[ Crossposted to ledger-cli and npo-accounting mailing list. Feel free to crosspost your replies or not as you feel appropriate. I'll try to keep the discussion in sync if some folks don't crosspost. ]
As many of you know, I'm mentoring this summer a GSoC student (Tripun Goel) who is investigating issues of precision in Ledger-CLI (see my other post about the NPO Accounting project and its overlap with Ledger-CLI, and Tripun's post today). Tripun is first investigating various problems that Conservancy has had using Ledger-CLI for currency conversion, and generally is going to investigate how to create clearly defined rules that we can show to an accountant about how rounding is handled in Ledger-CLI, and possibly propose patches that make the rounding behavior more configurable and documented in Ledger-CLI. Tripun's initial research has shown that there appears to be no specifically recommended accounting methodology for storing numbers and handling rounding. I somewhat expected there would be accounting guidelines on this point, but it seems that most accountants haven't thought deeply about the question (which I suppose is not surprising). In fact, accountants likely figure that any given transaction is only going to be off a penny or two, which isn't consider "material": http://en.wikipedia.org/wiki/Materiality_%28auditing%29 My argument is that if rounding is buggy, single penny errors in each transaction can add up to "real money" (cf: the plots of the films Superman 3 and Office Space). Therefore, the important thing is to verify that whatever mechanism are used for rounding and that mechanism is reproducible with other systems, including by hand with pen and paper, if an auditor wants to verify a transaction is correct. Indeed, accountants prefer predictable behavior from accounting systems that are documented officially as part of the fiscal policies. Currently, there are various types of transaction I'm doing with Ledger-CLI that are unpredictable with regard to rounding (of course, johnw can always explain it to me -- but he's not always going to be available to talk to everyone's auditors ;). I originally characterized Tripun's project as a "implement fixed point arithmetic"; which I naïvely thought was the "only way to handle the rounding problem properly". I've since been educated: there is more than one way to get this done right, and I think the way we're leaning is to clearly document options, why we picked the option we did, and (ideally) make Ledger-CLI more configurable on this point by the user. That's the plan from my point of view, anyway. Tripun keeps teaching me new things, so I may change based on what he discovers next. :) Tripun and I will keep the lists informed on our progress. -- Bradley M. Kuhn, President, Software Freedom Conservancy -- --- You received this message because you are subscribed to the Google Groups "Ledger" group. To unsubscribe from this group and stop receiving emails from it, send an email to ledger-cli+unsubscr...@googlegroups.com. For more options, visit https://groups.google.com/d/optout.
