The covenant working repeats a month in the rolling measurement period

The total contains the wrong time window

A borrower prepares a rolling-period covenant calculation by combining several accounting exports. One month appears twice while another is missing. Before discussing the reported result with the bank, check the period behind it. A spreadsheet can add perfectly and still answer the wrong question when the source files cover overlapping dates.

Find the contractual period first

Give the accountant the complete facility definition, schedules and later amendments. Identify the required measurement date and period rather than assuming a calendar year or the company's financial year applies. Ask the lawyer about unclear wording. This article does not prescribe a covenant formula or determine whether a particular measurement convention is required.

Keep the agreed basis visible

Business.gov.au recommends understanding contractual obligations and obtaining advice about unclear terms. Apply that discipline to the period used in the working, not just the name of the financial measure. Record the source and date of the relevant definition so a later reviewer can reproduce the intended window without relying on the spreadsheet author's memory.

Source: business.gov.au: Prepare a contract

Map each month once

Imagine the required working covers April through March. A nine-month export covers April to December, but the next export begins in December rather than January. Simply adding them repeats December. List the included months and trace each to its source. The example illustrates an overlap check only; it does not establish which financial items belong in your actual covenant calculation.

Investigate missing and changed periods

Check whether source reports include adjustments posted after an earlier export, and ask the accountant how those affect the period reconciliation. Do not remove a duplicated month by subtracting an unrelated average. Preserve the original files and the corrected working, explaining each change. If the incorrect calculation was supplied to the lender, obtain advice about an accurate correction.

Assess the result after the period is sound

Have the accountant reperform the agreed calculation using the verified window and explain any remaining interpretation issues. A corrected period may improve or worsen the result; neither outcome should be assumed. The practical objective is a traceable measurement period before the business debates compliance, rather than defending a number built from reports that never covered the intended dates.