An included account can still hold lines that are not purchases. Some are finance entries that move or spread a cost. Some are payments to government or to other parts of your group.
How do I tell if a line is a purchase?
Ask three questions:
Is there a supplier?
Did the supplier deliver goods or a service in return for this amount?
Is this the first place the amount is recorded?
If the answer to all three is yes, count it.
Which kinds of line do I leave out?
Line | What it is | Count it? |
Supplier invoice | A purchase | Yes |
Credit note | Corrects a purchase | Yes |
Payment | Money leaving the bank | No |
Month-end accrual | An estimate of a cost not yet invoiced | No |
Accrual reversal | Undoes last month's estimate | No |
Allocation or reclassification journal | Moves a cost that is already recorded somewhere else | No, if the original account is included |
Prepayment release | Moves part of a prepaid invoice into an expense account each month | No. Count the invoice in Prepayments. |
Depreciation and amortisation | Spreads a past asset purchase over time | No |
Wages, superannuation, leave | Payroll | No |
Tax, duty, fine, statutory levy | A payment to government, with nothing specific delivered in return | No |
Payment into a shared pool | For example an industry levy or risk equalisation fund | No |
Charge for a government or council service | For example commercial bin collection | Yes |
Intercompany charge | A payment between companies in your group | No |
Donation | Nothing is delivered in return | No |
Why leave out tax but include council waste charges?
The test is whether you receive something in return. A council bin collection is a service delivered to you, so it has emissions. Council rates, payroll tax and a speeding fine pay for nothing specific, so they do not.
What about spend Avarni already counts?
Some spend is already in your footprint from activity data. Counting the spend as well double counts it.
Electricity and gas, if you load the bills.
Fuel, if you load fuel card data.
Rent for a site whose electricity you already report in Scope 2.
What this means in Avarni
You leave things out at two levels:
Level | Use it when | How |
Whole account | Nothing in the account is a purchase, such as Payroll or Depreciation | Set the account to Excluded in your chart of accounts review |
Single lines | The account holds purchases and other lines, such as Freight outwards with accruals in it | Write a classification rule that sets the GHG Category to Excluded for the lines that match |
Rules match on fields such as Description, Supplier and Account Code. Accruals and journals often have a recognisable description, such as "Accrual" or "Reverse".
If your ledger has a column for the transaction type or source, such as Supplier invoice or Journal, ask for it in your extract and load it as a custom field. Rules can then match on it, which is more reliable than matching on descriptions. See Custom fields: when you need one and how to set it up.