If you have an account code in Xero that is an asset in the chart of accounts Hindsight will check those account codes to identify if the balance on the account is a debit or credit. If it is a credit then Hindsight will flag it as an alert for you to check.
It is good practice to do this as it could indicate mispostings. You would expect an asset account code to be a debit balance otherwise it is not an asset and should possibly be reallocated as a liability.
For the purposes of clarity the check Hindsight carries out is to check any account code allocated with a class of Asset but ignores Bank account codes as we have other checks for these and they could legitimately be a negative balance if the account is overdrawn.
Hindsight will also ignore any account codes that are mapped in Xero as accumulated depreciation and amortisation. These are treated as being an asset by Xero but we would expect these account codes to be credits.
Hindsight uses the Xero report code mappings for this check so it is really important to make sure the report code mappings are up to date. This avoids you having to manually exclude account codes. For example Hindsight knows that depreciation and amortisation account codes whilst being credit accounts sit in assets in chart of accounts so we automatically exclude those from our checks if you have mapped them correctly. If you not you will manually exclude them. Any new depreciation account codes will be automatically detected and excluded if you map them otherwise again a manual process.