Problem with Sage Instant Accounts

[Wilma]

Hi everyone,

Hope anyone can help me with a problem with Sage Instant Accounts. The company I do bookkeeping for use this package. We recently got a VAT inspection and it's raised a few queries. One of the questions was he queried the amount of sales in the bank statement against what was showing in the final accounts. We carried out further investigation the trial balance at the year end was showing a lot less sales than the global vat return and bank statements. When we looked further into this what was happening when a sales invoice just say was processed in February, and was paid in march (cash accounting) sage processed it okay in the bank account for march and the vat return okay, but the sales N/C showed it paid in february. I have just tried a dummy run again at home, and yes it has done the same thing. Has anyone came across this? Obviously with the VAT inspection we would not have investigated into it, and just taken the trial balance as a true figure. Is this a sage instant problem? Any help would be appreciated.

[David Griffiths]

There doesn't look to be anything wrong with that if I've understood it correctly.

You raised a sales invoice in February, so it shows in the February sales in code (4000 or thereabouts?) - that's correct irrespective of when it was paid.

It was paid in March so shows in the March bank account - that's correct - and shows on the March VAT return - that's also correct. So basically I would say that yes, everybody has come across this! :)

You don't say which way the difference is. Are the sales in the accounts higher or lower than the sales in the VAT returns? Are the sales in the accounts higher or lower than is suggested by the bankings? Do the bankings and VAT return tie up?

If the sales in the accounts are lower than the sales in the VAT return, look at the nominal printout for sales. Presumably most of the entries will be for sales invoices. What about debit entries on that account? Are there any sales refunds made to customers by cheque? These are probably debited to 4000, but probably show as purchases in the VAT report - i.e. they don't reduce sales for VAT. Are there any purchase invoices incorrectly coded to sales accounts?

On the other side, look at the sales invoices and similar postings on the VAT return - are any of these posted to accounts other than for sales? For example, sales of fixed assets, refunds from suppliers posted to purchases.

Have you contra'd any sales and purchase invoices? Do you receive money on behalf of other people and pass it on - those would be in bankings but not in sales.

Has the exercise correctly adjusted for opening and closing debtors? I've seen VAT officers get that the wrong way round.

There's a myriad of things to look at - you are basically looking for things treated differently for VAT and for nominal ledger purposes.

[DuaneJackson]

I'm with David - nothing is wrong.

You create an invoice in Feb - this effects the selected sales code and the debtors code.

You receive payment in March, this effects debtors code and bank.

If the client is on Cash accounting then the date of the first transaction is irrelevant. It's the dateof the payment that matters

[Wilma]

Thankyou David for your quick response and advise. I probably didn't explain myself very well. At the companies year end 07/08 the printed trial balance for sales (4000) showed a figure of 214,000. The global VAT for 07/08 showed sales for 239,000 and 07/08 original bank statements and sage bank account showed sales for 239,000. The difference between the year end trial balance and bank/vat sales were higher. This was the query the VAT inspector wanted explained. The accountant used the trial balance figure of 214,000 for sales in the year end accounts. What I meant to say was the N/C 4000 doesn't appear to be recording all the sales for the year, but showing in the VAT returns. I printed all sales from the N/C and checked each individual entry against the detailed VAT return and what I found was that entries in the VAT return and bank account were not showing up in the sales N/C. I hope I have made this clearer. This is the reason the accountant has now to amend the accounts. Any suggestions?

[Wilma]

If the client is on Cash accounting then the date of the first transaction is irrelevant. It's the dateof the payment that matters.

Thanks for your comments. That is what I thought intially until now. What is happening the sage I am using is recording the date the invoice is processed and not the date of payment. Therefore affecting the year end trial balance sales figure.

[David Griffiths]

Sorry, but you're still not explaining yourself very well. If the company has an accountant he or she should be able to sort this out by examining the transactions that aren't showing up in sales. If they are in the VAT return, they can be traced via the audit trail and the daybooks to see where they have ended up in the nominal ledger.

That's not something that anybody can do hypothetically without access to the data. I've already set out the things to look for - not exhaustive, but a starting point.

[RAL]

What sage is doing is correct. There may be timing difference i.e. invoices outstaning for yearend 06/07 may have been paid in 07/08!

The reconciliation should be carried out every quater!

If you need help PM me!

[Jenni384]

If the client is on Cash accounting then the date of the first transaction is irrelevant. It's the dateof the payment that matters.


Cash accounting is for VAT only. Sage correctly records the payments and receipts of VAT transactions in the VAT return.

Sage also correctly records all sales and purchases at the date of the invoice and reports these on the trial balance and in the nominal ledger.

The VAT account on Sage will be on accruals accounting (I think, been a few years since I had a sage file on cash acc for vat) and thus will not concur with the VAT returns (which I think is what you're saying) but Sage internally flags transactions for cash accounting and gets them right on the VAT return.

If you invoiced £100k in a year, your turnover will be £100k irrespective of when it was paid. Your VAT payments will be on monies received though.

[Wilma]

Hi everyone,

Thankyou all very much for your replies. Please excuse me if I sound really dense. Can I clarify this - at the y/e the trial balance sales n/c (4000) is not the exact sales turnover or is it? Is it the paid sales in the VAT return for the year which is the exact turnover which agrees with the bank statement. If this is the case or not why did the accountant lift the trial balance sales figure and not the VAT figure for the final year end accounts? And if so why has he asked me to find the difference between the trial balance sales (4000) and the VAT. I thought in the cash accounting that sales invoices only showed in the nominal ledger once paid and not at the processing point. Surely, the accountant would know that?

[David Griffiths]

The figure for sales for the year should be the balance on the sales account 4000 - and any other accounts mapped to sales. It's not uncommon for sales to be analysed into various categories - Sales A, Sales B etc

It quite categorically is not the amount of sales shown in the VAT returns drawn up on the cash basis, nor the amount of bankings - which of course include VAT. If the accountant has taken the figure from code 4000, it is reasonable to expect that to be correct.

As I've posted before, there may well be items in Outputs on the VAT return which don't belong in sales. And it may well be that there are refunds etc that aren't categorised as outputs on the VAT return

I thought in the cash accounting that sales invoices only showed in the nominal ledger once paid and not at the processing point. No that's not correct

Surely, the accountant would know that?He (or she) knows that that is wrong.

[Jenni384]

Wilma, I think you need to understand that accounting for VAT is different to accounting for the year end accounts. Sage looks after both just fine, but both are treated differently as described above :)

[JulieFAB]

Hi Wilma - I think the easiest way to get your head around it, is to think of a new business in its 1st month of trade. You would raise an invoice for say £4000 + VAT. The net amount would be shown in sales (NC 4000). If the bill remained unpaid at the end of the 1st month, the VAT Return produced would show no sales and no VAT due ( under Cash Accounting).

If in month 2 you made no sales and your received the money in for the invoice issued in month 1, your sales NC for month 2 would show zero but your VAT return for month 2 would show sales of £4000 and VAT of £600

Hope this helps.:)