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Adjustments in Fathom

Adjust your source system figures for their most accurate representation.

Updated over 3 weeks ago

This feature is included with Fathom Pro - the plan with access to all of Fathom's features. Companies on Portfolio can be upgraded to Fathom Pro at any time.

What are adjustments?

Fathom allows you to make balanced adjustments to your accounts to correct accruals and ensure your financial data is represented as accurately as possible. For instance, one of the most common use cases here is to accrue tax liability that has not yet been added to your books.

Adjustments will change the ‘Actual’ figures in Fathom. They will result in your actuals in Fathom not matching the figures in your source accounting system. As such, adjustments to your actuals should typically be made in your source accounting system and only created in Fathom when absolutely necessary.

Potential use cases at the individual company level:

  • Update Balance Sheet presentation

  • Adjust tax accruals

  • Reclassify specific transactions

Potential use cases at the consolidated group level:

  • Run consolidated group-level balanced adjustments

How to create an adjustment

To set up an adjustment:

  1. Navigate to Source Data in the company or group's Settings
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  2. Scroll down to the Financial Adjustments area.
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  3. Set a Current Earnings and Retained Earnings account. These links are required and enable Fathom to accurately reflect the earnings impact of any adjustments in the correct account on the balance sheet.
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  4. Click the green + Create adjustment button to start the journal.
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  5. Give the entry a name.
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  6. Set up the debit and credit (increase/decrease) amounts for the entry.

    1. There can be more than two accounts involved in the adjustment; however, all adjustments must balance. To add another account, hit the green ‘+ Add new line’ button.
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  7. Add an adjustment period and a quick description of the entry.
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  8. Click Create adjustment

📝Note: Adjustments cannot be made on future accounts as adjustments are made to actuals and future accounts are meant to house forecast values.

Edit or delete an adjustment

Adjustments can be changed or deleted at any time. To delete or edit an adjustment:

  1. Navigate to Source Data in the company or group's Settings
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  2. Scroll down to the Financial Adjustments area
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  3. Click Edit to make changes to the adjustment. To delete the adjustment, click the Three dots icon and select Remove.

❗Notice: System adjustments cannot be deleted. Instead, they must be turned off. Learn how to turn off system adjustments from our 'Auto adjustments for Income Tax' article.

View the impacts of adjustments

To view the financial impacts of all adjustments, you have two options:

  1. Download an Excel report
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  2. Add an adjustments table to a custom Pro report

Download an adjustments Excel report

The Adjustments Excel report contains adjustments across all periods and summarises the current and retained earnings impacts. To download the Excel report:

  1. Go to Reports
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  2. Click Excel reports on the left sidebar
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  3. Click the Cloud icon to download the 'Adjustments audit'

View the impacts of adjustments in a consolidated group

Once you have set up adjustments in the consolidated group, the Excel report ‘Consolidated financial results, including eliminations’ will have an extra column called ‘Group Adjustments’ that sits just before the group eliminations columns.

The Excel ‘Adjustments Audit' report and the PDF ‘Adjustments’ table are also available at the group level.

Include adjustments in a custom report

An adjustments table shows all of the adjustments you have created for the company or group for the specified period. To add an Adjustments table to a report:

  1. Go to Reports
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  2. Open or create a Draft report
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  3. Select Tables & Financials on the left sidebar
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  4. Click the second bolded smart text at the top of the tables menu
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  5. Select Financials
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  6. Scroll down to the bottom and click the Adjustments table

    1. You can double-click or hover over the table in your report and click the 'Pencil' icon to edit the table.

Impact of adjustments in companies with divisions

When you create adjustments at a company that contains divisions, you will have an additional ‘Adjustments’ column in your Financials by Division report component.

Adjustments cannot be made to specific divisions; they can only be made to the company total.

Frequently Asked Questions

Does Fathom check my source data to see if these adjustments have been made in my source system?

No. Fathom does not know if an adjustment that has been made in Fathom is now reflected in your source accounting system data.

If the source accounting system is updated, you will need to ensure you delete any Fathom adjustments that were in place to correct the accounting data. For example, when the accountant prepares end-of-year income tax returns, and these are added to the source accounting data, any income tax adjustments for that period in Fathom can be removed.

Can I set up adjusting journal entries in a consolidated group?

Yes! Adjustments can be set at the individual or consolidated group level.

If I’ve applied adjustments to subsidiary companies that are part of a consolidated group, will these adjustments be reflected in the consolidated financial statements?

Yes. These adjustments will flow through to the consolidated group and act as if they are a fully integrated part of the subsidiaries' actuals. Meaning that if you need to view the adjustments made to the subsidiary entity, you will need to navigate to the individual entity and download the Excel report.

It’s worth noting that you can create adjustments at the group level to partially eliminate accounts or adjust the group balance.

Can I use adjustments to perform eliminations in a consolidated group?

While Adjustments could be used to adjust or eliminate inter-company amounts, we recommend making adjustments with an Eliminations company.

Learn more from our 'Multi-Currency Consolidation Adjustments' article.

Learn more

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