16   End-of-period procedures

It is important to ensure that your accounting records are accurate. Reconciling the accounts regularly will help you and your accountant know that your books are complete, accurate and balanced.

Month-end procedures You should reconcile your company file records with any source documents and resources available to you. For example, your bank account can be reconciled with the bank statement, payable balances can be checked against supplier statements, and customer?s balances verified. Typical end-of-month procedures include reviewing your trial balance, reviewing your budgets and cash flow, and purging information that is no longer needed.

Year-end procedures End-of-year procedures are carried out at the end of your financial year and include any adjustments you need to make to your company file so that it agrees with your accountants' final records before you start a new financial year. If possible, your inventory should be counted, valued and, where necessary, adjusted in your company file. Follow the procedures in this chapter to reconcile the system and close the year. By closing the year in your company file, you are effectively bringing the company file up to date and removing information not required in the new year.

Month-end procedures

The following is a list of tasks we suggest you complete at the end of each month. Depending on the nature of your business, some of these tasks may not apply to you.

Task
1 Run the Company Data Auditor
2 Reconcile your bank accounts
3 Review reports
4 Send customer statements
5 Record depreciation
6 Lodge sales tax and GST returns
7 Lock periods
8 Backup and retrieve company data file

Task 1: Run the Company Data Auditor

The Company Data Auditor is a series of windows that guides you through the process of checking and ensuring the accuracy of the records in your MYOB company file. You can use the auditor to:

  • display basic information about the company file, such as the file name, release number, location, size, locked periods, etc.
  • perform maintenance tasks, such as set lock periods
  • display bank and credit card account details, including the current balance and the date when they were last reconciled
  • reconcile your bank and credit card accounts
  • check your transactions for exceptions and audit trail changes.

To run the company data auditor

  1. Go to the Accounts command centre and click Company Data Auditor. The Company File Overview window appears.

    2. This window shows you:

    • the company file name
    • the MYOB software release number
    • the location of the company file
    • the size of the company file
    • the date on which the company file was last verified
    • the end month and year of the current fiscal year
    • the locked period, if one has been specified.

    If necessary, you can perform the following maintenance tasks from this window:

    If you want to Do this
    Check your company file for errors Click Verify and complete the verification procedure.
    Set the locked periods for your company file Click Lock Periods and select the month before which data cannot be entered.
  2. When you have completed the required maintenance tasks, click Next. The Account Reconciliation Review window appears.

    3. This window shows you:

    • your bank and credit card accounts
    • the balance of each account
    • the date on which each account was last reconciled.
  3. If you want to reconcile an account, select the account and click Reconcile Accounts. For more information, see 'Reconcile your bank accounts' on page 44.
  4. Click Next. The Transaction Review window appears
  5. Enter the start date and end date of the period you want to review.
  6. Click Run Review. The following tasks are undertaken
    7. Reconcile invoices with the linked receivables account The total of all customer balances is compared to the current balance of the linked accounts receivable account. If there is an out-of-balance amount, click Display to view the Receivables Reconciliation Exceptions report and review, customise or print the details of the report.
    Reconcile purchases with the linked payables account The total of all supplier balances is compared to the current balance of the linked accounts payable account. If there is an out-of-balance amount, click Display to view the Payables Reconciliation Exceptions report and review, customise or print the details of the report.
    Compare item values with the linked inventory account The total value of inventory on-hand is compared to the current balance of the linked inventory account. If there is an out-of-balance amount, click Display to view the Inventory Value Exceptions report and review, customise or print the details of the report.
    Scan for future-dated transactions The company file is checked for any transactions dated after the date of the current session (that is, the current date). If there are transactions dated after the current session, click Display to view the Future Dated Transactions report and review, customise or print the details of the report.
    Scan for prepaid transactions The company file is checked for any prepaid transactions. These transactions include all customer and supplier payments (excluding deposit payments) that have a payment date prior to the date of the invoice or purchase. If there are payments made prior to the invoice or purchase date, click Display to view the Prepayment Transactions report and review, customise or print the details of the report.
    Scan for deposits paid The company file is checked for any deposits paid (within the date range specified) on sales orders or purchase orders. If any orders have a payment flagged as a deposit transaction, click Display to view the Deposit Transactions report and review, customise or print the details of the report.
    Review audit trail changes If you have selected the Use Audit Trail Tracking [System-wide] option in the Preferences window (Security tab), the company file is checked for any transactional, accounts, and system changes. If any changes occurred within the date range specified, click Display to view the Audit Trail report and review, customise or print the details of the report. For more information on audit trail tracking, see 'Audit trail tracking system'.
    Check for job exceptions [Cash Transactions] If you have selected the Warn if Jobs Are Not Assigned to All Transactions [System-wide] option in the Preferences window (System tab), the company file is checked for cash transactions (within the date range specified) that have no job number. If any transactions are detected with no job number, click Display to view the Job Exceptions [Cash Transactions] report and review, customise or print thedetails of the report.
    Check for job exceptions [Invoice Transactions] If you have selected the Warn if Jobs Are Not Assigned to All Transactions [System-wide] option in the Preferences window (System tab), the company file is checked for sales and purchase transactions (within the date range specified) that have no job number. If any transactions are detected with no job number, click Display to view the Job Exceptions [Invoice Transactions] report and review, customise or print the details of the report.
  7. When you have finished viewing and, if necessary, printing the Transaction Review reports, click Next. The Tax Exception Review window appears.
  8. Click Run Review. The following tasks are undertaken.
    • entries that seem unusually high or low for the account that has been affected
    • debit amounts for accounts that normally have credit entries and vice versa
    • unusually high or low ending balances an unusually high or low number of entries for a specific account.
    Check for tax code amount variances [Sales] The company file is checked for variances between the tax code amount posted and the tax code amount calculated for the tax codes assigned to sales transactions. If a variance is found, click Display to view the Tax Code Amount Variance report and review, customise or print the details of the report.
    Check for tax code amount variances [Purchases] The company file is checked for variances between the tax code amount posted and the tax code amount calculated for the tax codes assigned to purchase transactions. If a variance is found, click Display to view the Tax Code Amount Variance report and review, customise or print the details of the report.
    Check for tax code exceptions (invoice transactions). The company file is checked for sale and purchase transactions without a tax code assigned or where the entered tax code is different to the default tax code. If any invoice transactions are detected with no tax code or the wrong code, click Display to view the Tax Exemptions [Invoice Transactions] report and review, customise or print details of the report.
    Check for tax code exceptions (cash transactions). The company file is checked for Spend Money and Receive Money transactions without a tax code assigned or where the entered tax code is different to the default tax code. If any cash transactions are detected with no tax code or the wrong code, click Display to view the Tax Exemptions [Cash Transactions] report and review, customise or print details of the report.
    Audit Trail Reviews changes made to recorded transactions, account details and system settings. Note that before you can track and report changes, you need to activate the audit trail tracking preference. For more information, see 'Audit trail tracking system'.
    Profit & Loss Statement Shows your profit and loss figures.
    Balance Sheet Reviews your financial position as of the end of a period.
    Summary Trial Balance Identifies amounts incorrectly entered. When reviewing this report, check for:
    Balance Sheet [Budget Analysis] Lists account balances as at the end of a selected period, along with the budgeted amounts for them. If you have determined that changes need to be made to the amounts you have budgeted for the coming months, you can adjust your budget.
    Profit & Loss [Budget Analysis] Lists account balances for a selected period, along with the budgeted amounts for them. If you have determined that changes need to be made to the amounts you have budgeted for the coming months, you can adjust your budget.
  9. Click Finish. A message appears asking if you would like to print a report summarising the audit findings. Click Yes to print the report or click No to close the Company Data Auditor window without printing the report.

Task 2: Reconcile your bank accounts

To ensure the accuracy of your business records, you should keep your record of each bank account balance matched up with your bank?s records.

If you are reconciling your bank account for the first time since you started using your MYOB software, see 'Do an initial bank reconciliation'.

Task 3: Review reports

There are several reports that we recommend you review at the end of each month. You can use these reports to identify and correct any discrepancies in your records, as well as spot any trends in your business. These reports are listed below.

TIP : Create a report batch You may find it useful to create a report batch for your month-end reports and print them all in one go. For more information, see 'Printing report batches'.

Report Description
Receivables Reconciliation Lists all your outstanding receivables.
Payables Reconciliation Analyse Sales [Customer]
Analyse Purchases [Supplier] Lists your company's monthly purchases
Items List [Summary] Shows what?s on-hand and what needs to be ordered.
Statement of Cash Flow Shows how your cash position has changed over a period of time, what profit you have earned, where you received additional cash, and where your cash was spent.
Cash Flow Worksheet Enables you to estimate your short-term cash needs.

Task 4: Send customer statements

Most businesses send statements to customers who have outstanding balances at the end of each month. You can either print out and send these statements through the mail or send them via email.

Statement types You can choose from two types of customer statement; invoice and activity

  • Invoice statements list all invoices aged as at a specified date.
  • Activity statements list all sales invoices, payments, and orders with a customer deposit within a specified date range. Activity statements include a running account balance.

To print a customer statement

  1. Go to the Sales command centre and click Print/Email Statements. The Review Statements Before Delivery window appears
  2. Click the To Be Printed tab.
  3. In the Statement Type field, select the statement type
  4. Specify the statement period.
    • If you selected Invoice as the statement type, enter an aging date to display invoices outstanding as at that date.
    • If you selected Activity as the statement type, enter the statement period in the From and to fields.
  5. In the Print field, type the number of statements you want to print per customer.
  6. Click Advanced Filters to filter and customise the information to be displayed in the customer statement. For more information, see 'Advanced filters'.
  7. Click in the select column next to the name of each customer you want to print statements for.
  8. Click Print.

To email a customer statement

  1. Go to the Sales command centre and click Print/Email Statements. The Review Statements Before Delivery window appears.
  2. Click the To Be Emailed tab.
  3. In the Statement Type field, select the statement type.
  4. Specify the statement period.
    • If you selected Invoice as the statement type, enter an aging date to display invoices outstanding as at that date.
    • If you selected Activity as the statement type, enter the statement period in the From and to fields
  5. If you want to include invoices up to the specified statement date, select the Only include invoices up to Statement Date option.
  6. Click in the select column next to the name of each customer you want to email statements to.
  7. If you want to change a customer?s email address, highlight their name and select an address from the Email Address list . Alternatively, type the email address in the Email Address field.
  8. Type the subject and message of the email or accept the default subject and message. If you want to change the default message, click Email Defaults and make the changes as appropriate.
  9. If you want to filter or customise the statement, or to change the type of form it will be printed on, click Advanced Filters. For more information, see 'Advanced filters'.
  10. Click Send Email.

Task 5: Record depreciation

NOTE : If you depreciate your assets at the end of the financial year, make this step a part of your end-of-year routine. Consult your tax adviser or accountant for information on when to depreciate your assets.

Your company?s vehicles and equipment lose value each year. Part of the cost of vehicles and equipment can be allocated as an expense to your company each year you benefit from their use. The allocation of the cost of a piece of equipment over its useful life is called depreciation.

There are several methods of depreciation. Consult your accountant to see whether you should be depreciating vehicles and equipment and, if you should, which method is best for you.

You record your depreciation figures using a journal entry.

To record depreciation expense

  1. Create a new asset account for each type of asset you depreciate. Add the words ?Accum Dep? (for Accumulated Depreciation) at the end of each new account name. Give the new account a number that allows it to come directly after its corresponding asset account in the accounts list. For more information, see 'To create an account'. In the following example, we have a header account, Vehicles, numbered 1-1600, and a detail account, Vehicles Original Cost, numbered 1-1610. We have created a new asset account called Vehicles Accum Dep, numbered 1-1620.
  2. Create an expense account for depreciation
  3. Once you have determined your depreciation amounts, make journal entries to credit the accumulated depreciation asset accounts and debit the depreciation expense account. The accumulated depreciation asset accounts will always have a negative balance to show a reduction in the value of the depreciable assets.

Task 6: Lodge sales tax and GST returns

Many businesses are required by the government to submit tax returns. To determine the amounts you need to include on your tax returns, you need to produce the tax reports that are available in your MYOB software.

To view a list of the tax reports, go to the Index to Reports window and select the GST/Sales Tax tab.

Task 7: Lock periods

After you have completed your month-end tasks, you should lock that month using the Lock Periods feature. This will prevent you from inadvertently making an entry in a month in which you do not want new entries.

  1. Go to the Setup menu and choose Preferences. The Preferences window appears.
  2. Click the Security tab.
  3. Select the Lock Periods: Disallow Entries Prior to option and choose the relevant date. This selection places a temporary lock on the period before that date. If you need to make an entry in a locked period at a later time?for example, you locked October, and now want to make an entry in September, you can unlock that period in the Preferences window.

Task 8: Backup and retrieve company data file

  1. Backup of company data file (.myo) is automatically done every time user logs out of MYOB Premier online and is kept for 7days. Data file will be kept in M drive’s Backup folder.
  2. The backup files will come with time-stamped prefix in this format: yyyymmddhhmmss_data file name.myo.
  3. To retrieve the backup data, you need to go to File menu and choose Open File, when the browser window appears, browse your M drive?s backup folder and select the company data file that you want to open.

Starting a new financial year

With MYOB software, you do not need to close your financial year at any particular time. You can continue to use your company file after the last month of your current financial year.

Complete the tasks listed below to close your financial year and start a new one.

Task
1 Complete month-end tasks
2 Perform a stocktake
3 Enter end-of-year adjustments
4 Start a new financial year
5 Optimise your company file

Task 1: Complete month-end tasks

Make sure you complete each of the month-end tasks. See 'Month-end procedures'.

Task 2: Perform a stocktake

If you track inventory quantities and values, you should perform an inventory count when all transactions affecting inventory for the financial year have been entered.

To perform a stocktake

  1. Go to the Inventory command centre and click Count Inventory. The Count Inventory window appears.
  2. Click Print to print the Inventory Count Sheet report.
  3. Count the inventory on-hand and note down the quantities on the Inventory Count Sheet.
  4. Make the necessary adjustments in the Count Inventory window so that the inventory quantities shown in your company file match your counted items on-hand. For more information, see 'Performing stocktakes'.

Task 3: Enter end-of-year adjustments

Your accountant is likely to provide you with a number of adjustments, such as journal transactions. If the adjustments have been provided on paper, you can manually enter them in the Record Journal Entry window.

To record adjustments manually

If your company file is set to 13 accounting periods in the financial year, assign your adjustments to the 13th period by entering an asterisk (*) before the date, for example, *30/9/2012.

  1. Go to the Accounts command centre and click Record Journal Entry. The Record Journal Entry window appears.

    2. The general journal number and transaction date appear by default. You can change these if necessary.

  2. [Optional] In the Memo field, type a comment to describe the journal entry, for example, Depreciation of Motor Vehicles.

    3. Each row of information entered in the scrolling list is a line item. The line item details are provided by your accountant.

  3. For each line item:
    1. Type or select the account number (or name) from the account list
    2. In the Debit and Credit fields, type the debit or credit amount for the line item.
    3. [Optional] In the Job field, enter the job number for the line item.
    4. [Optional] In the Memo field, type a description of the line item.
    5. In the Tax column, enter the appropriate tax code for the adjustment.

      6. NOTE : Journal entry must be balanced The journal entry cannot be recorded until the Out of Balance field is zero.

  4. Click Record to record the journal entry.

Task 4: Start a new financial year

If you have completed steps 1-5, you are now ready to start a new financial year

Make sure that all transactions for the year that's ending are entered in your company file before you begin closing the year. That way, you can avoid making adjusting general journal entries in the new year and your yearly records will be more accurate. This will also make it easier for you to compare your company's performance from one year to the next.

If you have an accountant who produces your year-end financial reports, you may need to wait for your accountant to provide you with any adjusting entries that may be needed.

When you start a new financial year:

  • The previous financial year's monthly totals for all accounts are changed to last year categories. If last year amounts already existed, those amounts will be replaced.
  • The balance of your current-year earnings account is transferred to your retained earnings account.
  • The balances of your income, cost of sales, expense, other income and other expense accounts are returned to zero.
  • Closed sales, closed purchases and journal entries assigned to closed sales and closed purchases are kept or purged according to your selections in the Start a New Financial Year assistant.

To start a new financial year

NOTE : Single-user access [MYOB Premier range only] Note that this task requires single-user access. For more information, see 'Single-user file locking for special tasks'.

  1. Go to the File menu, choose Start a New Year and then Start a New Financial Year. The Start a New Financial Year window appears.
  2. Follow the instructions that appear. If you need help, click Help and then choose Help for This Window.

Task 5: Optimise your company file

Once the Start a New Year procedure is complete, we recommend that you optimise and verify your company file. For more information, see 'Optimising your company file'.