[Question] VAT Control Account

[Debbie Mitchell]

Hi There

I am hoping someone will be able to assist me with the VAT Control Account

I am using Pastel Xpress Version 11

I have recently taken over the books for a (small) farming company, I was trying to reconcile the accounts and noticed that the VAT Control Account doesn't balance with the VAT returns (The VAT is was processed manually and reconciled on Pastel at a later stage). The Company is a CC so it has not been audited

The last time the figures balanced was February 2013.

I noted while manually going through Transaction Audit Trail the following:

1. The company receives a Diesel Rebate which is usually paid separately but on the occasions that the company owed money to SARS the Diesel Rebate was deducted from the monies owed, it appears that this amount was then allocated to the VAT Control Account and so the full amount Due and Paid was not allocated correctly. How do I amend this?

2. Some Invoices were processed incorrectly in the Cash Book (Bank Account) eg: Repairs was processed with no Vat when it should have been processed with VAT, I have noted a number of these transaction between 2013 and 2016, Can I amend this? What do I do if they were processed as GL Accounts and What do I do if they were processed under the Supplier Accounts?

The year end for 2015/2016 has already been done, but the year end financials have not been done yet Is there a way to amend these discrepancies in the 2016/2017 or should the adjustments be done in the 2015/2016 financial year?

I do not often work in Pastel and am finding it a little difficult to manoeuvre through all these mistakes

Any help would be much appreciated.

Debbie

[Neville Bailey]

Neville Bailey

1. The company receives a Diesel Rebate which is usually paid separately but on the occasions that the company owed money to SARS the Diesel Rebate was deducted from the monies owed, it appears that this amount was then allocated to the VAT Control Account and so the full amount Due and Paid was not allocated correctly. How do I amend this?

I would suggest you open a separate Diesel Rebate Control account in the Balance Sheet. When payments to SARS are made for VAT, split the payment into two lines, with the one line being allocated to the VAT Control account (before the deduction of the diesel rebate) and the second line being captured as a negative payment and allocated to the Diesel Rebate Control account. This will ensure that, all other things being equal, your VAT Control account will agree with your VAT reports.

With regards to past payments to SARS, you will need to reverse each payment (by capturing them as negative payments) and then process them again as described above.

2. Some Invoices were processed incorrectly in the Cash Book (Bank Account) eg: Repairs was processed with no Vat when it should have been processed with VAT, I have noted a number of these transaction between 2013 and 2016, Can I amend this? What do I do if they were processed as GL Accounts and What do I do if they were processed under the Supplier Accounts?

If they were processed as GL accounts, process the payments again, exactly as they were originally processed (without VAT), but with a minus sign in front of the amount, and then process them yet again, but with the VAT code. You can only process these amendments in the current year and in the prior financial year, but not before the prior financial year.

If they were processed to Supplier accounts, the amendments will be determined as to whether the original entries were processed in the form of supplier invoices or in the form of supplier journals. If they were processed as supplier invoices, then process Return & Debit notes to reverse the original supplier invoice and then process revised supplier invoices to account for the VAT. You will only be able to amend supplier invoices in the current financial year, as the system will not allow you to process supplier documents in the prior financial year. If they were processed as supplier journals, the same principle will apply as for the GL accounts.

The year end for 2015/2016 has already been done, but the year end financials have not been done yet Is there a way to amend these discrepancies in the 2016/2017 or should the adjustments be done in the 2015/2016 financial year?

I suggest that you process the amendments in 2015/2016, as current year adjustments, and then process them again in 2016/2017 as prior year adjustments.

[Debbie Mitchell]

Thanks Neville I will give it a bash

[Debbie Mitchell]

I would suggest you open a separate Diesel Rebate Control account in the Balance Sheet. When payments to SARS are made for VAT, split the payment into two lines, with the one line being allocated to the VAT Control account (before the deduction of the diesel rebate) and the second line being captured as a negative payment and allocated to the Diesel Rebate Control account. This will ensure that, all other things being equal, your VAT Control account will agree with your VAT reports.

With regards to past payments to SARS, you will need to reverse each payment (by capturing them as negative payments) and then process them again as described above.



If they were processed as GL accounts, process the payments again, exactly as they were originally processed (without VAT), but with a minus sign in front of the amount, and then process them yet again, but with the VAT code. You can only process these amendments in the current year and in the prior financial year, but not before the prior financial year.

If they were processed to Supplier accounts, the amendments will be determined as to whether the original entries were processed in the form of supplier invoices or in the form of supplier journals. If they were processed as supplier invoices, then process Return & Debit notes to reverse the original supplier invoice and then process revised supplier invoices to account for the VAT. You will only be able to amend supplier invoices in the current financial year, as the system will not allow you to process supplier documents in the prior financial year. If they were processed as supplier journals, the same principle will apply as for the GL accounts.



I suggest that you process the amendments in 2015/2016, as current year adjustments, and then process them again in 2016/2017 as prior year adjustments.

Hi Neville

Thank You for your advice about the Diesel Rebate Control Account it was really helpful.

I just have two further question:

you said that I should process the amendments in 2015/2016 and then process them again in 2016/2017, could you please explain to me why it needs to be done in both financial years I was under the impression that if you processed Journal or Cash Book entries after the year end has been run that the adjustments would show up on the Trial Balance.

Perhaps I misunderstood what you were telling me with regards to the current year adjustments and prior year adjustments.

Just so I am 100% clear the amendments you were talking about in 2015/2016 are all the amendments (excluding the Return and Debit Transactions): VAT Control Account and The Diesel Rebate Control Account and the GL and Supplier Journal Transactions.

I apologies for asking questions which seem very simple but I am really just a data capturer so my experience is very limited when it comes to corrections from mistakes made by the previous data capturer.

Thanking you in advance for all your assistance

[Neville Bailey]

you said that I should process the amendments in 2015/2016 and then process them again in 2016/2017, could you please explain to me why it needs to be done in both financial years I was under the impression that if you processed Journal or Cash Book entries after the year end has been run that the adjustments would show up on the Trial Balance.

Perhaps I misunderstood what you were telling me with regards to the current year adjustments and prior year adjustments.

Perhaps I need to clarify how Pastel handles financial year ends.

Pastel maintains transaction history and balances for the current year and the prior year. So, for example, if you are currently processing in the 2016/2017 financial year, you are able to process journals in the prior year (2015/2016) without having to open the previous financial year's database. These prior year adjustments will automatically adjust the opening balances for the current financial year.

What I was trying to say in my earlier post was that the prior year adjustments should be processed as prior year adjustment as in the 2016/2017 database, as well as in the 2015/2016 database in its current year. The two databases are independent from each other. In other words, you should have at least two databases in Pastel, i.e. the 2015/2016 database, which contains history for 2015/2016 as well as for 2014/2015, and the 2016/2017 database, which contains history for 2016/2017 as well as 2015/2016.

Just so I am 100% clear the amendments you were talking about in 2015/2016 are all the amendments (excluding the Return and Debit Transactions): VAT Control Account and The Diesel Rebate Control Account and the GL and Supplier Journal Transactions.

Yes.

[Christel]

Hi there,
Diesel claims can only happen if you have a valid log book for all expenditure.
Diesel rebate refunds must be allocated to an Income Statement account - "other income".

hope this helps.