When using a full accounting package it is important to make sure that all processing is correct. This ensures that financial reports are reliable for checking the position of your business. This help file lists areas to reconcile or keep-an-eye-on that will help you check that your processing is correct. It is recommended that these checks are worked into part of your monthly processing routine.
When you run Day End you will normally leave the option selected to have the Daily Batches automatically posted. If there is a problem with a Daily Batch the batch will not be posted and a warning will be given. It is important to regularly check for any unposted batches in case this warning has been ignored.
OW Batches can be checked from - Day End, Day End Accounting Batches
PI Batches can be checked from - Suppliers, A/P Invoice Entry
RC Batches can be checked from - Suppliers, Accrued Payable Batches
if you find any unposted batches, look at the contents of the batch and determine if you need to post it.
Check the ageing on your full AP ledger to ensure that suppliers are being paid in a timely manner. Payments should be made in Suppliers, AP Cheque Prep or Manual Cheques.
Report: Suppliers, AP Reports, Aged List
Check the ageing on your full AR ledger to ensure that debts are being collected in a timely manner. Debt Collecting should be done in Customers, Collections.
Report: Customers, AR Reports, Aged List
Make sure that any balances are from current transactions.
Report: Suppliers, AP Reports, Open Item List, select Accrued Payables on the Options Tab.
Make sure that all General Ledgers flagged as Operating Bank Accounts are reconciled and the outstanding transactions are only current transactions. Check:
The BAS payment can include more than just GST. It can also include your PAYG liabilities. The BAS payments need to be coded correctly in the system to account for all of this. Check the ATO Supplier Account to ensure that outstanding balances are for periods not yet paid. Also check the GST Payable and GST Claimable GL's to ensure only unpaid periods have balances.
If you are a multi-branched company Branch Transfers need to be reconciled to make sure that the stock that has been transferred by the sending branch has actually been receipted by the receiving branch.
The sending store creates the Stock Transfer OUT document which automatically creates the Purchase Order inwards document of the receiving branch. The transfer out documents should take the standard price of the inventory items.
The accounting entries created by the transfer out document are CR Inventory in the sending Branch; DR Goods in transit in the receiving branch.
When the purchase order IN document is created the transactions are DR inventory in the receiving branch and CR good in transit receiving branch.
If the receiving branch makes an alteration to the goods inwards document the variance will be left in the Goods in Transit account of the receiving branch. These variances must be identified, explained and accounted for.
Report: Inventory, Inventory, Branch Transfer Report. Select the date range you wish to reconcile.
Payment for Cash on Delivery (COD) sales should be received when the goods are delivered. In the Order Entry, Invoicing/Repair Order, Work in Progress screen sort by the Terms column to get all the CODs together. The date of these invoices should be current. If not, this needs to be followed up.
There also should not be any old documents appearing in the WIP screens. One should be suspicious of any cash sale documents that have old dates on them. This could indicate that some goods were put on a cash sales document, were allowed to leave the premises but have not yet been paid for. It is too easy to forget who the person was and then simply delete the document.
Anytime that goods leave the premises they must be accompanied with a completed document. If the goods are being supplied on a COD basis then the document must be converted to a COD document and “sold”. COD documents without full addresses and telephone contact details should be considered as serious breaches.
The only documents that should be allowed to “age” in WIP would be documents where a deposit has been taken on a sale. Documents with deposits must also show the full details of the sale that is to be completed upon settlement.
Part of the day end process is to reconcile the till and EFTPOS machine to the system. Doing this ensures that any tender mistakes are fixed before entries are posted to the GL and Bank Reconciliation. The Day End procedure should be followed for assistance in this area.
The Inventory value in the GL and the value reported on an Inventory Valuation Report should balance to each other. They can be different for two reasons:
Any outstanding invoices on AR accounts for these types of sales should only be current. If they aren’t this needs to be followed up.
Stock levels should not be in negative if all stock is receipted in before being sold. It should be someone’s responsibility to monitor this on a weekly basis and resolve all outstanding issues.
Report: Inventory, Inventory Reports, Stock Analysis Reports, Items with Negative Quantities.
If the cash register till is used as the petty cash then Paid Outs should be processed each day for the money that is used from the till. This would also be checked during the Day End reconciliation.
Ensure that Supplier Payments and BAS payments are posted to the period they were physically paid, not to the period they are paying. (e.g. if paying all suppliers in October for September invoices, the payment should be posted to October, not September).
In Financials, GL Maintenance bring up the Stock Variance GL and check the value of the balance. Values go to Stock Variance from gaining or losing stock via Stock Counts, Quantity on Hand Adjustments or Cost Adjustments. If the value is unacceptable, check with staff as to why the QOH or Cost adjustments had to be performed. There might be a processing issue (e.g. they are/were selling the wrong stock item, or are not finding out the correct cost before receipting the stock in).
The best method of control is to vest the responsibility for quantity on hand or price adjustments in the hands of one person. The adjustments can only be performed by that person who must also know the password for the activity.
Also, a password can be put on the ability to sell into negative in Settings>>Passwords and Events. Having the override screen come up on an invoice will serve as a warning that stock is about to be sold into negative and corrections can be made before the invoice is sold.
In Financials, GL Maintenance, bring up the System Suspense GL and check that it has a zero YTD balance. If not contact the National Support Desk to get help fixing it.
The purpose of the System Suspense is to catch any errant transactions; transactions that might get posted after an account has been changed or deleted while the transaction was in a document or batch which was subsequently posted. There should be no user generated transactions in the account.
Stock Counts are imperative to any business that holds inventory. Stock Counts should be run regularly and kept small so they are manageable. The ideal situation is to run rolling stock counts, ie always be running small stock counts.
This usually means to restrict the count to a range of Sizes, Brands or Types rather that running a full count. This tends to break the job up into smaller chunks and makes for fewer errors.
Variances created by Stock counts are automatically posted to the Stock Variances GL (See Stock Variance Section of this document).
When new GL Accounts are created they must also be assigned to the major financial reports. If a General Ledger is not assigned, it will not be included in Financial Reports. To check this go into Financials, GL Maintenance and go into each Tab. The right hand side will show any unassigned GLs.
When the wages are allocated into Costar it is recommended that the Gross Wages, PAYG Withholding and the compulsory superannuation is accounted for. Doing this, as opposed to just coding the net wages, ensures that financial reporting is as accurate as possible.
These accrual accounts (PAYG, Superannuation etc) need to be monitored to ensure that the accruals have always been cleared by the payments.
Each time a pay run is done, the totals from the payroll package need to be reconciled against the totals in Costar to ensure that all processing is correct.
Warranties can be processed a few different ways. Either using the warranty tick box on an invoice screen or by just using a Special Code to give a discount.
Warranty Tick Box: A value is put on the Accrued Payables for the supplier. This account should come back to zero after the credit note is received and processed. Report: Suppliers, AP Reports, Open Item List.
Special Code: The discount you give the customer and the credit note received from the supplier should be coded to the same General Ledger.
If you have any queries regarding Areas to Reconcile in COSTAR, please contact the Support Desk.