Sunday, March 27, 2011

General Ledger (G/L) Reconciliation

The General Ledger (G/L) Reconciliation report is extremely useful for locating posting errors. The report displays imbalances between the various sub-journals and your general ledger. Your general ledger is the information that appears on your balance sheet or income statement. So, if the G/L Reconciliation report shows value in Differences column for your general bank, the figure that appears on your balance sheet will not be the same figure as your bank journal or your bank reconciliation.

To locate the error, run the reconciliation report on a date half way between now and your last closed month. If nothing shows up in the Differences column, the error occurred closer to today’s date. If a difference is displayed, the error occurred closer to the closed month. Repeat, cutting the time in half until you have located the date the error occurred.

Assume you are looking for a $250 error in the general bank. Run your general bank journal on the error date, and examine each $250 entry, making sure it was entered properly. You can also check for general ledger adjustments. This could also be two errors, $350 positive and $100 negative.

Maintaining your general ledger in balance on a regular basis can save you a lot of work. Having to go back and open closed months to correct errors takes extra time. I recommend placing the G/L Reconciliation button on your End of Month/Year Quick Step page, and using it before you do your monthly bank reconciliations.

Be aware that if you have never done a G/L Reconciliation, and you have 10 or 15 years of data, you will not be able to correct some of the older errors using conventional methods. Upgrades to the PCLaw program cut off access to some older entries.

In addition to helping my regular clients, I am happy to assist anyone on a consultancy basis, if they need help correcting errors in their General Ledger Reconciliation report, or anything else.

As always, I invite your comments and suggestions for future posting topics. Next week – End of Month (EOM) Reports.

Sunday, March 20, 2011

HST on reports, invoices, etc.

The change from GST to HST occurred July 1, 2010, and I am assuming everybody has changed the tax rate in System Settings. However, this does not change the wording of how the taxes appear on your invoices, cheques and reports in PCLaw.

To change GST to HST on various windows and reports – Options – Terminology – scroll down the “Replace” column to find Goods and Services Tax – in the “With” column type “Harmonized Sales Tax”. On the next line below – “Replace” – GST – “With” – type “HST”. OK.

To have HST appear on your invoices – System Settings – Billing – and at the bottom of the window locate and write down the names of the templates being used for Bill, Pre-Bill, and Quick-Bill.

Next, Tools – Template Editor, then Open File and scroll to locate one of the above templates. When the template opens, locate the text boxes that contain GST (usually at least two, or more – fee & disbursement and maybe sub-total, totals). Double click on the text box to open it.  Change the text from GST to HST - OK. Repeat until all text GST boxes on this template are changed to HST. Re-save the template.

Repeat this same process for the two other templates you wrote down from System Settings. You can test all the templates by running pre-bills and selecting each of them in the template box. You may also have custom templates that you use only for some clients. Be sure to change these too.

Lastly, to change the name of the payable account on your balance sheet - Options – Lists – G/L Accounts – scroll down to GST Payable – double click – change GST to HST – OK.

As always, I invite your comments and suggestions for future post topics. Next week – G/L Reconciliation Report.

Thursday, March 17, 2011

Work-In-Progress Reports

We previously discussed Accounts Receivable and how this information is displayed on reports. I thought I would continue with the other reports available within PCLaw. There are several reasons why it is good practice to review your Work-In-Progress (WIP) report often.  

Reviewing the report frequently ensures that you catch missed fees and disbursements, while they are still fresh in your mind.

You may find you have indeed posted your time and disbursements, but neglected to finalize your account and remit your invoice to your client.

Matters that are old and have stale activity should be discussed with the client - to obtain instructions to either proceed or close the file. If you have lost contact with the client, close the matter and forward any trust funds to the LSUC.

The WIP report is also another place where you can locate general retainer errors. If the LSUC’s rules are followed, there should not be any general retainers on the report, but mistakes do happen. If you do find a general retainer balance, transfer the funds to from general to trust – both in PCLaw and between your bank accounts.

As always, I invite your comments and suggestions for future post topics. Next week – Client Summary Reports.

Sunday, March 13, 2011

Goods and Services Tax (HST) Report

The Goods and Services Tax Report, now HST, is a seemingly fairly straight forward. The bottom of the report provides you with all the information you need to complete your HST return. In my bookkeeping practice I have found that this report is often misunderstood, and frequently results in posting errors. 
Firstly, the method of producing the report is commonly misunderstood. The report should be run by only changing only the end date, to capture all of the data.  Running from January 1st to December 31st, will not capture any write-downs or other year-end adjustments made in the previous years.
Secondly, when viewing the report, the General Reconciliation Balance, Period Totals, and Running Balance should all be the same amount. If these three amounts are not the same, your HST report is out of balance, and a posting error has been made.
The three most common posting errors are:
  1. Failing to use a “z” in the HST box when remitting your payment.
  2. Posting a G/L adjustment entry involving HST and failing to place a checkmark in the “Show on Journal Entry on HST Journal” box.
  3. Using a receipt entry to record a HST refund. Instead, use a cheque and enter a negative amount.
If you find that your HST report is out of balance, carefully review past entries and make adjustments accordingly. The importance of maintaining accurate HST records can best be emphasized by the penalties and interest levied when Revenue Canada gets involved, or the loss of input tax credits which directly results in a loss of income.
In addition to helping my regular clients, I am happy to assist anyone on a consultancy basis, if they need help correcting errors in their HST report, or anything else.
As always, I invite your comments and suggestions for future post topics. Next week – Do your PCLaw cheques, invoices, and reports still show GST? I will tell you how to change this to HST.