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I
am a big one for figuring out why my accounts don’t balance to the
penny. Not for financial reasons but because I enjoy the hunt and I
enjoy solving the puzzle.
For
those out there who can relate to this mindset, I encourage you to do
what you enjoy, within reason. For those who are a little
more into “fudge factors”, there is a certain level of
accuracy you should strive to maintain.
There
are two things which everyone should check each month and which should agree
exactly between bivio and your financial accounts.
They
are, your cash balance and the number of shares of each stock that you
own.
If
they agree, your accounts are in balance.
If
they don’t agree exactly, something is wrong in your accounting and
you need to find it and fix it. If you check the numbers
monthly, you won’t have many transactions to go through and it
shouldn’t take too long to find out what needs to be fixed. If
you don’t know how to fix something, just let us know and
we’ll be glad to help you.
It
is very important that you do this reconciliation monthly!
If
cash balances and number of shares agree exactly, it is OK if the stock
price and the total market value is a few cents off. Stock
prices can change by the minute and will be affected by the rounding used by
the site who prepared the reports. There will always be occasions where
several different sources might vary by a tiny bit.
The
only true value of your assets would come from selling them. Of course,
it wouldn’t be terribly practical to do this every time you needed a
valuation to conduct club business. The next best way to do your club
accounting is to make sure that the pricing data source is consistent.
We do not read daily pricing from your broker. We use a single, very
high quality source for your stock pricing. It is the same one Yahoo
and many other large Internet sites use.
For
the purposes of creating and using valuations for doing your club
accounting, the important thing is that the pricing source be
consistent, not that it agree to the penny with your
broker. A penny or two difference between a stock price in
bivio and a report from your broker that is due to the specific time a price
was determined or a slightly different rounding method used to prepare a
report will have no significant impact on your club accounting and is not
something that needs to be “fixed”.
Laurie Frederiksen
www.bivio.com
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