Xero this week introduced a new reporting engine for practice reports which promises to address shortcomings in the original version.
The key aspect of this update is much greater customisation, says Bailey Brooks, Xero’s partner product marketing manager. The first iteration of practice reports introduced the concept of report codes, a core set of items that an accountant could map to each clients’ chart of accounts.
Reporting codes give accountants a way to run a standard set of reports for all clients to generate the compliance documents required at the close of each financial year. This approach means accountant and client operate from the same financial figures, and any corrections or adjustments appear to both parties.
In other words, the system creates a single source of truth rather than the accountant copying the client’s data file into the firm’s practice software and leaving the client’s data uncorrected.
“This facilitates better conversations because accountants can run a report any time of the year and say this is how your business is doing now,” says Brooks, a chartered accountant who previously worked in public practice.
Unfortunately, the initial deployment of reporting codes was too restrictive. The reports could only display reporting codes in a small number of ways, Brooks says.
“If you had 10 office expense codes and you wanted to group it on a report it wasn’t as easy as we liked. And if you wanted to show a gross profit percentage line you couldn’t show that,” Brooks says.
An accountant was unable to show a trust’s profit and loss statement with the net profits before distribution and net profits after distribution before tax. “You couldn’t really add your own formulas,” Brooks says.
Xero started from scratch to find a way to produce standardised codes across all templates that could still be customisable for each client.
Handing Back Control
The new reporting engine retains the concept of reporting codes but has added the ability to customise right down to the client level. There are several new options.
Add Your Own Formulas
The old engine didn’t allow accountants to create their own formulas; the new one does. The formulas can use any of the reporting codes. In this release they are limited to horizontal calculations such as income less expenses. “In the future you will have variance percentages as a column as well,” Brooks says.
Grouping and Account Codes
Codes or accounts can be grouped and saved at the template level. For example, an accountant could include a schedule with all admin expenses or a different page of the report that shows a breakdown of the expenses.
The accountant can change where a particular account code shows on a report as well. It is no longer limited by the reporting code to which it’s mapped.
The new engine adds intelligence to how information is displayed. A bank account going into overdraft will automatically switch from one part of the balance sheet to another.
“A bank in debit will show as a current asset with the name “Bank”. But if that account goes into credit it will show as a current liability with the name “Overdraft”, Brooks says.
The release includes two template switching rules. Besides the one above, a shareholder current account will show up as an asset if it is in debit and a liability if it is in credit.
Accountants can create their own switching rules as well using “if this, then that” conditions.
Practice reports uses the same editor at practice level to customise reports on a client basis. An accountant can set up a firm-wide template and then add more sections or report formats for each client.
Xero has adopted a click and drag approach to customisation which makes it quite simple to change reports. It has also added the ability to preview a report without leaving the screen.
Xero has created new report templates that are compliant with New Zealand’s new reporting regime, just released this year. Accountants can use these templates as a base for their own customisations or copy other templates they have created.
The reporting engine is due in Australia by June, with rapid minor releases booked in the months between, Brooks says.
In the next few releases accountants will be able to group a set of accounts on a profit and loss statement or balance sheet. When an accountant adds a schedule it will auto-populate with the accounts in that group.