Incorrect Account Allocation

[Leslie22]

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

[Seattle]

@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

[Leslie22]

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

[Julie_A_C]

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.