Implement integrated accounting system

Submitted by coleen.yan@edd… on Wed, 05/22/2024 - 12:33
Sub Topics

One of the initial steps in implementing an integrated accounting system is to set up the general ledger, chart of accounts, and subsidiary accounts in alignment with your organisation's requirements, policies, and procedures. Let's explore each of these components in detail:

The general ledger is a comprehensive record of all the financial transactions of an organisation, categorised by accounts. It serves as the central repository for all accounting data, summarising the company's financial activities.

The chart of accounts is a structured list of all the accounts used by an organisation to record its financial transactions. It acts as a framework for organising and reporting financial data, ensuring consistency and clarity in the accounting process.

Subsidiary accounts are detailed records that support specific accounts in the general ledger, often tracking individual transactions or balances related to particular customers, vendors, or assets. They provide a more granular view of financial activity, enabling better management and control.

Setting up MYOB

Before the business starts using MYOB Business it's important to get set up.

Business settings

Business settings form the foundation of MYOB Business, including essential details that appear on documents like invoices and configurations that determine GST recording on transactions. Explore the various business settings below.

Check details like the organisation's name, contact details, ABN and financial year are correct and update if necessary. The business details appear on documents like invoices, statements and pay slips.

View or edit the business's GST registration status. This enables other GST settings and features like Tax/GST codes.

View or edit the email settings, including the "From" name and "Reply-to" email address. This applies to all emails sent from MYOB, including invoices, quotes, remittance advice and pay slips.

Explore

MYOB – Setting Up course If you choose to use MYOB for this course, you can access this free short course to set up MYOB on your computer:

Course: Setting up (myob.com)

Setting up the general ledger, chart of accounts, and subsidiary accounts in MYOB

Setting up the general ledger, chart of accounts, and subsidiary accounts in MYOB involves several steps to ensure your accounting system is properly configured and tailored to your business needs. Here's how to do it:

1. Accessing MYOB
  • Log in to your MYOB account.
  • Select the relevant business or company file where you want to set up the general ledger, categories, and subsidiary accounts.
2. Setting Up Categories (formerly Accounts)
  • Navigate to Categories: In the main menu, go to "Accounting" and select "Categories" (previously known as Accounts List or Chart of Accounts).
  • Review Existing Categories: MYOB provides a default set of categories. Review these to see if they meet your business needs.
  • Add New Categories:
    • Click on "Add Category" to create a new category.
    • Choose the category type (e.g., Asset, Liability, Equity, Income, Expense).
    • Enter the category name, description, and optional category number.
    • Set the tax code and any other relevant options, such as reporting categories or job tracking.
  • Edit or Delete Categories:
    • To edit a category, select it from the list and modify the necessary details.
    • To delete a category, click on it and select "Delete" (note that categories with existing transactions cannot be deleted).
  • Group Categories: You can organise your categories by creating headers and sub-categories to build a more structured Categories List. This helps in better reporting and understanding your financial data
3. Setting Up the General Ledger
  • Automatic Integration with the General Ledger: The general ledger in MYOB is automatically populated and updated based on transactions recorded in the Categories List. As you add or modify categories, these changes are reflected in the general ledger.
  • Entering Opening Balances: If you’re starting fresh or migrating from another system, you need to enter opening balances for each category. This can be done by going to "Accounting" > "Opening Balances" and entering the starting balance for each category as of your conversion date.
  • Reviewing the General Ledger: Regularly review your general ledger using the "General Ledger Summary" or "General Ledger Detail" reports, found under the "Reports" menu.
4. Setting Up Subsidiary Accounts
  • Understanding Subsidiary Accounts: Subsidiary accounts track detailed records supporting main categories in the general ledger. These often include individual customer accounts, supplier accounts, and inventory items.
  • Accounts Receivable (Debtors): Set up subsidiary accounts for customers by going to the "Sales" menu and creating individual customer profiles. Each profile will track transactions and balances for that customer, integrating with the Accounts Receivable category.
  • Accounts Payable (Creditors): Similarly, set up subsidiary accounts for suppliers by navigating to the "Purchases" menu and creating supplier profiles. These profiles will track transactions and balances for each supplier, feeding into the Accounts Payable category.
  • Inventory Management: If your business manages inventory, go to "Inventory" in the menu. Add each inventory item as a subsidiary account. MYOB will track quantities, costs, and sales associated with each item.
  • Fixed Assets: For fixed assets, use the "Assets" section under the "Accounting" menu. Add each asset to track its value and depreciation, linking these to the relevant general ledger categories.
5. Recording Transactions Once your categories, general ledger, and subsidiary accounts are set up, you can begin recording transactions. Invoices, bills, payments, and other entries will automatically update the corresponding categories in both the general ledger and subsidiary accounts.
Watch

Watch this video to see how to learn how to add categories in the Chart of Accounts in MYOB:

Navigate Xero

Mastering Xero will allow you to unlock its valuable features. Once you’re familiar with the platform, you’ll save time as navigating becomes effortless, leading to increased productivity.

Tabs

When you first log in to Xero, you land on the customisable Xero Dashboard, which provides an overview of crucial business insights.

The business tab is where you'll find features for day-to-day business tasks.

The accounting tab is where you'll find features and settings to enhance your use of Xero.

The Contacts tab contains one central, easy-to-manage list of everyone you do business with.

Quick Access Icons

Use the plus (+) icon to add a new transaction, such as a sales invoice or a bill, in a few clicks wherever you are in Xero.

Use the magnifying glass to find transactions you have already entered based on names, amounts, dates, or other information.

Use the bell icon to turn on notifications for information about activity in an organisation, such as the status of bank feeds or Xero product updates.

Click the question mark '?' to access Xero support and learning.

Use the grid icon to access the Xero App Store and learn about integrated third-party software.

Click your initials or profile image to view your personal account settings and log out of Xero from here

Organisation Menu

Browse or upload files or send them to a unique email address linked to the files inbox for each Xero organisation. Create transactions directly from the file so that source documentation is attached.

Xero's basic settings help you get started and ensure you set up your organisation correctly to get the most out of Xero. The organisation settings page is where you manage the organisational details of your business.

This drop-down menu allows you to switch between different organisations, which you can access by selecting them from the list. You'll access the demo company from here after you've used it once.

Access Xero's business apps, such as Expenses, Analytics Plus, and Xero's data capture tool, Hubdoc.

Watch

Watch the video below to see step-by-step how to set up Xero:

Setting up the general ledger, chart of accounts, and subsidiary accounts in Xero

Setting up the general ledger, chart of accounts, and subsidiary accounts in Xero is a straightforward process, allowing you to customise your accounting system to fit your business needs. Here’s how to do it:

1. Accessing Xero
  • Log in to your Xero account.
  • Select the relevant organisation where you want to set up the general ledger, chart of accounts, and subsidiary accounts.
2. Setting Up the Chart of Accounts
  • Navigate to Chart of Accounts: Go to the "Accounting" menu and select "Chart of Accounts."
  • Review Existing Accounts: Xero provides a default chart of accounts. Review these accounts to see if they meet your business needs.
  • Add New Accounts:
    • Click on the "Add Account" button to create a new account. o Select the account type (e.g., Asset, Liability, Equity, Revenue, Expense).
    • Enter an account code (optional but recommended for better organisation).
    • Enter the account name and description.
    • Specify the tax rate and any other relevant settings.
  • Edit or Delete Accounts:
    • To edit an existing account, select it from the list and modify the details as needed.
    • To delete an account, select it and click "Delete" (note that accounts with existing transactions cannot be deleted).
  • Importing a Chart of Accounts: If you have a predefined chart of accounts in a CSV file, you can import it directly into Xero. Click on "Import" and follow the instructions to upload your chart of accounts.
3. Setting Up the General Ledger
  • Automatic Ledger Updates: In Xero, the general ledger is automatically populated and maintained based on the transactions recorded in the chart of accounts. As you set up and modify accounts, Xero updates the general ledger accordingly.
  • Entering Opening Balances: If you're starting fresh or migrating from another system, you need to enter opening balances for each account. Go to the "Chart of Accounts" and click on "Conversion Balances" to input the balances as of your start date.
  • Reviewing the General Ledger: You can view the general ledger by navigating to the "Reports" menu and selecting "General Ledger Summary" or "General Ledger Detail" reports.
4. Setting Up Subsidiary Accounts
  • Understanding Subsidiary Accounts in Xero: Subsidiary accounts in Xero are managed through contacts (for customers and suppliers) and inventory items rather than being separate accounts.
  • Accounts Receivable (Debtors): Set up subsidiary accounts for customers by navigating to the "Contacts" menu and adding individual customers. Each customer record will track transactions and outstanding balances.
  • Accounts Payable (Creditors): Similarly, set up subsidiary accounts for suppliers by adding them under the "Contacts" menu. Each supplier record will track your transactions with them and any outstanding payments.
  • Inventory: If you manage inventory, go to the "Products and Services" section under the "Business" menu. Add individual inventory items, which act as subsidiary accounts. Each item will track quantities, costs, and sales.
  • Fixed Assets: For fixed assets, use the "Fixed Assets" section under the "Accounting" menu. Set up each asset, and Xero will automatically track depreciation and other related financial data.
5. Recording Transactions Once your chart of accounts, general ledger, and subsidiary accounts are set up, you can begin recording transactions such as invoices, bills, and payments. These transactions will automatically update the relevant accounts, ensuring that both the general ledger and subsidiary accounts reflect accurate and up-to-date information.
Watch

Watch this video to learn how to customise the Chart of Accounts in Xero:

Woman's hand on computer, inventory

MYOB

Let’s see how to set up customers, suppliers, inventory items, and reporting requirements for Goods and Services Tax (GST) in MYOB:

Setting Up Customers

  1. Navigate to Contacts: In the main menu, go to "Contacts" and select "All Contacts."
  2. Add New Customers:
    • Click on "Add Contact" to create a new contact.
    • Choose the type as "Customer."
    • Enter the customer’s details, including their name, contact information, and any other relevant details.
    • Assign categories for sales transactions related to this customer.
    • Configure payment terms and any other settings, such as credit limits and GST preferences.
  3. Manage Customer Information: You can update customer details, view their transaction history, and monitor their outstanding balances from their contact profile.

Setting Up Suppliers

  1. Navigate to Contacts: In the same "Contacts" menu, select "All Contacts."
  2. Add New Suppliers:
    • Click on "Add Contact" to create a new contact.
    • Choose the type as "Supplier."
    • Enter the supplier’s details, including their name, contact information, and payment terms.
    • Set the default categories for purchase transactions related to this supplier. o Specify GST preferences and any other relevant settings.
  3. Manage Supplier Information: Keep supplier profiles updated and track purchase history, outstanding bills, and payment terms from the contact profile.
Watch

Watch the video below to learn how to add contacts on MYOB:

Setting Up Inventory Items

  1. Navigate to Items: Go to the "Inventory" or "Items" menu, depending on your version of MYOB.
  2. Add New Inventory Items:
    • Click on "New Item" to create a new inventory item.
    • Enter the item name, item code, description, and unit of measure.
    • Assign appropriate categories for tracking the item, such as Inventory, Cost of Goods Sold, and Sales.
    • Set the purchase and sale prices, including any applicable GST codes.
    • Enter opening stock quantities and reorder levels if needed.
  3. Manage Inventory: Track stock levels, update item details, and monitor stock movements within the Items section. MYOB will automatically update inventory quantities based on transactions.

Setting Up GST Reporting Requirements

  1. Configure GST Settings:
    • Go to the "Accounting" menu and select "GST Settings."
    • Ensure your business’s GST registration status, reporting frequency, and accounting basis (cash or accrual) are correctly configured.
  2. Assign GST Codes: Set the appropriate GST codes for each category, customer, supplier, and inventory item. These codes determine how GST is applied during transactions.
  3. Record GST on Transactions: When entering sales and purchase transactions, MYOB will calculate GST based on the GST codes assigned to the categories. Make sure that GST is correctly applied to invoices, bills, and other documents.
  4. Generate GST Reports: Use the "GST Report" feature under the "Reports" menu to generate the BAS (Business Activity Statement) or GST summary reports. These reports provide an overview of GST collected on sales and paid on purchases, helping you comply with tax obligations.
  5. Lodge GST Returns: After preparing your GST reports, use MYOB’s reporting tools to lodge your GST returns with the relevant tax authorities, ensuring compliance with GST regulations.

Xero

Here’s how to set up customers, suppliers, inventory items, and reporting requirements for Goods and Services Tax (GST) in Xero:

Setting Up Customers

  1. Navigate to Contacts: In the main menu, go to "Contacts" and select "Customers."
  2. Add New Customers:
    • Click on "Add Contact" to create a new customer profile.
    • Enter the customer’s details, including name, email, phone number, and billing address.
    • You can add additional details such as default sales account (category), payment terms, and tax settings.
  3. Manage Customer Information: You can update customer details, view transaction history, and manage outstanding balances from the customer's profile. Xero also allows you to import customer contacts via a CSV file if you have a large list.

Setting Up Suppliers

  1. Navigate to Contacts: In the same "Contacts" menu, select "Suppliers."
  2. Add New Suppliers:
    • Click on "Add Contact" to create a new supplier profile.
    • Enter the supplier’s details, including name, email, phone number, and payment address.
    • Set up default purchase categories (previously accounts), payment terms, and tax settings.
  3. Manage Supplier Information: Update supplier profiles, track purchase history, and manage outstanding bills through the supplier's contact profile. Like customers, you can also import supplier contacts via a CSV file.
Watch

Watch the video below to learn how to add new Contacts on Xero:

Setting Up Inventory Items

  1. Navigate to Products and Services: Go to the "Business" menu and select "Products and Services."
  2. Add New Inventory Items:
    • Click on "Add Item" to create a new inventory item.
    • Enter the item’s name, code, and description.
    • Set the purchase price, sale price, and any applicable tax rates (GST).
    • Assign the default sales and purchase categories (previously accounts) where the item’s costs and revenue will be recorded.
    • If you are tracking inventory, enable inventory tracking and set up opening balances and reorder points.
  3. Manage Inventory: Track stock levels, adjust quantities, and monitor item performance. Xero automatically updates inventory levels based on purchases and sales transactions.

Setting Up GST Reporting Requirements

  1. Configure GST Settings:
    • Go to the "Accounting" menu and select "Advanced" > "Financial Settings."
    • Under "Tax," ensure your business’s GST registration details, reporting frequency, and accounting basis (cash or accrual) are correctly configured.
  2. Set Up GST Codes: Navigate to "Accounting" > "Chart of Accounts" and ensure that all relevant categories (e.g., Sales, Purchases, Expenses) have the correct GST codes assigned (e.g., GST on Income, GST on Expenses, GST-Free).
  3. Apply GST to Transactions: When entering sales or purchase transactions, Xero will automatically calculate and apply GST based on the GST codes set up in your categories and inventory items.
  4. Generate GST Reports: Go to "Accounting" > "Reports" > "GST Return" or "Activity Statement" to generate GST reports. These reports summarise GST collected on sales and paid on purchases, and they are essential for preparing your Business Activity Statement (BAS).
  5. Lodge GST Returns: After reviewing your GST reports, use Xero’s tools to lodge your GST returns with the tax authorities. Xero integrates with various tax platforms to simplify this process.
Business woman doing inventory

MYOB

Establish and Review System Output

To establish and review the system output in MYOB, you can follow the process below:

System output process for MYOB
  1. Set Up Initial System Parameters in MYOB:
    • Define Categories: Ensure that all categories (formerly accounts) are correctly set up in the system. This involves configuring the chart of categories to align with your business’s financial structure.
    • Integrate Bank Feeds: Set up bank feeds to automatically import transactions from your bank accounts into MYOB. This ensures real-time data flow and reduces manual data entry errors.
    • Import Opening Balances: If you’re migrating from another system, import or manually enter the opening balances for all relevant categories, customers, suppliers, and inventory items.
  2. Data Mapping and Integration:
    • Map Data Fields: Ensure that all data fields from your previous system or other integrated software are correctly mapped to the corresponding fields in MYOB. This includes customer data, supplier data, inventory items, and transactional data.
    • Review Data Integration: After data import, review the integration by checking a sample of transactions to ensure they have been correctly categorised and that all data has been accurately imported.
  3. Initial Trial Run:
    • Conduct a Trial Period: Before fully rolling out the system, conduct a trial run of the integrated MYOB system. This involves entering sample transactions, such as sales, purchases, and payments, and reviewing the outputs to ensure accuracy.
    • Check System Outputs: Review the system outputs by running trial reports, such as an initial profit and loss statement or a balance sheet, to verify that all transactions are being recorded correctly and reflect the intended financial position.
  4. Feedback and Adjustment:
    • Gather Feedback: During the trial phase, gather feedback from the users on the accuracy and functionality of the system output. This includes checking if transactions are correctly categorised and whether the system is user-friendly.
    • Make Adjustments: Based on the feedback, make necessary adjustments to the system configuration, such as re-mapping data fields, adjusting categories, or updating system parameters.

Verify Accuracy of Data

Accuracy of data is crucial as it ensures reliable financial reporting and informed decision-making. Below are some examples of how to verify the accuracy of data in MYOB.

  1. Reconcile Accounts:
    • Regularly reconcile your bank accounts, credit cards, and other financial accounts in MYOB with your bank statements. This helps ensure that the transactions recorded in MYOB match your actual financial activities.
    • Navigate to "Banking" > "Reconcile Accounts" to perform reconciliations.
  2. Check Data Entry: Review entries for invoices, bills, and journal entries to ensure they are correct and complete. Verify that dates, amounts, and categories are properly entered.
  3. Use the Audit Trail: MYOB provides an "Audit Trail" feature that tracks changes made to your data. Review the audit trail to identify who made changes, what was changed, and when the changes were made. This helps in maintaining data integrity.
  4. Run Data Validation Reports: MYOB offers data validation tools that can be used to check for common errors, such as unbalanced entries or incomplete transactions. Running these tools regularly helps in catching mistakes early.
Watch

Watch the video below to see how to reconcile accounts using MYOB:

Identify Sources of Technical Help

Being able to get help when you need it in MYOB is very important, especially when you are performing complex tasks. Below are some examples of how to access technical support:

  • MYOB Help Centre: Access the MYOB Help Centre directly from the software or by visiting the MYOB website via this link MYOB Support. The Help Centre provides a wide range of articles, guides, and video tutorials on using MYOB effectively.
  • In-Product Help: Use the in-product help feature by clicking on the question mark icon "?" in the top right corner. This provides context-specific assistance related to the task you're performing.
  • MYOB Community Forum: Visit the MYOB Community Forum, where you can ask questions, share experiences, and get advice from other MYOB users and experts.
  • Contact MYOB Support: If you encounter technical issues that you cannot resolve on your own, contact MYOB support. You can reach them via phone, email, or live chat. The contact details are available on the MYOB website.
  • Consult a MYOB Certified Partner: For more complex issues or customised help, consider consulting a MYOB Certified Partner or advisor. These are professionals who specialise in MYOB and can provide tailored assistance and training.

Xero

Establish and Review System Output

To establish and review the system output in Xero, you can follow the process described below:

System output process for Xero
  1. Set Up Initial System Parameters in Xero:
    • Configure Chart of Accounts: Ensure that your chart of accounts is correctly set up in Xero to match your business’s financial structure. This includes setting up relevant accounts for assets, liabilities, equity, income, and expenses.
    • Integrate Bank Feeds: Set up bank feeds in Xero to automatically import transactions from your bank accounts. This integration helps maintain up-to-date financial records and reduces manual entry errors.
    • Import Opening Balances: Import or manually enter opening balances for your accounts, ensuring that your starting position in Xero reflects your current financial status.
  2. Data Mapping and Integration:
    • Map Data Fields: Ensure that all data fields from your previous accounting system or any other integrated software are correctly mapped to Xero’s fields. This ensures that customer details, supplier information, inventory data, and transactional records are accurately reflected.
    • Review Data Integration: After importing data, review a sample of transactions to ensure that they have been correctly categorised and that all data has been accurately imported into Xero.
  3. Initial Trial Run:
    • Conduct a Trial Period: Perform a trial run of the Xero system by entering sample transactions. This might include generating invoices, recording bills, and making payments to see how the system processes and outputs this information.
    • Check System Outputs: During the trial, generate initial reports or system outputs (like transaction lists) to verify that the data has been recorded accurately and reflects the correct financial outcomes.
  4. Feedback and Adjustment:
    • Gather Feedback: Collect feedback from the team using the system during the trial phase to identify any issues with data entry, processing, or output.
    • Make Adjustments: Based on the feedback, adjust system settings, reconfigure data mappings, or refine category settings to ensure accuracy and efficiency.

Verify Accuracy of Data

Below are some examples of how to verify the accuracy of data in Xero:

  1. Bank Reconciliation:
    • Regularly reconcile your bank accounts in Xero to ensure the transactions recorded in Xero match those in your bank statements.
    • Go to "Accounting" > "Bank Accounts" and select "Reconcile" for the relevant account. Xero will guide you through matching transactions.
  2. Check Data Entry:
    • Review invoices, bills, and manual journals to ensure all details (dates, amounts, categories) are correctly entered.
    • Use the "Find and Recode" tool under "Advanced Accounting" to bulk check and, if necessary, correct data entries across multiple transactions.
  3. Audit Trail and History: Xero maintains an audit trail of changes made to transactions. To review this, go to the "History and Notes" section in any transaction to see who made changes and when.
  4. Run the Assurance Dashboard: For organisations using Xero, the Assurance Dashboard provides an overview of potential issues in your financial data, such as missing or duplicated transactions. Access it from the "Reports" menu under "Assurance."
Watch

Watch the video below to see how to reconcile accounts in Xero:

Identify Sources of Technical Help

Below are some examples of how to access technical support in Xero:

  • Xero Central: Xero Central is the primary help resource, offering a wide range of articles, how-to guides, and video tutorials. Access it directly from the "Help" menu in Xero or visit Xero Central online here: Support – Xero Central.
  • In-Product Help: While using Xero, click on the help icon or "?" within the software to access context-specific help articles and resources relevant to the task you are performing.
  • Xero Community and Forums: Join the Xero Community to ask questions, share experiences, and get advice from other Xero users and experts.
  • Contact Xero Support: If you need further assistance, you can raise a support request through Xero Central. Xero offers support via email and chat, with responses typically provided within a few hours

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