Student Guide 2013 Version 3.1
Copyright Notice. All rights strictly reserved. No part of this publication may be reproduced or transmitted in any form or by any means, mechanical or electronic, including photocopying or recording, or by information storage or retrieval system, without permission in writing by the publisher. Requests for permission or further information should be addressed to Maria Landrelli at maria@thebookkeeper.com.au. Legal Notices While all attempts have been made to verify information provided in this publication, neither the author nor the publisher assumes any responsibility for errors, omissions or contrary interpretation of the subject matter herein. The purchaser of this publication assumes responsibility for the use of the material and information. If the advice of legal or related matters is needed, the services of a qualified professional should be sought. The program is not intended for use as a source of legal or accounting advice. You should be aware of any laws that govern business transactions or other business practices in your state. Any reference to any persons or business, whether living or deceased, existing or defunct is purely coincidental. Next Review Date May 2013
About the author Maria Landrelli Maria has been involved in mentoring and training franchisees and small business owners (SME) in computer accounting software and business systems since March 1994. Over this time she has helped hundreds of SMEs with their accounting needs using software programs such as MYOB and Quicken. Since 1995 she has been an MYOB Certified Consultant and is one of a small number of specialists around Australia authorised by MYOB Australia Limited to provide training on their behalf. During her career, Maria has been the main trainer of a large international accounting franchise and has setup many of the systems which are still in place today. Over the years she has mentored a number of franchisees specializing in accounting, financial control and bookkeeping services to help them create their own profitable businesses and still keeps in contact with a number of them today. Maria in 1997 joined a Not For Profit Registered Training Organisation (RTO) as part time trainer and trained business owners in MYOB related products. During this time Maria became dissatisfied with the quality of the training material available and decided to create her own manuals. During this time Maria was asked to become a member of the board for this Not for Profit RTO. She has also been a member of the executive committee and over the last 15 years has been treasurer on a number of occasions. Maria has a Certificate IV in Training & Assessment to ensure she is delivering training to the highest possible standards and has been training small businesses, accountants and bookkeepers in a classroom situation since 1998. In 1999 Maria set up her own successful MYOB consulting and bookkeeping business.
Maria went on to become a franchisee of the international accounting franchise and had been named the most successful franchisee in NSW on more than one occasion. Maria has also twice been a mentor for the Women in Business Mentor program for the NSW Department of State and Regional Development. The Women in Business Program helps up-andcoming women business owners expand their business. In 2006 Maria became a member of the MYOB Publishers Program which helps publishers of MYOB learning material to ensure the quality and integrity of that material is of the highest standard. In 2010, Maria was asked to teach the Certificate IV in Financial Services (Bookkeeping) and GST/BAS Skill set for the RTO, the required educational qualifications for registration with the Tax Practitioners Board as a BAS Agent. In 2011, Maria received both the Brian Milligan Memorial Shield and the Pride in Workmanship award from The Rotary Club of Waitara In 2012 Maria was invited to be a presenter at the prestigious NSW/ACT annual congress for the Institute of Public Accountants (IPA), In 2013, the Institute invited Maria to develop and present course material for members of the Institute. Maria is also a fellow of the Institute of Public Accountants (IPA) and a member of the Institute of Certified Bookkeepers (ICB). Maria is also Network Meeting Facilitator for ICB and runs the monthly networking meetings at Hornsby. In 2007 Maria co-founded Bookkeeping Biz in a Box with Ralph Rossteuscher to assist bookkeepers and financial accountants that wished to setup their own successful bookkeeping business.
Updated: January 2013 Page 1 Table of Contents Unit of competence... 2 Introduction... 9 Chapter 1 Implement an integrated accounting system... 11 Implementing an accounting system... 12 Choosing the right accounting system... 12 Installing and setting up the software to suit the organisation... 13 Help and support... 17 Chapter 2 Process transactions within the system... 20 Data Entry transaction classification... 21 End of month / quarter / year adjustments... 22 Reviewing transactions prior to producing reports... 23 End of Financial Year Rollover... 25 Chapter 3 Maintain the system... 26 Creating new accounts... 27 Chart of Accounts... 28 Customer and Supplier database... 28 Maintaining your databases... 30 Customising the chart of accounts to meet reporting requirements... 30 Chapter 4 Produce reports... 31 Reports to indicate the financial performance of the organisation... 32 Reconciling reports and subsidiary ledger... 33 Reconciling bank accounts... 38 Chapter 5 Ensure system integrity... 39 Backups of your accounting system... 40 How often should you backup?... 41 What should you backup to?... 41 Keeping records for audit purposes... 44 Restoring your data... 46 Assessment Tasks... 47
Page 2 Updated: January 2013 Unit of competence
Updated: January 2013 Page 3 Unit Descriptor This unit describes the performance outcomes, skills and knowledge required to modify and operate an integrated computerised accounting system. This is generally under supervision and encompasses processing transactions within the system, maintaining the system, producing reports and ensuring system integrity. No licensing, legislative, regulatory or certification requirements apply to this unit at the time of endorsement. Employability Skills This unit contains employability skills. Application of the Unit The unit has application across all sectors of the financial services sector and other industry organisations using accounting software. It has application to job roles such as accounts receivable and payable clerks. Unit Sector Accounting ELEMENT PERFORMANCE CRITERIA 1. Implement an 1.1 The general ledger, chart of accounts and subsidiary integrated accounting accounts are implemented in accordance with organisational system requirements, procedures and policies 1.2 Customers, suppliers and inventory items are set up in the system to meet organisational requirements and the reporting requirements of Goods and Services Tax (GST) 1.3 Appropriate technical help is used to solve any operational problems 2. Process transactions 2.1 Input data is collated, coded and classified before within the system processing 2.2 A wide range of cash and credit transactions are processed in both a service and trading environment 2.3 The general journal is used to make any balance day adjustments for prepayments and accruals 2.4 System output are regularly reviewed to verify the accuracy of data input and adjustments made for any detected 2.5 An end of financial year rollover is performed 3. Maintain the system 3.1 Any new general ledger accounts, customer, supplier, inventory and fixed asset records are added as required 3.2 An existing chart of accounts, customer, supplier, inventory and fixed asset records and subsidiary accounts are maintained and updated 3.3 The chart of accounts is customised to meet the reporting requirements of the organisation 4. Produce reports 4.1 Reports to indicate the financial performance and financial position of the organisation and for GST purposes are generated as 4.2 required Reports or to requested ensure that subsidiary ledgers and accounts reconcile with the general ledger are generated 4.3 Reports, which ensure that the bank account reconciles with the bank statement, over at least two reporting periods are 5. Ensure system integrity 5.1 Regular back-ups of the system are made to ensure against loss or corruption of data 5.2 Data are restored from back-ups in the event of loss or corruption of current data 5.3 A secure record of all processed transactions is maintained for audit purposes
Page 4 Updated: January 2013 REQUIRED SKILLS AND KNOWLEDGE This describes the essential skills and knowledge and their level, required for this unit. Required skills communication skills to: determine and confirm work requirements, using questioning and active listening as required liaise with others, share information, listen and understand use language and concepts appropriate to cultural differences research skills such as: accessing and managing information interpreting documentation numeracy skills for financial calculations and analysis well-developed IT skills for modifying and using integrated financial software literacy skills for identifying and using financial data from a variety of sources problem solving skills to identify any issues that have the potential to impact on the data entry and reporting process and to develop options to resolve these issues when they arise organisational skills, including the ability to plan and sequence work Required knowledge organisational procedures and policies relating to maintaining financial records principles and practices of accrual accounting principles of double entry accounting relevant financial services industry legislation and statutory requirements the characteristics and included information in relevant source documents of financial data RANGE STATEMENT The range statement relates to the unit of competency as a whole. It allows for different work environments and situations that may affect performance. Bold italicised wording, if used in the performance criteria, is detailed below. Essential operating conditions that may be present with training and assessment (depending on the work situation, needs of the candidate, accessibility of the item, and local industry and regional contexts) may also be included. Chart of accounts may include: classified expenses by type current assets current liabilities equity income non-current assets non-current liabilities.
Updated: January 2013 Page 5 Organisational requirements, procedures and policies may include: Australian Accounting Standards corporate governance correctly identifying and opening files within an organisational permit electronic and paper-based recording log on and system security procedures organisational health and safety (OHS) policies, procedures and programs storing data to security requirements and for appropriate future access. Appropriate technical help may include: computer help desk personnel designated technology assistance staff external staff employed or recommended by the software supplier to assist with difficulties managers and supervisors on-screen help online help software manuals. Transactions may include: adjustment notes bad debts bank reconciliation cash sales and deposits cheque payments commencing business entry commission contra entries credit card payments customer payments discounts financial sales funds transfers inventory stock take loans petty cash purchase and sale of stock purchase invoices purchase orders sales invoices supplier payments withdrawal of stock and assets by owner. Balance day adjustments may include: accrued expenses depreciation doubtful debts prepaid expenses revenue received in advance.
Page 6 Updated: January 2013 Reports may include: aged payables and reconciliation aged receivables and reconciliation asset listing auditable transaction trail balance sheet bank reconciliation business activity statement customer statements inventory listing profit and loss. Subsidiary ledgers may include: accounts payable accounts receivable fixed assets inventory.
Updated: January 2013 Page 7 EVIDENCE GUIDE The evidence guide provides advice on assessment and must be read in conjunction with the performance criteria, required skills and knowledge, range statement and the Assessment Guidelines for the Training Package. Overview of assessment Critical aspects for assessment and evidence required to demonstrate competency in this unit Evidence of the ability to: set up an organisation's chart of accounts by modifying an established integrated financial software system interpret and apply organisational policies and procedures implement an integrated accounting system ensuring integrity of the data process transactions within the integrated system and generate reports maintain the integrated system. Context of and specific resources for assessment Assessment must ensure: competency is demonstrated in the context of the financial services work environment and conditions specified in the range statement either in a relevant workplace or a closely simulated work environment access to and the use of a range of common office equipment, technology, software and consumables. access to an integrated financial software system and associated data access to the internet. Method of assessment A range of assessment methods should be used to assess practical skills and knowledge. The following examples, in combination, are appropriate for this unit: evaluating an integrated activity which combines the elements of competency for the unit or a cluster of related units of competency verbal or written questioning on underpinning knowledge and skills setting and reviewing projects using specialised software evaluating samples of work accessing and validating third party reports. Guidance information for assessment
Page 8 Updated: January 2013 Manual MYOB T = Theory Manual ELEMENT PERFORMANCE CRITERIA M = MYOB Chapter 1. Implement 1.1 The general ledger, chart of accounts an integrated and subsidiary accounts are implemented in T & M 1, 2 accounting system accordance with organisational requirements, procedures and policies 2. Process transactions within the system 3. Maintain the system 4. Produce reports 5. Ensure system integrity 1.2 Customers, suppliers and inventory items are set up in the system to meet organisational requirements and the reporting requirements of Goods and Services Tax (GST) 1.3 Appropriate technical help is used to solve any operational problems 2.1 Input data is collated, coded and classified before processing 2.2 A wide range of cash and credit transactions are processed in both a service and trading environment 2.3 The general journal is used to make any balance day adjustments for prepayments and accruals 2.4 System output are regularly reviewed to verify the accuracy of data input and adjustments made for any detected 2.5 An end of financial year rollover is performed 3.1 Any new general ledger accounts, customer, supplier, inventory and fixed asset records are added as required 3.2 An existing chart of accounts, customer, supplier, inventory and fixed asset records and subsidiary accounts are maintained and updated 3.3 The chart of accounts is customised to meet the reporting requirements of the organisation 4.1 Reports to indicate the financial performance and financial position of the organisation and for GST purposes are generated as required or requested 4.2 Reports to ensure that subsidiary ledgers and accounts reconcile with the general ledger are generated 4.3 Reports, which ensure that the bank account reconciles with the bank statement, over at least two reporting periods are generated 5.1 Regular back-ups of the system are made to ensure against loss or corruption of data 5.2 Data are restored from back-ups in the event of loss or corruption of current data 5.3 A secure record of all processed transactions is maintained for audit purposes T & M 1, 3, 4, 5, 7, 11, 12, 14, 15, 16 T T & M 3, 4, 5, 11, 14, 15, 16 T & M 3, 4, 5, 11, 14, 15, 16 T & M 10 T & M 6, 13, 17 M 17 T & M 3, 4, 5, 11, 14, 15, 16 T & M 3, 4, 5, 7, 11, 14, 15, 16 T & M 1 T & M 6, 17 T & M 1, 3, 4, 6 T & M 5 T & M 19 T & M 19 T
Updated: January 2013 Page 9 Introduction
Page 10 Updated: January 2013 This unit is designed for bookkeepers both contract and those in the employment of organisations. Bookkeepers will have a different skill set to end users of MYOB. Every business, regardless of the size of the organisation, must maintain accurate accounting records. This information is used not only to complete the Business Activity Statements (BAS) but also the annual income tax return. Previously, smaller organisations relied on their tax accountants to complete the annual tax return - including the data entry of all of the transactions - usually many months after the end of the financial year. This was largely due to the cost of purchasing and maintaining computers and computer accounting packages such as Sybiz, Attache. We have come a long way in a relatively short amount of time. During the 90s, computers became more affordable. With the introduction of smaller and more affordable accounting software such as MYOB, QuickBooks and others which have since flooded the market, many business owners started taking control of their own accounting needs but with mixed results. This trend increased with the introduction of the GST system and the need to complete monthly / quarterly BAS. Recently, however, many business owners, realising that they do not have the necessary accounting skills or that their time was better spent on other areas of the business, have decided to employ bookkeepers to process the day to day transactions and complete the BASs.
Updated: January 2013 Page 11 Chapter 1 Implement an integrated accounting system
Page 12 Updated: January 2013 Implementing an accounting system Implementing an integrated computer system into any size organisation requires thought and planning prior to purchasing the actual software. This is particularly true of larger organisations which may be moving between programs because their current systems are not giving them the information they require to run their businesses effectively. Business owners have become computer-savvy, and are demanding more from their accounting packages rather than just being able to provide information to create income tax returns and Business Activity Statements. As a bookkeeper an organisation may enlist your aid in choosing, implementing and running the package. There are numerous software distributors out there, but you need to choose the one that is most appropriate for the organisation s needs, e.g. you would not install a package such as MYOB or QuickBooks into BHP Limited and similarly you would not introduce SAP Accounting Systems into a small sole trader plumber. A larger organisation will spend much time researching and evaluating an accounting package to determine if it will produce the required information. However, a small business will often go into a store such as Officeworks or Dick Smith and purchase an off the shelf package, often at the recommendation of accountants, friends or the sales person at the store. Choosing the right accounting system For small organisations, most off-the-shelf packages are affordable and can be easily customised to suit the small business. However it is not just a matter of installing the software and starting to use it: you need to consider a number of factors before you enter the first transactions. Going down the wrong path can cost you money and several days of time to correct. You will need to gather information from a number of different sources to ensure you are setting up the program to suit the organisation, and that you are then able to extract the data for the reports required by the organisation. Relevant sources of information could be the business owner, staff members and the accountant. Each will have different needs and requirements and trying to cater to all may be a bit of a juggling act.
Updated: January 2013 Page 13 Most of the companies associated with the software packages have outside consultants who they will recommend to assist business - both before and after purchase. These consultants can be particularly useful during the selection process as they know the package well and will often make suggestions that you have not considered. A number of consultants specialise in not just one package but in several, so they can give you the pros and cons of each to help with your selection. Things to consider include: Government reporting e.g. Goods and Services Tax (GST) and Income Tax Assessments Cost of software and associated installation costs Does your accountant have knowledge of and the ability to use the software you choose (some accountants prefer MYOB over QuickBooks and vice versa) Is the entity Cash or Accrual for accounting and GST purposes Does the organisation need certain reports e.g. franchiser s reporting Do you need subsidiary ledgers for Debtors, Creditors, Inventory and Payroll If you already have an accounting package is there a migration path to convert your list of customers, suppliers, inventory etc Do you need to produce invoices from the package How many people within the organisation need access to the program now and in the future Does the software allow you to upgrade as your accounting needs grow Does the software company offer support options e.g. telephone support, onsite support; is there support available from other sources, not just from the manufacturer (what if the manufacturer disappears) Do you run a retail outlet and use a cash register which needs to be linked to the accounting package Once you have determined the organisation s requirements you can evaluate all the options: this may narrow your choice down to one or two packages only. Installing and setting up the software to suit the organisation When you have chosen the software you will need to work out an action plan: what needs to be done, who will need to access the program and training requirements. You then need to look at installing the software and providing training to relevant staff. In very small organisations the installation may be a fairly easy process: just pop in the disk and away you go. Some small to medium organisations may have network administrators who dictate what software can be installed on each machine. The installation can become more complex if you implement multi-user software where the file must be located in a central location.
Page 14 Updated: January 2013 Depending on the size of the organisation and the complexity of the software, just installing and configuring the software can take several days and may need to be implemented in stages so as not to overload staff with too much information at one time. You will require lists of data to be entered: opening balances, customers, suppliers, employees along with any relevant information so that the information is at your fingertips when you need it. You may need to collect this information from a number of locations and sources and this can often take time. Sometimes the information will not always be readily available at the time of installation and may not be for several months e.g. if you are setting up the program from 1 st July you may not yet have financial figures for June from the accountant. Different stakeholders will have different needs and requirements e.g. the accountant may want the chart of accounts setup in a certain way however the business owner may require more detailed information. It is a juggling act to ensure that, as much as possible, you are providing both parties with the relevant information. For example, the business owner may want to see information about the income broken down this way However the accountant doing the tax returns does not need as much detail and wants to see this If you are moving away from an existing package you will also need to determine whether some of the information can be imported into the new package and thus save days of re-keying.
Updated: January 2013 Page 15 A client had approximately 7,500 customers, 5,000 suppliers and 2,000 inventory items. This data entry could have taken a staff member a number of days. However the data from the old package was extracted as a Comma Separated Value (CSV) file, tidied up in Excel and from Excel imported directly into MYOB. This process took 4-5 hours of my time at a consulting rate however it saved an employee a tedious few days of data entry and reduced the possibility of errors. You will also need to decide at what point in time you want to implement the software for the organisation. If it is close to 30 th June, then it might be wise to perform the initial setup in May so that you can be ready to begin processing on 1 st July, or if your implementation date is 1 st August then go back and re-enter transactions for July. However, many accounting software packages allow you to start midyear and enter opening Profit & Loss (P & L) balances as well as the Balance Sheet. In that case, you will then need to extract information from both the old and new applications for the accountant. A checklist can help you ensure you have not missed any vital steps in the installation process. Here is a sample checklist I use with MYOB software installation.
Page 16 Updated: January 2013 Client: Accounting Software Installation Checklist Software Installation Install computer accounting software Register software Input company details Setup security passwords Setup standard report fonts etc. Modify default preferences Modify default customer terms before input Setup icon to go directly into file Customisation Input chart of accounts Input customer cards Input supplier cards Input employee cards Input inventory items Establish payroll categories & assign to employees Beginning Balances Input balance sheet figures Input unpresented cheques Input beginning debtor balances Input beginning creditor balances Input beginning inventory balances Form Design Design invoice form Design quote form Design statement form Design purchase order form Bring System Up-to-date Input invoices since conversion date Input customer payments since conversion Input creditor purchases since conversion Input creditor payments since conversion Input other income & expenditure since conversion date Input employee balances as at conversion date Balance New System Reconcile bank account Reconcile debtor balances with asset a/c Reconcile creditor balances with liability a/c Reconcile employee deductions with liability a/c s Training Other Staff if Applicable Overview of software Entering invoices Printing / Email invoices/quotes Entering receipts Printing / Email statements Entering purchases Printing / Email purchases/orders Entering payments Entering miscellaneous income/expenditure Inventory overview Checking for errors BACKUP! Network Install accounting software on second PC Map drive to first PC Copy forms to second PC Miscellaneous