Tuesday, October 29, 2013

PCLaw and Credit Card Purchases

 How you enter credit card purchases made on behalf of your firm, depends on some variables:
  1. Is this a personal card or a business credit card, where most, if not all, purchases are business related?
  2. Do you make a lot of business purchases each month, or only a few?
  3. Will you pay the credit card company directly? Or, will you be reimbursed, and you will pay your personal credit card?
For a just a few purchases, you can write a general cheque for the total amount, account for the HST, and itemized the expenses and G/L accounts in the lower portion. Post any personal amounts to Draw. Make the cheque payable to yourself or the credit card company as is applicable.

If you make a lot of purchases each month, you can download a csv (comma separated values) (Excel) from most credit card websites. You can then calculate the total purchases for each expense category, then enter a general cheque as above. Save your worksheet with your bank records, as the purchases are itemized here, with only the category totals being used for the cheque. Do not forget to calculate for HST too.

If the majority of purchases are business related, it is usually easier to post personal items to the drawings account, and the pay the entire credit card bill with one firm cheque.

I like to add a credit card general bank account for those clients that are higher volume purchasers. I post the Excel sheet on the statement date. I then do a General Bank to Bank transfer on the payment date.

As always, I invite your comments and suggestions for future post topics. Next Posting – How To Account For Change Made From Petty Cash For PCLaw Receipts.


Friday, August 9, 2013

PCLaw and Petty Cash Purchases

How you enter Petty cash purchases made on behalf of your firm, depends on:
  1. Do you have an actual petty cash fund or are these purchases paid out of your own pocket?
  2. Do you want to be reimbursed or do you want to offset these purchases against your drawings or equity?
If you have a petty cash fund, you reconcile the fund by totalling up the receipts, which should equal the missing funds. You then replace the funds by writing a general cheque for the total amount, account for the HST, and itemized the expenses and G/L accounts in the lower portion. Post any personal amounts to Draw. Make the cheque payable to yourself or Cash. Cash the cheque at the bank, and return the funds to the petty cash box.

For out of pocket expenses, I prefer to let PCLaw do the adding work for me. Gather up all the receipts. In Options - Systems Setting, change the default bank to petty cash. In Options - Workstation Settings, remove the checkmark from “Close data entry windows on OK”. You can now quickly write a series of petty cash cheques to post the expenses and HST. When you have finished the pile of receipts, change the default bank and “Close data entry”settings above back to the way they were before you started.

To reimburse yourself for petty cash, to a General Bank to Bank Transfer for the total amount that petty cash account is overdrawn.

To invest the funds in the business, post a Firm Receipt to the petty cash account for the total amount that petty cash account is overdrawn, and credit drawings or equity.

As always, I invite your comments and suggestions for future post topics. Next Posting – PCLaw And Credit Card Purchases.


Tuesday, July 2, 2013

Post-dated Cheques And Monthly Entries In PCLaw

Did you know you can make post-dated entries in PCLaw?

There are actually a few ways to handle repetitive entries in PCLaw.

You can simply enter the individual entries, like a series of post-dated cheques given to your landlord. Simply do the cheque entry with the future date, print the cheque, and save the entry.  You can do the same for pre-authorized withdrawals without printing the cheque.  Replace the cheque number with Lease or Copier, Car, LSUC, etc. You can complete a years’ worth of entries in one short session,

You can also save the information by creating a Recurring Entry. These can be created from any cheque or receipt window, including accounts payable and accounts receivable. Complete the first entry, but instead of clicking OK, click Create, and name your entry, and whether or not you wish to be reminded. OK to save the Recurring and OK to save the original entry.

For pre-authorized withdrawals, you can have PCLaw remind you to enter the payment when it is due each month (weekly, bi-weekly, semi-monthly, monthly, quarterly or semi-annually).

If the entry is the same amount but random, you can recall the entry with the Use button. For example, you may have a client that always pays $50, but never on the same day each month. The amount and matter number are already saved for you – just open Receive Payment – click Use – change the date – OK.

These reminders not only help you complete the entries, but can also act as a tickler system:
  • to follow up with a client for payment
  • to retrieve and deposit a post-dated cheque you already have in your possession
  • to insure sufficient funds are on deposit for your own post-dated or pre-authorized payments

As always, I invite your comments and suggestions for future post topics. Next Posting – PCLaw and Petty Cash Purchases.

Thursday, May 23, 2013

PCLaw And LSUC Spot Audits – Prepare Ahead

Last time I gave an overview of what to expect on during the LSUC Spot Audit. What can you do to prepare ahead of time?

In addition to the required banking photocopies (typically the most recent month and the prior December 31st), have the rest of the audit period (1year) ready for photocopying. For each month, have your bank statement, together with your trust bank reconciliation, client trust listing, and your trust bank journal. Keeping these copies together is always good practice, but whichever month the auditor selects at random, you are ready to begin photocopying.

Review each bank statement during the audit period. Make sure you have completed the applicable Form 9 a, b, or c, if you do electronic banking for trust transactions. Add a copy of each to the pile of monthly banking records you have just prepared.

You will need to provide a Client Trust Listing as at the audit date, with detailed explanations for all inactive trust ledger account balances.  If you have inactive matters, prepare your answers ahead of time.

Have photocopies prepared of your most recent Levy filing and your most recent 4 months of Teranet reports.

Prior to the audit, run the Client Summary, selecting for general retainers and negative unbilled disbursements. If matters are listed on the reports, transfer the funds to trust. Keep a copy of the report and your deposit slip to show the auditor.

Private Mortgage matters – for the files the auditor has selected, have copies of:
Form 9D
Form 9E
Registered Mortgage and any Assignments
Abstract/Search confirming ownership and mortgage priority (if the title search is a lengthy registry search, please contact the auditor for direction)
Client ledger
Any client ledger(s) where funds have been transferred to or from the mortgage ledger

Registered Discharge (if applicable)

Power of Attorney and Estate matters – for the files selected by the auditor, have copies of:
  • The Will and any Codicils
  • Certificate of Appointment of Estate Trustee
  • List of Original Assets
  • Client Trust Ledger or Equivalent Record Keeping
  • Support for Current Value of Assets (investment statements etc.)
  • Billings for Executor Compensation and/or Legal Fees
  • Calculation for Executor Compensation Claimed and/or paid
The all of these reports and photocopies will be need on audit day, so why not prepare them ahead of time. Spot audits are  already stressful events. The more you do prior to audit day, the more you can do to relieve some of this pressure.

As always, I invite your comments and suggestions for future post topics. Next Posting – Post-dated Cheques And Monthly entries in PClaw.

Thursday, April 25, 2013

PCLaw And LSUC Spot Audits

Prior to your LSUC Spot Audit, you will receive a letter outlining the period of the audit, typically from the audit date back 1 year - to the nearest month end. If you have them, you will be required to email a detailed list of Private Mortgages, and a detailed list of Power of Attorney and Estate matters. If you have a lot of these types of files, the auditor will advise you which files have been selected for auditing.

During the audit, you will be required to provide photocopies of bank statements, bank reconciliations, and Client Trust Listings – typically the most recent month and the prior December 31st. If you do electronic banking for any trust transactions, you will need to provide photocopies of the applicable Form 9 a, b, or c.

The auditor will usually have you run the Bank Journal report for a randomly selected month, and all of the matters with transactions appearing on this report will form the basis of the audit. All of the files and paperwork to support the transactions will be examined. If anything is unclear, you will need to be able to satisfy any of the auditor’s questions.

The Private Mortgage, Power of Attorney, and Estate files previously selected by the auditor will also be examined, even if they have no transactions in the randomly selected month.  The auditor will likely ask for additional PCLaw reports related to these matters.

The auditor will also want you to run Client Summary reports, selecting for general retainers and negative unbilled disbursements. These represent client funds on deposit in your general account, which is not allowed.  On audit day, these reports should show $0.00 balances.

As always, I invite your comments and suggestions for future post topics. Next Posting – PCLaw And LSUC Audits – Prepare Ahead.


Thursday, April 11, 2013

What to look for when hiring a PCLaw Bookkeeper

Hiring a bookkeeper for your law firm is one of the most important decisions you will make in your practice. After all, this is your livelihood we are talking about. As previously discussed, poor bookkeeping can have dire consequences, up to and including disbarment.

Education vs. Experience

In my opinion, both are equally important. You are hiring a bookkeeper, not an accountant. The level of education should therefore be appropriate. Hiring a chartered accountant to do your regular bookkeeping is both overkill and extremely expensive. Nor would you want someone with their brand new accounting degree, but no real world experience. The key is to find the right balance between adequate education and practical experience. I strongly recommend hiring an accountant to do your taxes and provide basic oversight of your bookkeeper.


PCLaw handles all aspect of legal bookkeeping: general bank, trust bank, accounts receivable, accounts payable, expense recovery, invoices, and HST / Payroll taxes. It is a very complex program, and using the wrong methods when doing entries can create errors. Your bookkeeper should be familiar with how to fix problems created by other staff as they occur. Your bookkeeper should also be able to assist staff with ongoing training and be available to answer questions as they arise from time to time.

Other Considerations

Hopefully your prospective bookkeeper possesses a strong aptitude for numbers, which drew him/her to a career that they find enjoyable and satisfying. Some hobbies to look for include any kind of logic puzzles: Challenger, Kakuro, Sudoku, Sticklers – but not crossword puzzles. Crosswords are good for building your vocabulary, but logic puzzles use the same part of your brain that will help figure out why your bank account will not reconcile. A good puzzle solver will will be much more efficient with your bookkeeping.

Is your prospective bookkeeper accessible: easy to talk to, available to answer questions,
available to assist your staff? Doing the monthly reports/reconciliations if fine, but oftentimes you will want to answers or advise throughout the month.

As always, I invite your comments and suggestions for future post topics. Next Posting – PCLaw And LSUC Audits.


Thursday, March 14, 2013

Adjusting A Period HST Report In PCLaw

Many bookkeepers for small law firms work part-time or on contract basis, and are not in the office every day. They do the bank reconciliations, and calculated the HST remittance, and payroll remittance all on one day. They then pass on the reports to the lawyer for payment.

The lawyer may wait till the end of the month when the HST when due, but many remit right away or by the 15th (same date as payroll).

The banks need to be reconciled by 25th. If the HST was remitted on the 15th, there is a gap of time from the HST payment and the prior month being closed. Examples of things that could affect the HST report are invoice write-offs and prior month expense invoices. A lot of law firms use The Conveyancer for their real estate closings, but may not enter their invoice into PCLaw until well after the closing date.

For example, I have a client that likes to pay his HST immediately after the 1st. His credit card statement is issued at the end of the month and arrives early in the following month, I usually do the entries during the 1st week of the month, but the HST has already been paid by this point in time. Posting the entries on the Statement Date in the prior month results in new HST input tax credits (ITC). 

When I run the HST report for the next period, I will want to capture these ITC from the previous period. This is why it is important to run two HST reports:
  • one for the current reporting period (change both the start and end date)
  • one for all dates ending on the period ending date (change only the end date)
If you are submitting the report to someone else to remit the payment (eg my client remits online), you will want the current period report to display the amount owing, including the HST adjustments from the prior period. To do this, you make a G/L adjustment on the last day of the prior period and a reverse the entry on the 1st as follows:

First create a HST Adjustments G/L account (G/L 2401)

If your current report shows more HST is owing than the G/L balance, run the report for the prior period. It should show a refund balance.
  • to capture the refund, increase (credit) the HST owing (G/L 2400) by the refund amount for the prior period end date, and debit HST Adjustments (G/L 2401)
  • on the 1st of the month, decrease (debit) the HST owing by the same amount, and credit HST Adjustments
  • for your explanations, refer to the other date (eg HST adjustment – see July 1st, and HST adjustment – see June 30th)
  • remember to checkmark the box “Show journal entry on HST journal”
To check your work, refresh the prior period HST report, and the refund should disappear (balance $0.00). On your current report, the report balance and the G/L balance should now be the same amount.

Of course, if your current report shows less HST is owing than the G/L balance, run the report for the prior period. It should show a balance owing. Follow the above instructions but reverse the debits and credits.

As always, I invite your comments and suggestions for future post topics. Next Posting – What To Look For When Hiring a PCLaw Bookkeeper.


Wednesday, January 30, 2013

PCLaw Errors – Why They Happen

I have written many times about PCLaw errors, including the types of errors, how to locate them, and how to correct them. I have not really discussed how the errors occurred in the first place. This may give the wrong impression about PCLaw, which in my humble opinion is the best legal accounting program available.

On my December 18, 2011 posting, I provided a list of the 7 most common PCLaw errors:

User Errors
  1. Simple posting error
  2. Trust errors (multiple matters/trust accounts)
  3. Accounts Receivable errors (method/multiple invoices/matters)
PCLaw Errors
  1. Posting error (PCLaw generated)
  2. Partial posting error
  3. Read/write error
  4. Hidden error
The 3 User Errors are simply a matter of proper training in how to use the software properly. If you follow PCLaw methods in the user manual, you should not have any errors. LexisNexis University also offers online teaching covering a wide variety of topics; some free and some that cost. In-person training is also available at a cost, providing hands-on experience in a classroom setting (Toronto & Vancouver). I offer virtual one-on-one training for new users, which will help you learn the basics for daily use, and I am always available to answer questions.

In my experience, the 4 PCLaw Errors listed above can occur for 1 of 3 reasons:
  1. Electrical fluctuations
  2. Network/server fluctuations
  3. Bank reconciliation window
Why They Happen:
  1. Electrical fluctuations - While our power grid appears stable, imperceptible variations in voltage and power surges do occur regularly. If one hits at the same time you click OK, one of the PCLaw errors above can occur.
  2. Network/server fluctuations - Errors are virtually non-existent when PCLaw is running on one computer. While that may not be practical, it is important to realize that these errors are network errors, not PCLaw errors. Essentially, the same as the issue of power surges and voltage fluctuations, only just localized to your internal network.
  3. Bank reconciliation window - The bank reconciliation window has an option “Auto save every ‘5’ minutes”. When you are doing your bank reconciliation, you may be adding entries as you progress, while leaving the reconciliation window open. If you click OK at the same time the Auto Save function runs, there is a high probability that an error will occur. If you are correcting an entry and Auto Save runs, you often get an error message “Unable to link to previous entry”. When you return to the reconciliation window, you will see 2 entries instead of 1.
As you can see, PCLaw is not actually causing most of the errors. And, with regards to the bank reconciliation errors, you can avoid them by simply closing the reconciliation window.

As always, I invite your comments and suggestions for future post topics. Next Posting – Adjusting A Period HST Report In PCLaw.


Monday, January 14, 2013

LawPro Issues A Warning

LawPro issues warning after law firm lost six figures from trust account.

A common scam, but first time for an Ontario law practice.

  1. Do you have a robust antivirus program installed?
  2. Do you have additional antispyware protection?
  3. Does your firm have policies and Windows settings to prevent staff from installing new programs / screensavers, etc.?
  4. Do you scan suspect attachments? Hackers can highjack the email account of someone you know and trust. If you are not expecting anything, scan before opening.
Most email attachments are nowadays automatically scanned. Downloading a less common business program usually issues a warning from antivirus programs that do not recognize the name. Most malware attachments are triggered upon opening the attachment. Manually check any suspect file before opening by saving to your desktop, right click, and scan with your antivirus program.