction data including classification details and is described with reference to that application. However it will be appreciated that the invention is not limited to this particular field of use. BACKGROUND [3] Any discussion of the prior art throughout the specification should in no way be considered as an admission that such prior art is widely known or forms part of common general knowledge in the field. [4] Existing accounting systems allow users to add new accounts, and these accounts appear automatically in financial reports such as the Profit and Loss and Balance Sheet reports. However, a problem exists in how to add the account into the more complex reports such as the Cash Flow report or Reconciliation of Operating Profit Cash Flows from Operations. Existing accounting systems require the user to build these reports manually or using a report writer. Existing accounting systems provide little or no assistance to the user in balancing the reports. SUMMARY OF THE INVENTION [5] It is an object of the present invention to overcome or ameliorate at least one of the disadvantages of the prior art, or to provide a useful alternative. [6] The system produces financial reports on the basis of user defined classification hierarchies. Each item in a financial report corresponds to a classification in the hierarchy, wherein classifications include a plurality of properties induding: -3 The classification name property which determines the description that is displayed for an item in the financial report which corresponds to the classification; Position(s) in the hierarchy, such that a classification may be placed at several positions within the classification hierarchy. This property determines the structure of the financial reports; Collapsed/expanded property, such that if a classification has the property "collapsed" the lower level classifications do not have corresponding items displayed on the financial report. If the classification has the property "expanded" the lower level classifications will have corresponding items displayed on the financial report; Hidden/display property, such that a classification with the property hidden does not have a corresponding item displayed on the financial report. This property does not affect whether lower level classifications are displayed on financial reports; Balance type property, having the values of "opening", "closing", "movement" or "default" such that a classification with a balance type of "default" takes on the balance type of the classification's parent classification; Aggregate function property, which may be any function to aggregate lower level amounts. Possible examples are sum, multiplication, average etc. If the aggregate function is "default" the aggregate function of the parent classification is applied. If the classification has no parent classification the default aggregate function of sum is used. Where an item is displayed in a financial report the corresponding amount is calculated using the aggregate function of the related classification. If the classification has child classifications, the aggregate function is applied to the amounts calculated for the child classifications. If the classification does not have any child classifications then the aggregate function is applied to all transactions that are assigned to the classification within the period range determined by the balance type as follows: If the balance type is "opening", all transactions associated with the classification prior to the start date ofthe report; -4 If the balance type is "closing", all transactions associated with the classification up to and including the end date of the report; or If the balance type is "movement" or "default" all transactions associated with the classification from the start date of the report up to and including the end date of the report; Sort order property, which indicates the order in which the lower level classifications should be displayed in financial reports; Display debits property, having the values of "positive", "negative" or "default" such that a classification with a display debits property of "default" takes on the display debits property of the classification's parent classification. If there is no parent classification and the classification has a display debits value of "default" the display debits property is defaulted to "positive". Where an item on a financial report relates to a classification with a display debits property of "positive", if the amount has a debit value it is displayed as a positive number, if it has a credit value it is displayed as a negative number. Where an item on a financial report relates to a classification with a display debits property of "negative", if the amount has a debit value it is displayed as a negative number, if it has a credit value it is displayed as a positive number; and Allow transactions property, having the values of either "yes" or "no". This defines whether the user is allowed to associate transactions directly with the classification. If a classification has an allow transactions of "yes" the user is allowed to associate transactions directly with the classification and the classification may not have any child classifications. If the allow transactions property is set to "no" then the classification may have child classifications and may not have any transactions associated directly with it. [7] One embodiment provides a balance check which ensures that a set of financial reports will always balance. The balance check is performed on a set of classifications which correspond to the financial reports that are required to balance. The system prevents the user from changing a classification's properties or the classification hierarchy in a way which would cause any one of the financial reports to not balance.

-5 [8] One embodiment provides a computer program product for performing a method as described herein. [9] One embodiment provides a computer system configured to perform a method as described herein. [10] Reference throughout this specification to "one embodiment", "some embodiments" or "an embodiment" means that a particular feature, structure or characteristic described in connection with the embodiment is included in at least one embodiment of the present invention. Thus, appearances of the phrases "in one embodiment", "in some embodiments" or "in an embodiment" in various places throughout this specification are not necessarily all referring to the same embodiment, but may. Furthermore, the particular features, structures or characteristics may be combined in any suitable manner, as would be apparent to one of ordinary skill in the art from this disclosure, in one or more embodiments. [11] As used herein, unless otherwise specified the use of the ordinal adjectives "first", "second", "third", etc., to describe a common object, merely indicate that different instances of like objects are being referred to, and are not intended to imply that the objects so described must be in a given sequence, either temporally, spatially, in ranking, or in any other manner. DETAILED DESCRIPTION [12] An accounting system according to one embodiment is designed to be flexible in the recording of items of transaction data and information about the transactions such as accounts, cost centres, regions etc. [13] For the present purposes, the term "classification" refers to a group of items of transaction data that have a common characteristic. For example, transactions relating to sales revenue are grouped together in a "Sales Revenue" classification and those transactions relating to employee expenses are grouped in the classification "Employee Related Expense". Also items of transaction data which have a common characteristic because of the geographical region they relate to may be grouped together in geographical classifications. For example transactions taking place in Australia may be grouped -6 together in the "Australia" classification and transactions related to New Zealand may be grouped in the "New Zealand" classification. [14] In this accounting system, information about a transaction that can take a theoretically infinite range of values is recorded with the transaction and is referred to as the transaction detail. Examples of this include Effective date, Time created, Amount, and Quantity. Some of this information may be recorded on the transaction header (e.g. journal header, creditor invoice header) as it relates to all lines of the transaction and some on individual transaction lines (such as journal line). [15] Other information about the transaction that is used for grouping transactions in reports are referred to as classifications of the transaction detail. [16] A transaction may be assigned to one or more classifications. When a user enters a transaction the user specifies the classifications that it relates to. [17] Classifications may be arranged by the user in a hierarchical structure. E.g. the "Revenue" classification is the parent classification for the classifications "Sales Revenue" and "Interest Received". A classification may be included in zero, one or more than one parent classifications. The financial reports produced by the system correspond to the classification hierarchy Each item on the financial reports represents a classification. [18] In some embodiments, the system is configured to produce accounting reports including: .Profit and Loss .Balance Sheet .Cash Flow .Reconciliation of operating proft to cash flow from operations. [19] The system, in some embodiments, allows a user to easily use the collected information to generate financial reports. Embodiments of the system do not require any end of year rollover process that is common in other accounting systems and is commonly used to correct the balance of Opening Retained Earnings.

-7 [20] In some embodiments, the accounting reports have the benefit of balancing automatically rather than requiring any manual preparation. [21] The system is flexible in allowing the user to make alterations to the reports to suit the users needs including adding new classifications and changing the structure of the reports. However, the user is prevented from making any alteration that would cause any of the above reports to not balance. This is achieved by abalance check function, which is discussed in more detail below. [22] In the present embodiment,Classifications have the following properties: Name; Place(s) in hierarchy; Collapse/expand; Hidden/displayed; Balance type; Aggregate function; Sort order of child classifications; Display debits; and Allow transactions. [23] A classification may have additional properties such as a code but these are not necessary to the functioning of the system. [24] The name is the description used to identify the classification. [25] Classifications are arranged in a hierarchy A classification may have zero, one or many parent classifications. If the allow transactions property is set to "no" the classification may have zero, one or many child classifications. If the allow transactions property is set to "yes" the classification may not have child classifications.

-8 [26] In the present embodiment, hierarchies are used for financial reports and classification selections within the system. An example classification hierarchy for the Profit and Loss Statement is shown in Table 1. In this classification hierarchy the classification "Profit and Loss Report" has the child classifications "Profit and Loss", "Opening Retained Earnings" and "Closing Retained Earnings". The classification "Profit and Loss" has the child classifications "Revenue" and "Expense". The classification "Revenue" has the child classifications "Sales Revenue", "Interest Received" and "Commissions". The classification "Expense" has the child classifications "Employee Related Expense" and "Advertising". The classification "Employee Related Expense" has the child classifications "Salaries and Wages" and "Superannuation". In the table, child classifications are indented. [27] Table 1 Profit and Loss Report Profit and Loss Revenue Sales Revenue Interest Received Commissions Received Expense Employee Related Expense Salaries and Wages Superannuation Advertising Opening Retained Earnings Closing Retained Earnings -9 [28] Each classification has an expand/collapse property If a classification has this property set to collapse then wherever an item appears in a financial report representing this classification then items in the financial report representing lower level classifications are not shown. If the user wants to see the lower level classifications detail the user must drill through the classification. This may be done by clicking on the classification or other means of indicating that the detail is required. [29] Each classification is specified by the user as either hidden or displayed. A hidden classification is not displayed in reports, but the hidden classification's child classifications are displayed under the hidden classification's parent classification. If the hidden classification's parent classification is also hidden they are displayed under the next level up and so on until a non hidden parent classification is encountered. If there is no non hidden parent classification the child classifications are displayed as the highest level classifications of the report. [30] Each classification has a balance type property, having the values of "opening", ''closing", "movement" or "default" such that a classification with a balance type of "default" takes on the balance type ofthe classification's parent classification; [31] Each classification has an aggregate function property, which may be any function to aggregate lower level amounts. Possible examples are sum, multiplication, average etc. If the aggregate function is "default" the aggregate function of the parent classification is applied. If the classification has no parent classification the default aggregate function of sum is used. [32] Each classification has an allow transactions property, having the values of either "yes" or "no". This defines whether the user is allowed to associate transactions directly with the classification. If a classification has an allow transactions of "yes" the user is allowed to associate transactions directly with the classification and the classification may not have any child classifications. If the allow transactions property is set to "no" then the classification may have child classifications and may not have any transactions associated directly with it. [33] The system displays reports for a specific time period using user specified start and end dates. The start and end dates may be specified as a date or by other time periods used such as month, quarter or other accounting period.

- 10 [34] Where an item is displayed in a financial report the corresponding amount is calculated based on the balance type, the allow transactions property, aggregate function of the related classification and period the report is run for as follows: If the balance type is "opening" and the and the allow transactions property is "yes" the aggregate function is applied to all transactions directly associated with the classification prior to the start of thereport; If the balance type is "closing" and the allow transactions property is "yes" the aggregate function is applied to all transactions directly associated with the classification up to and including the end date of the report; If the balance type is "movement" and the allow transactions property is "yes" the aggregate function is applied to all transactions directly associated with the classification from the start date of the report up to and including the end date of the report; If the allow transactions property is "no" the aggregate function is applied to the amount calculated for all the classification's child classifications; [35] The order in which classifications are displayed in reports may be specified by the user. Each classification has a unique sort index for each of its child classifications. This determines the order in which the classification is displayed in the financial reports. This allows the order of the classification to be specified independently for each parent classification under which itappears. [36] In the present embodiment the sort index is initially assigned by the system. The user alters the sort index by viewing a list of classifications and clicking an up or down arrow, the system then swaps the sort index of the classification with the above or below classification as appropriate. [37] A classification may have zero, one or many child classifications which are hidden. The same classification may contain displayed (not hidden) child classifications. The hidden classifications are not displayed but the child classifications of the hidden classification are displayed. In this case the sort index that is used by the hidden classification is used by the hidden classifications displayed parent classification to determine the order in which the child classifications should be displayed.

- 11 [38] Each classification has a display debits setting. This setting determines whether to display the debit values as positive numbers or negative numbers. If debit values are displayed as positive numbers then credits values are displayed as negative numbers and vice versa. [39] A display debits of "positive" indicates that debits are displayed as positive numbers. [40] A display debits of "negative" indicates that debits are displayed as negative numbers. [41] A display debits of "default" indicates that the display debits value of the parent classification is used. If the parent classification is also default the next higher level parent classification that has a display debits value is used. If the classification does not have a parent classification with a display debits value, then the system wide default display debits value is used. The system wide default display debits value is preferably "positive". [42] The display debits setting only affects the sign of the amounts displayed in the reports it does not affect the calculation of the amount itself. [43] When a user adds a new classification, or copies and pastes an existing classification or classification, deletes a classification, or modifies the classification hierarchy in any way, the system performs a balance check. If the balance check is failed the user is prevented from making the change. [44] The balance check is designed to ensure that the financial reports will always balance. The specific financial reports that must always balance may be configured by the user of the system. For example the financial reports that must balance are the "Trial Balance", "Balance Sheet", "Cash flow plus Cash". The "Cash Flow" report is indirectly balanced by adding "Cash" to the "Cash Flow" report so that the balance check described herein can be performed. The "Profit and Loss" report is balanced as it is included in Retained Earnings in the "Balance Sheet" report. [45] Each financial report is represented by a hierarchy of classifications. The top level classification in each hierarchy forms a set of classifications referred to herein as a - 12 balanced set. There may be more than one balanced set. The balance check is performed on each classification in the balanced set by checking Every classification that is directly or indirectly a child classification of any classification within the balanced set and has an allow transactions property of "yes" is directly or indirectly a child classification of the classification being checked; All classification that are directly or indirectly a child classification of the classification being checked and have an allow transactions property of "yes" are included within the classification hierarchy being checked with the balance type of closing balance the sane number of times. The closing balance may be included by the classification having a balance type of "closing" at one place within the hierarchy or the classification being included at two separate places in the hierarchy, once with a balance type of "movement" and once with a balance type of "opening". The classification may not be included with a balance type of "opening" without a corresponding "movement". Likewise, the classification may not be included with a balance type of "movement" without a corresponding "opening"; The change to the transaction hierarchy does not add or remove a classification directly or indirectly as a child classification where the classification has transactions associated with it and the classification was not already directly or indirectly a child classification of a classification within the balanced set. [46] In the present embodiment the classifications representing the following accounting reports form a balanced set Trial Balance; Balance Sheet; and Cash Flow plus Cash. This is a classification with child classifications representing the "Cash Flow Statement" and "Cash for the Purposes of the Cash Flow Statement".

- 13 [47] Although the present invention has been described with particular reference to certain embodiments thereof, further variations and modifications can be effected within the spirit and scope of the invention. [48] Unless specifically stated otherwise, as apparent from the following discussions, it is appreciated that throughout the specification discussions utilizing terms such as "processing," "computing," "calculating," "determining", analyzing" or the like, refer to the action and/or processes of a computer or computing system, or similar electronic computing device, that manipulate and/or transform data represented as physical, such as electronic, quantities into other data similarly represented as physical quantities. [49] In a similar manner, the term "processor" may refer to any device or portion of a device that processes electronic data, e.g., from registers and/or memory to transform that electronic data into other electronic data that, e.g., may be stored in registers and/or memory. A "computer" or a "computing machine" or a "computing platform" may include one or more processors. [50] The methodologies described herein are, in one embodiment, performable by one or more processors that accept computer-readable (also called machine-readable) code containing a set of instructions that when executed by one or more of the processors carry out at least one of the methods described herein. Any processor capable of executing a set of instructions (sequential or otherwise) that specify actions to be taken are included. Thus, one example is a typical processing system that includes one or more processors. Each processor may include one or more of a CPU, a graphics processing unit, and a programmable DSP unit. The processing system further may include a memory subsystem including main RAM and/or a static RAM, and/or ROM. A bus subsystem may be included for communicating between the components. The processing system further may be a distributed processing system with processors coupled by a network. If the processing system requires a display, such a display may be included, e.g., a liquid crystal display (LCD) or a cathode ray tube (CRT) display. If manual data entry is required, the processing system also includes an input device such as one or more of an alphanumeric input unit such as a keyboard, a pointing control device such as a mouse, and so forth. The term memory unit as used herein, if clear from the context and unless explicitly stated otherwise, also encompasses a storage system such as a disk drive unit. The processing system in some configurations may include a sound output device, and a network interface device. The memory subsystem thus includes a computer-readable carrier medium that - 14 carries computer-readable code (e.g., software) including a set of instructions to cause performing, when executed by one or more processors, one of more of the methods described herein. Note that when the method includes several elements, e.g., several steps, no ordering of such elements is implied, unless specifically stated. The software may reside in the hard disk, or may also reside, completely or at least partially, within the RAM and/or within the processor during execution thereof by the computer system. Thus, the memory and the processor also constitute computer-readable carrier medium carrying computer-readable code. [51] Furthermore, a computer-readable carrier medium may form, or be included in a computer program product. [52] In alternative embodiments, the one or more processors operate as a standalone device or may be connected, e.g., networked to other processor(s), in a networked deployment, the one or more processors may operate in the capacity of a server or a user machine in server-user network environment, or as a peer machine in a peer-to-peer or distributed network environment. The one or more processors may form a personal computer (PC), a tablet PC, a set-top box (STB), a Personal Digital Assistant (PDA), a cellular telephone, a web appliance, a network router, switch or bridge, or any machine capable of executing a set of instructions (sequential or otherwise) that specify actions to be taken by that machine. [53] Furthermore, a computer-readable carrier medium may form, or be included in a computer program product. [54] The software may further be transmitted or received over a network via a network interface device. While the carrier medium is shown in an exemplary embodiment to be a single medium, the term "carrier medium" should be taken to include a single medium or multiple media (e.g., a centralized or distributed database, and/or associated caches and servers) that store the one or more sets of instructions. The term "carrier medium" shall also be taken to include any medium that is capable of storing, encoding or carrying a set of instructions for execution by one or more of the processors and that cause the one or more processors to perform any one or more of the methodologies of the present invention. A carrier medium may take many forms, including but not limited to, non volatile media, volatile media, and transmission media. Non-volatile media includes, for example, optical, magnetic disks, and magneto-optical disks. Volatile media includes - 15 dynamic memory, such as main memory. Transmission media includes coaxial cables, copper wire and fiber optics, including the wires that comprise a bus subsystem. Transmission media also may also take the form of acoustic or light waves, such as those generated during radio wave and infrared data communications. For example, the term "carrier medium" shall accordingly be taken to included, but not be limited to, solid-state memories, a computer product embodied in optical and magnetic media; a medium bearing a propagated signal detectable by at least one processor of one or more processors and representing a set of instructions that, when executed, implement a method; a carrier wave bearing a propagated signal detectable by at least one processor of the one or more processors and representing the set of instructions a propagated signal and representing the set of instructions; and a transmission medium in a network bearing a propagated signal detectable by at least one processor of the one or more processors and representing the set of instructions. [55] It will be understood that the steps of methods discussed are performed in one embodiment by an appropriate processor (or processors) of a processing (i.e., computer) system executing instructions (computer-readable code) stored in storage. It will also be understood that the invention is not limited to any particular implementation or programming technique and that the invention may be implemented using any appropriate techniques for implementing the functionality described herein. The invention is not limited to any particular programming language or operating system. [56] Reference throughout this specification to "one embodiment" or "an embodiment" means that a particular feature, structure or characteristic described in connection with the embodiment is included in at least one embodiment of the present invention. Thus, appearances of the phrases "in one embodiment" or "in an embodiment" in various places throughout this specification are not necessarily all referring to the same embodiment, but may. Furthermore, the particular features, structures or characteristics may be combined in any suitable manner, as would be apparent to one of ordinary skill in the art from this disclosure, in one or more embodiments. [57] Similarly it should be appreciated that in the above description of exemplary embodiments of the invention, various features of the invention are sometimes grouped together in a single embodiment, FIG., or description thereof for the purpose of streamlining the disclosure and aiding in the understanding of one or more of the various inventive aspects. This method of disclosure, however, is not to be interpreted as - 16 reflecting an intention that the claimed invention requires more features than are expressly recited in each claim. Rather, as the following claims reflect, inventive aspects lie in less than all features of a single foregoing disclosed embodiment. Thus, the claims following the Detailed Description are hereby expressly incorporated into this Detailed Description, with each claim standing on its own as a separate embodiment of this invention. [58] Furthermore, while some embodiments described herein include some but not other features included in other embodiments, combinations of features of different embodiments are meant to be within the scope of the invention, and form different embodiments, as would be understood by those skilled in the art. For example, in the following claims, any of the claimed embodiments canbe used in any combination. [59] Furthermore, some of the embodiments are described herein as a method or combination of elements of a method that can be implemented by a processor of a computer system or by other means of carrying out the function. Thus, a processor with the necessary instructions for carrying out such a method or element of a method forms a means for carrying out the method or element of a method. Furthermore, an element described herein of an apparatus embodiment is an example of a means for carrying out the function performed by the element for the purpose ofcarrying out the invention. [60] In the description provided herein, numerous specific details are set forth. However, it is understood that embodiments of the invention may be practiced without these specific details. In other instances, well-known methods, structures and techniques have not been shown in detail in order not to obscure an understanding of this description. [61] Thus, while there has been described what are believed to be the preferred embodiments of the invention, those skilled in the art will recognize that other and further modifications may be made thereto without departing from the spirit of the invention, and it is intended to claim all such changes and modifications as falling within the scope of the invention. For example, any formulas given above are merely representative of procedures that may be used. Functionality may be added or deleted from the block diagrams and operations may be interchanged among functional blocks. Steps may be added or deleted to methods described within the scope of the present invention.

- 17 THE CLAIMS DEFINING THE INVENTION AREAS FOLLOWS: 1. A method of managing accounting information and preparing financial reports using classification hierarchies. Each item in a financial report corresponds to a classification in the hierarchy, wherein classifications include a plurality of properties including: The classification name property which determines the description that is displayed for an item in the financial report which corresponds to the classification; Position(s) in the hierarchy, such that a classification may be placed at several positions within the classification hierarchy This property determines the structure of the financial reports; Collapsed/expanded property, such that if a classification has the property "collapsed" the lower level classifications do not have corresponding items displayed on the financial report. If the classification has the property "expanded" the lower level classifications will have corresponding items displayed on the financial report; Hidden/display property, such that a classification with the property hidden does not have a corresponding item displayed on the financial report. This property does not affect whether lower level classifications are displayed on financial reports; Balance type property, having the values of "opening", "closing", "movement" or "default" such that a classification with a balance type of "default" takes on the balance type of the classification's parent classification; Aggregate function property, which may be any function to aggregate lower level amounts. Possible examples are sum, multiplication, average etc. If the aggregate function is "default" the aggregate function of the parent classification is applied. If the classification has no parent classification the default aggregate function of sum is used. Where an item is displayed in a financial report the corresponding amount is calculated using the aggregate function of the related classification. If the classification has child classifications, the aggregate function is applied to the amounts calculated for the child classifications. If the classification does not have any child classifications then the aggregate function is applied to all transactions - 18 that are assigned to the classification within the period range determined by the balance type as follows: If the balance type is "opening", all transactions associated with the classification prior to the start date ofthe report; If the balance type is "closing", all transactions associated with the classification up to and including the end date of the report; or If the balance type is "movement" or "default" all transactions associated with the classification from the start date of the report up to and including the end date of the report; Sort order property, which indicates the order in which the lower level classifications should be displayed in financial reports; Display debits property, having the values of "positive", "negative" or "default" such that a classification with a display debits property of "default" takes on the display debits property of the classification's parent classification. If there is no parent classification and the classification has a display debits value of "default" the display debits property is defaulted to "positive". Where an item on a financial report relates to a classification with a display debits property of "positive", if the amount has a debit value it is displayed as a positive number, if it has a credit value it is displayed as a negative number. Where an item on a financial report relates to a classification with a display debits property of "negative", if the amount has a debit value it is displayed as a negative number, if it has a credit value it is displayed as a positive number; and Allow transactions property, having the values of either "yes" or "no". This defines whether the user is allowed to associate transactions directly with the classification. If a classification has an allow transactions of "yes" the user is allowed to associate transactions directly with the classification and the classification may not have any child classifications. If the allow transactions property is set to "no" then the classification may have child classifications and may not have any transactions associated directly with it.

- 19 2. A method according to claim 1 wherein the classification hierarchy provides a balance check which ensures that a set of financial reports will always balance. The balance check is performed on a set of classifications which correspond to the financial reports that the user requires to balance. The system prevents the user from changing a classification's properties or the classification hierarchy in a way which would cause any one of the financial reports to nct balance. 3. A method according to claim 1 or claim 2 wherein a classification hierarchy is used to prepare financial reports and the amounts displayed are calculated on the basis of the balance type, allow transactions property, aggregate function and period of the financial report. 4. A computer program product for performing a method according to any preceding claim. 5. A computer system configured to perform a method according to any one of claims 1 to 3.

-20 ABSTRACT An accounting system utilizing classifications of transactions and hierarchies of classifications to produce financial reports. The financial reports produced include the Profit and Loss, Balance Sheet, Cash Flow Statement, Reconciliation of Operating Profit to Cash Flow from Operations and other financial reports. The financial reports have the advantage of always balancing. A user of this system can add new classifications and modify the financial reports. The system prevents the user from changing the reports in such a way to cause the financial reports to not balance. The system also does not require any end of year or other process to correct the opening balances of accounts such as Opening Retained Earnings.

Claims (5)

1. A method of managing accounting information and preparing financial reports using classification hierarchies. Each item in a financial report corresponds to a classification in the hierarchy, wherein classifications include a plurality of properties including: The classification name property which determines the description that is displayed for an item in the financial report which corresponds to the classification; Position(s) in the hierarchy, such that a classification may be placed at several positions within the classification hierarchy This property determines the structure of the financial reports; Collapsed/expanded property, such that if a classification has the property "collapsed" the lower level classifications do not have corresponding items displayed on the financial report. If the classification has the property "expanded" the lower level classifications will have corresponding items displayed on the financial report; Hidden/display property, such that a classification with the property hidden does not have a corresponding item displayed on the financial report. This property does not affect whether lower level classifications are displayed on financial reports; Balance type property, having the values of "opening", "closing", "movement" or "default" such that a classification with a balance type of "default" takes on the balance type of the classification's parent classification; Aggregate function property, which may be any function to aggregate lower level amounts. Possible examples are sum, multiplication, average etc. If the aggregate function is "default" the aggregate function of the parent classification is applied. If the classification has no parent classification the default aggregate function of sum is used. Where an item is displayed in a financial report the corresponding amount is calculated using the aggregate function of the related classification. If the classification has child classifications, the aggregate function is applied to the amounts calculated for the child classifications. If the classification does not have any child classifications then the aggregate function is applied to all transactions - 18 that are assigned to the classification within the period range determined by the balance type as follows: If the balance type is "opening", all transactions associated with the classification prior to the start date ofthe report; If the balance type is "closing", all transactions associated with the classification up to and including the end date of the report; or If the balance type is "movement" or "default" all transactions associated with the classification from the start date of the report up to and including the end date of the report; Sort order property, which indicates the order in which the lower level classifications should be displayed in financial reports; Display debits property, having the values of "positive", "negative" or "default" such that a classification with a display debits property of "default" takes on the display debits property of the classification's parent classification. If there is no parent classification and the classification has a display debits value of "default" the display debits property is defaulted to "positive". Where an item on a financial report relates to a classification with a display debits property of "positive", if the amount has a debit value it is displayed as a positive number, if it has a credit value it is displayed as a negative number. Where an item on a financial report relates to a classification with a display debits property of "negative", if the amount has a debit value it is displayed as a negative number, if it has a credit value it is displayed as a positive number; and Allow transactions property, having the values of either "yes" or "no". This defines whether the user is allowed to associate transactions directly with the classification. If a classification has an allow transactions of "yes" the user is allowed to associate transactions directly with the classification and the classification may not have any child classifications. If the allow transactions property is set to "no" then the classification may have child classifications and may not have any transactions associated directly with it. - 19

2. A method according to claim 1 wherein the classification hierarchy provides a balance check which ensures that a set of financial reports will always balance. The balance check is performed on a set of classifications which correspond to the financial reports that the user requires to balance. The system prevents the user from changing a classification's properties or the classification hierarchy in a way which would cause any one of the financial reports to nct balance.

3. A method according to claim 1 or claim 2 wherein a classification hierarchy is used to prepare financial reports and the amounts displayed are calculated on the basis of the balance type, allow transactions property, aggregate function and period of the financial report.

4. A computer program product for performing a method according to any preceding claim.

5. A computer system configured to perform a method according to any one of claims 1 to 3.