Audit adjustments

[Maf. King]

On Fri 7 September 12 15:44:48 Terence wrote:
> On Friday, September 07, 2012 03:08 PM, Maf. King wrote:
> > On Fri 7 September 12 10:18:39 Terence wrote:
> >> Hi All,
> >> 
> >> The auditor told me most accounting software allows a lump sum figure to
> >> be put into retained earning for audit adjustment purpose instead of
> >> putting in the entry line by line.  Can this also be done in GnuCash?
> >> Thanks for the input in advance.
> >> 
> >> T Wong
> > 
> > Hi Terence,
> > 
> > I'm still not clear on the problems that you are trying to fix.
> > 
> > You can put a lump sum from any account to any other account at any time,
> > with the caveat that you can't directly enter transactions in the AP and
> > AR accounts used by the business features sub-system.
> > 
> > I'm trying to imagine why you would need to adjust the A/R. The only
> > reason I can think is that you maybe have been charging the wrong rate of
> > tax or something similar. But IANAA, so there could be any number of
> > things I don't know.
> > 
> > Has every invoice covered by the audit period been paid in full?  if so,
> > the A/R should be at zero, with the money is sitting in the bank and
> > pointing at some income account(s).  Can't you make the audit adjustment
> > from the income account, rather than the invoices? (which would alter the
> > total income and allow retained earnings to increase)
> > 
> > Like I said, IANAA, and I'm not clear what and why you are trying to do!
> > 
> > Maf.
> 
> Hi Maf,
> 
> The AR ageing report showing AR inactive invoices is separate from the
> audit adjustment I am trying to do.

Hi Terence,

Ahh, OK that makes more sense.  Sorry for conflating two separate issues!

> First, in the past, when I did a
> close book, I had to put the figures into retained earnings
> individually.  I did not know there was a Close Book feature now.
> Yesterday, I clicked on that function and selected Retained Earnings.  I
> did all the close book for me.  That was great as I had to do exactly
> that.  But then when I looked at the CoA, I found there are three
> retained earnings with different currencies.  In our CoA, we have
> multicurrencies current assets, e.g. Euro and AUD.  I cannot recall if
> those retained earnings - Euro, retained earning AUD were already there
> in the pull down menu when I chose Close Book.  Were they created
> automatically by Close Book execution?

Can't really help here, I'm afraid.  Haven't used multi currency or book 
closing.  From what I understand of GC and multi currency, the 3 retained 
earnings accounts sounds reasonable, as exchange rates fluctuate. So your 
retained €1000 may not be worth AUD 1226 if/when you need to "liquidate" the 
euro asset. IANAA!  Auto-creation of retained Earnings-{currency} sounds like 
a thing that gnucash would do.

> 
> Second, I need to do some audit adjustments as recommended by the
> auditor.  E.g. there are some entries for adjusting some P&L entries and
> some for Balance Sheet items.  I was told that some accounting software
> e.g. Peachtree or DacEasy has a feature which allows a user to put in
> audit adjustment in a total amount.  That will be easy would not it?
> Therefore, I just wonder if GnuCash also has this feature.  Otherwise,
> I'd need to put in an entry on 1/1/2012 for those accounts which need
> adjusted and put a transfer into Retained Earnings.  That also leads to
> another question.  Now that I have Retained Earnings, Retained Earnings
> with a currency in the suffix, do I select Retained Earnings?  I am now
> in the process of doing it and when finished, I'd need to run a Balance
> Sheet on 1/1/2012 to check with the audited Balance sheet provided by
> the auditor.
> 

AFAIK, there is no way to adjust automatically any retained earnings accounts, 
other than a manual adjustment transaction.  You may want to put it on 
31/12/2011, rather than 1st January, though?

As a thought, you could maybe do one big adjustment from Retained Earnings to 
some new "expenses:AuditAdjustment" account, and make extensive use of the 
comments field?

As to the multi-currency retained earnings question, don't know! I suspect 
that your original account may now be superfluous (you could move any balance 
into one of the 3 currency ones).

Maf.