My Accountants Feedback of program

I have just met up with my accountant today for going over the year end accounts.

Her feedback was that she likes the simplicity of the program and she said it was one of the few programs that include purchase invoices. Apparently quite a lot of programs don’t for some reason.

She said that it would really improve the program if the following was implemented.

  1. Add ability to reverse journal entries for accruals. We had to create one journal entry on the 31st and reverse the entry on the 1st of the next month.

  2. Add ability to debit/credit bank accounts in Journal Entries. Thinking about it now, this is probably not necessary as we could have done spend bank and selected the appropriate account, so perhaps disregard this point, but we were focusing on journal entries and directors loan accounts at the time and we didn’t think of it.

  3. Add functionality to the program to allow end user to add new supplier, new chart of account or add new customer or anything from any part of the program. We were doing a couple of journal entries and we had to keep going out of Journal Entries into Chart of Accounts to create the relevant account and then going back to Journal Entries to complete the transaction. This was a big negative for her.

  4. Request that open entries are viewable in some way. For example if we click on VAT Tax on Summary Page, she wanted to see what entries were open that produced the amount xyz instead of only having the option to view all transactions. This feature is very useful if you can see there is something wrong with the accounts ie the tax amount is more or less than it should be, she wants to be able to see just open transactions which she can do in VT which is the accounting program that she uses. It wasn’t just VAT Tax where she wanted this functionality, I think any liability account was what she was interested in for this particular function.

  5. She found the interface a bit clunky, but I think it was more having to go out of say Journal Entries into Chart of Accounts to create an account and then back again into Journal Entries as well as the screen size changes on different forms so sometimes you see everything on the monitor and sometimes you have to scroll to the right. So consistency in look varied in terms of layout size.

The impression that I got is that she thought that the software was quite good in that it did the accounts very well and was easy to use, and if the above issues were addressed for her, she probably would consider using this program and recommending it to her clients as she admitted that VT was not as simple to use as Manager. She didn’t say that, but thats the impression I got. It was mainly points three and four that were very important to her.

I’m not understanding this. Why make the entry if you know you’re going to reverse it the next day? Can you give an example?

That used to exist, but vanished when the current scheme for uncleared deposits and payments was added. I suspect there was too much interaction between subaccounts for it to work any longer. In general, I think you ought to be able to do anything with a journal entry, but I’m willing to accept this compromise.

Wasn’t that a function of the fact that this was your first year? Will you have to create such accounts on the fly in the future? In other words, is this really such a big deal as far as usability goes?

What do you mean by “open entries?” As I see it, you drill down and see every transaction that produces the balance showing. Transactions are not “open” or “closed.” They either exist or they don’t. Even an account that is routinely zeroed out depends on all the previous transactions (which might have taken it to zero in the past) being entered correctly to be able to zero it correctly in the present. Again, an example will probably make this clear to me.

What she did is she allocated the accountants fees for end of year returns to the year ending March 2016 and then she reversed the transaction at the beginning of the new tax year ie 1st April. What this does is it allocates the expense to last years accounts, even though I have not paid the bill.

I agree with you about the bank accounts and journal entries. We could actually have done what we wanted in bank spend if we had thought about it.

Its not just end of year returns, you could be creating a purchase order and then suddenly realise that you dont have that supplier added to the system, so you have to leave the purchase order and create the supplier. Same concept with creating a sales quote and you realise that you forgot to add the new client. There are loads of occasions where its convenient to be able to add a new supplier/client or account on the fly as it were![quote=“Tut, post:2, topic:5310”]
Request that open entries are viewable in some way.

A good example is if you have a zero balance on VAT - ie everything is paid up and you don’t owe HMRC anything and they don’t owe you anything. Then you create one transaction that creates a VAT liability. How do you find that transaction if you don’t know which transaction it is in the list? Apparently she can do this in VT Accounting program and the benefit is when she knows that something is not correct about the accounts and she can use open transactions to track it down - this is more for liabilities accounts than anything else.

I still don’t understand the concept of so-called “open” transactions. It seems to me all you would have to do is drill down on the VAT-owed account and look for the amount in question. Or, once you were in that register, search on it.

There is Tax Reconciliation report which will break down movements in VAT account.

This way you can separate transactions which represent VAT collected, VAT paid and actual payments to (refunds from) HMRC.

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Its difficult to explain because I am not familiar with her program VT, but this is something she mentioned was a problem for her in Manager. I would have to get her to explain how it works in VT.

I will pass that on to her. Having said that, the VAT transactions was just an example - as I understood her, it was basically being able to pick up this kind of information for any liability or equity account etc.

You can post some screenshots to demonstrate.

Good idea. I will let her know. :smiley:

This is the traditional approach, the more modern approach is to leave the accrual expense in the accrual account and allocate the invoice directly to the accrual account. By reversing the Journal your expense account is now in “credit/profit” until the invoice arrives. Also, by not reversing you are keeping 2016 P&L chatter out of your 2017 P&L. Any variation between the accrual and the invoice would be allocated to the P&L account.

Its noted that you basically withdrew this one, but am a little aghast that an accountant would even hint at it. Journal entries into bank accounts are a BIG no-no. Bank Statements can only show your receipts and payments and nothing else so how could you ever reconcile your BS Bank Account if it included non receipt/payment type entries.

Totally support this in, nothing peeves me off more then having to can a multi line transaction due to a new item, but I now have a work around. I leave the “offending” line putting towards suspense and when the transaction is completed, create the COA/Fixed Asset/Inventory Item and then edit

@tut added “is this really such a big deal as far as usability goes”. Yes it is, especially when you have had the advantage of such a feature in previous packages. Imagine that you could add a Fixed Asset or Inventory Item on the fly during the processing of the Purchase Invoice without having to go separately to the Fixed Asset/Inventory Item tab. When you click on the item dropdown listing there would be an option “new” which would open the appropriate dialog for completion without having to exit the Purchase Invoice. The same “new” feature could be applied to Customer, Supplier, Employee etc.

In fairness to myself and the accountant. We had not planned on using bank entries in the journal. We were discussing ways of paying dividends to directors loan accounts etc and one of the options explored was making the directors loan account a bank account because in a way thats what it is. I think what happened is that we were in Journal Entries at the time, so we didn’t think of using bank spend for directors loans or whatever we were doing at the time. Me, I forgot to suggest bank spend and my accountant is not familiar with manager and the conversation sort of jumped a bit at that point, so I think it was more we were just exploring options. It does help to have a familiarity with the program, which my accountant does not.

I will direct my accountant to this topic and she can see what she thinks of various suggestions such as Lubos talking about VAT Reconciliation Report etc.

I am a bit of two minds which option is better. It is possible that she suggested reverse accrual because its easier for business owners as all we have to do is pay the invoice in the normal way, i.e. bank spend and select the accounting fees account. That would be easier for many business owners than for the accountant to try and explain why they need to pay the accruals account and not the accounting fees account. Also her method means that people don’t forget that they have to allocate to the accruals account instead of the accounting fees account. I think in a way, I actually prefer her approach. Your method works providing that the business owners understands whats going on and actually remembers to allocate to accruals.

@lubos do you think reverse journal transactions as discussed here is something that you would implement in Manager at some point or do you think that this accounting method should not be used any more in favour of Brucanna’s approach?

To have reversing Journals, you would have to have a Reverse tick box, to distinguish from non-reversing Journals.

I understand your points about accrual Journals, but one of the great advantages of the BS (frequently underutilised) is that every account is reconcilable therefore each account has the ability to be use as a management tool. E.g. - each accrual or prepayment could have its own account rather then being grouped together, so when ever the BS is being read/reviewed it talks as to the status of the various elements.

In my wish list, I would prefer to see automated recurring Journals before reversing ones (only because I don’t use them). Once Manager has Budgets then recurring Journals will have much more relevance as the user will have the ability to spread costs over a year rather then have lumpy expenses - known as revenue/cost matching.

This point highlights the difference between accountants (which you are, or you are just very good at accounting). I didn’t really understand anything you just said here! :blush:

What I do in this situation (unsure if this is correct or not but seems to work) is create a purchase invoice for Accounting fee on the last day of the accounting year then on BS it shows accounts payable then I pay the fee in the new accounting year.

I speak under correction, others will no doubt correct me on this point. This procedure is not correct if you are using Cash Based Accounting as the account will fall under the year that you pay the bill in this case. What my accountant did was make it so that my accounting fees falls under the previous year even though I am paying the bill this year! You are not accruing the account to the previous year by creating the invoice in the previous year and paying it in the current tax year.

What you are doing is correct in the sense that you can create the invoice on last day of year and pay it in the current year (now), but if you think that you are allocating the expense to last year (assuming you are using cash basis), you are not doing this - the account is allocated to this year when you pay your bill.

Again, somebody may correct me on this point!

Yes you are correct, on cash based accounting the Accounting Fee expense will occur in the new Tax year.
I see now why you used journal entries.
Apologies, I use accrual based accounting.

Manager used to have reversing journal entries. I’ve removed that feature some time ago.

I really didn’t like how accountants were abusing reversing journal entries to the point that P&L looked ugly and illogical for better part of the year. So I 100% agree with what @Brucanna said. And that was the reason reversing journal entries have been thrown out. I have some new module in mind which will handle this a lot more gracefully.

I would be interested in hearing more on this. As you know I am not an accountant so I didn’t even know about reverse accrual until this week. As mentioned in my post earlier on in this topic, I like the concept of reverse accruals for the reasons that I explained above. I just don’t think that accountants should expect customers to know when to allocate to accruals as Brucanna suggested and when to allocate to say accounting fees. As explained in my post above. So I actually understand why she used reverse journal entries in this case.

If you have a better solution that either reverse accruals or what Brucanna suggested, then I look forward to seeing that in the future. Thanks

To fabricate a Purchase Invoice in lieu of accruing an expense is wrong, even more so if that fabricated invoice has any VAT/GST tax elements as that would clearly be breaching tax regulation/law especially with accrual basis accounting as you would be claiming the “paid tax” before you had any legal right to that claim - receipt of the genuine invoice,

Accruing is an internal financial transaction that recognises a future expense that relates to a prior year.
Taking up “any” invoice implies the purchase/service has already been completed, unless it is for a deposit/progress claim.

Also, by the fabricated invoice you are creating the impression that the Supplier has already earned that income, yet their accounts wouldn’t be reflecting that - a tax auditors delight

@Brucanna thank you very much for putting me right on this I thought that it may not have been correct. I will delete that invoice immediately.
Can I ask, in simple terms, what is the best way to account for the accountancy fee from the previous tax year? I’m not yet registered for VAT.