Incorrect Account Allocation

Experienced User Leslie22
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Experienced User
Australia
Leslie22
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Incorrect Account Allocation

We have allocated numerous purchases to an incorrect account in our P&L for this year. The amount and GST component are the same.

 

Are there any potential problems if we go back to 1/7/2017, open the closed invoice and reallocate to the correct COGS account which will be an easy fix. If this is not advisable please advise the best approach.

 

Thank you

3 REPLIES
Ultimate Partner Seattle
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Seattle
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Re: Incorrect Account Allocation

@Leslie22

 

A traditional accountant from years ago would say never change an existing accounting entry.

 

MYOB allows prior entries to be changed.

 

If you formally report to a Board or Committee on a monthly basis, I would not alter Financials that have been tabled.

 

You can do a Journal which keeps a proper record or you can alter the transactions.

As you say the GST is not altering.

You may like to get instruction from a Board or Committee Member.

 

Duncan

 

Duncan Smith
Business Advice + Tax
Helping business owners build a better business since 1998
E expressgst@optusnet.com.au T 02 9904 3672 7 days
Experienced User Leslie22
210 Posts
Experienced User
Australia
Leslie22
Experienced User

210Posts

28Kudos

1Solutions

Re: Incorrect Account Allocation

Thanks  Seattle

 

Appreciate your reply as always.

 

Members of our committee alerted us to the error. Their only question was "Will this change our bottom line net/ profit loss or balance sheet items" and any impact on BAS?

 

If they elect to correct via Journal entries would this have to be done for each supplier and if so do you have any suggestions as to how best to do this.

 

If it is a line item journal entry then I believe the correct approach would be to

 

DR - the Newly Identified COGS Account

CR = The Incorrectly Allcoated COGS Account

 

Thank you

 

 

Ultimate Partner Julie_A_C
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Julie_A_C
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Re: Incorrect Account Allocation

hi @Leslie22

 

As simple as you stated.

 

You said that purchase amount and GST will not change, so my suggestion would be total the amount for each month that went through to the wrong COGS, credit that account (either coded GST or no coding or coded not reportable) then DR the correct COGS account, coded exactly the same.

 

Bottom line wont change!

 

The reason for doing it monthly is that most NFP or other FP's with a committe/board, want monthly reports, and you also may have either 1 or 100 entries in the month that need to be changed, so just do a bulk entry.

 

This will then enable monthly comparisons to be more accurate.

 

If you do monthly reports that include year to date comparisons to other months, then the next reporting month should include a footnote that journals have been done to rectify the incorrect coding of COGS, if a board member compared the last report to the next report.

 

All in all though bottom line of GP and NP wont change.

 

Hope this helps solve your situation.

 

 

Julie Carter AIPA, BBus(Acctg),
MYOB Professional Partner, Registered BAS Service Provider
Associate Member of Institute of Public Accountants
Member Association of Accounting Technicians
ph: 0417 927 654 email: accuratebooks7@gmail.com
JAC' of All Trades Bookkeeping (Servicing from Leederville to Pinjarra, Fremantle to Armadale WA)
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