Why Last Month's Numbers Keep Changing — And Why It Has to Stop

There's a specific failure that undermines management reporting more effectively than almost anything else, and it's rarely identified as a failure at all. It's usually described as being thorough.

Prior periods keep moving.

How it happens

Nobody sets out to restate last month. It happens through a series of individually sensible decisions.

A supplier invoice arrives on the 12th for work performed on the 26th of the previous month. Posting it to the prior month is more accurate, so it gets posted there.

A miscoding is discovered — three invoices allocated to the wrong job. Correcting them in the original period is more accurate, so that's what happens.

An accrual raised at $30,000 settles at $18,000. Adjusting the original accrual is more accurate than releasing the difference now.

A timesheet correction comes through for a fortnight two months ago.

Each of these is defensible in isolation. Together, they mean the closed period was never actually closed, and the management pack issued for that month is now a historical document that doesn't match the system it came from.

What it costs

Variance analysis becomes impossible. The purpose of comparing this month to last month is to explain what changed. If the baseline has moved, you're explaining a variance that includes both real trading changes and retrospective adjustments, with no way to separate them. The analysis produces confident-sounding explanations for movements that didn't occur.

Trend reporting loses meaning. Rolling twelve-month views, run rates and moving averages all assume the history is fixed. When it isn't, the trend line shifts every time it's produced.

Behaviour changes. This is the real cost. Once a management team has been caught out twice by a number that moved, they stop treating the pack as authoritative. Meetings start with someone asking whether the figures are final. Decisions get deferred pending the detail. The pack becomes a discussion document rather than a decision document, and the whole value of producing it evaporates.

Accountability weakens. If a project manager is held to a job margin that can be restated three months later, the number stops being a management tool. People manage to a number they trust; they ignore a number that moves.

The hard close

The correction is a defined close process with a locked period at the end of it.

A fixed date. Working day five, working day seven — the date matters less than the fact that it's the same every month and everybody knows it. Suppliers, subcontractors and internal approvers all work back from it.

A close checklist. Bank and card reconciliation complete. Supplier invoices received and posted. Accruals raised for known costs not yet invoiced. WIP position assessed with operations. Payroll posted and reconciled. Intercompany balances agreed. Balance sheet reconciliations complete.

A lock. Every mainstream accounting platform supports period locking. Use it. After the close date, the period is closed in the system, not just conceptually.

A correction protocol. Errors found after close are corrected in the current period, with a clear description referencing the period they relate to. If a correction is large enough to distort the current month's reading, it's disclosed as a note in the pack — one line explaining what it is and which period it relates to.

Accepting imperfect history

The objection to this is straightforward: it means the historical accounts are known to contain small errors.

That's true, and it's the right trade. The purpose of management reporting isn't perfect historical accuracy — the statutory accounts and your external accountant's year-end work address that. The purpose of management reporting is to support decisions in something close to real time.

A number that's ninety-eight per cent accurate and fixed is far more useful than a number that's ninety-nine per cent accurate and still moving. The first one can be acted on. The second one gets checked, questioned and eventually ignored.

Close the period. Lock it. Move forward.