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Please will you advsie the purpose of the Company Data Auditor, how frequently it should be run and the comfort zone one can have if all transactional data is confirmed as being ok (with the exception of future dta transactions).
In a majority of instnaces are invoices are paid in advance / in excess of balance due amounts.
In addition to the above are there any other health checks that one should undertake to ensure we have a healthy system and how frequently should they be done
The Company Data Auditor is a tool that runs a series of checks and scans on the data to ensure the accuracy of the records in the company file. It can be run via Accounts>>Company Data Auditor. There is no required time that you should be running through the Company Data Auditor, generally most clients will it maybe once a month or at the end of the quarter. Although at the very least at the end of the year should be the recommendation.
A few of the scans in the Company Data Auditor are just alerting you to the fact that you have these and should check out the transactions to ensure they are correct. For example, the Scan for future-dated transactions, this process is merely taking the end date and checking for transactions dated after that date, it doesn't know if they are entered wrongly or rightly its just alerting you to the fact that they exist and should be reviewed.
Help Article: Run the Company Data Auditor has more information on the tool and the various functions and steps it contains.
I run the Company Data Auditor for all of my clients monthly.
It lets me know who has been keeping the reconciliations upto to date and who is being slack.
Also I keep my eye on the reconcile invoices and purchases, and if they show any errors then the prepaid transactions can usually help find them as this where most errors come from.
The Tax variance and Tax code excemptions are great to check to make sure tax amounts aren't being changed and that the tax codes being used are correct for the accounts they are getting allocated too.
I also run the Company Data Auditor last thing being processing a BAS / IAS for my clients.
I think it is a great tool to use and use it as often as I need too.
December - last edited December
Thank you so much for sharing your insight.
Hopefully I can ask a couple more questions:
Your mentioned prepaid transactions may indicate where most errors are. Are these warnings predominately for people whof paid prior to invoices being issued or in excess. What other issues can occur
if all other reports are healthy should there be other periodic checks (eg out of balance reports, trial balances, P&L etc.
I also run the Company Data Auditor as a valuable tool.
It shows when the file was last backed up and when the locked period is.
I use it to ensure all Bank Accounts and Credit Card Statements have been reconciled and to when.
Before lodging a BAS, I reconcile every Balance Sheet account.
Depreciation is entered monthly.
Before lodging a BAS, I review the General Ledger and GST Coding.
I preplan a Directors Salary for a FY and enter a monthly Journal and pay the tax on the Salary.
Single Touch Payroll may well bring administrative difficulties for little reward as it would not be able to enter a Journal for a Director's Salary. I mentioned this to the ATO some years ago but my reasoning for very small businesses has not been considered.
A business owner is provided with a month by month P&L.
My understanding is that some Tax Accountants do not undertake these checks and balances.
Let us know your thoughts.
The main reason prepaid cause problems is when the payment is in one reporting period and the invoice in the following one, this throws the reconciliation of the receivables out of balance.
The correct procedure for prepaid items is that when paid the money should be shown as going into a Asset Account called Prepaid or something like that. This is usually done using a Spend Money or Transfer money tranaction from Prepaid into the bank account.
Then when the invoice is created it is paid from this Prepaid account using Pay Bills.
When setup, the PrePaid account needs to be a Bank type account.
The other thing a lot of people do is when a bill is paid they create the bill on the date of the payment so there is no actual prepayment.