Why do totals not add up when numbers are rounded?

The challenge with rounding figures to the nearest pound is that the total of the rounding amounts can appear to look incorrect.

Here is an example:

Three categories with expenditure, with a total expenditure shown at the bottom, might look like this:

If each figure was rounded, it would then look like this:

In this example, the total line for the bottom table appears to be incorrect. Someone looking at this report and not knowing the unrounded figures would naturally anticipate the total row to show as £3 (because 1 + 1 + 1 = 3).

However, the rounded total of course needs to show £4 (as the actual total is £4.30).

The problem: rounding at a larger scale

Whilst this is a trivial example, over many more categories, the apparent 'rounding error' is likely to be more than just £1. You may have seen correction for larger rounding errors when preparing your year-end accounts (which are typically presented in whole currency units, or even rounded thousands for larger organisations).

So, whilst rounding may make reports easier to read for some users, it also may cause other users to question whether the data is correct.

As well as an issue with the total lines within reports, a similar issue exists with drilling into reports. Currently, when you click on a cell to view transactions that make up the total you are viewing, the transactions precisely add up to the cell on the income and expenditure report you clicked on, whereas when rounding is enabled, this may no longer be the case.

To better understand the Finance Reports module, please view the module overview video here.