140310 MSTS105 Strataware Accounting Final€¦ · MSTS105!STRATAWARE!ACCOUNTING!! Page2!of!56!! COURSE’OUTLINE! CONTENTS’ 1.0AnintroductiontoaccountinginStrataware

MSTS105 STRATAWARE ACCOUNTING Copyright © Mystrata South Africa Pty Limited 2014

Version 1.0 (March 2014)

STUDENT WORKBOOK

MSTS105 STRATAWARE ACCOUNTING

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COURSE OUTLINE CONTENTS

1.0 An introduction to accounting in Strataware ...................................................................... 3

2.0 Interaction Between Ledgers .............................................................................................. 4

2.1 General Ledger .................................................................................................................... 5

2.2 Accounts Receivable Ledger ............................................................................................... 6

2.3 Accounts Payable Ledger .................................................................................................... 7

2.4 Unit Ledgers ........................................................................................................................ 8

3. Creating a budget ................................................................................................................. 9

4. Paying invoices ................................................................................................................... 14

4.1 Entering an accounts payable item ................................................................................... 14

4.2 Executing a payment ......................................................................................................... 18

5. Receipting Service Charge Income ...................................................................................... 20

6. Accruing an Invoice Over Time ............................................................................................ 24

7. End of Financial Year Accrued Expense ............................................................................... 28

7.1 Entering a FYE Accrued Expense ....................................................................................... 28

7.2 FYE Accrued Expense Adjustment ..................................................................................... 32

8. Unit Ledger Journals ........................................................................................................... 33

8.1 To Make Unit Ledger Journal ............................................................................................ 34

9. Creating New Ledgers ......................................................................................................... 40

9.1 Creating an Investment Account ....................................................................................... 40

9.2 Creating a Loan Account ................................................................................................... 45

9.3 Creating a Holding Account ............................................................................................... 49

9.4 Creating a Security Deposit ............................................................................................... 52


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1.0 AN INTRODUCTION TO ACCOUNTING IN STRATAWARE

The accounting modules within Strataware have been developed specifically for the purpose of running bodies corporate and home owners’ association accounts. As such, many standard accounting procedures have been removed (such as ‘pay roll’) in order to create a streamlined, easy to use and highly automated accounting system.

Further to the usability of the accounting system itself, the reports generated by the system have also evolved over the years to be easy to read for community managers, home owners and auditors alike. Because of this some reports can be shown in various formats, including some reports that could be considered ‘non-‐standard’ from a strict accounting perspective.

It is also important to note that some accounting information in Strataware is published to the MyCommunity web portals and is visible to owners and trustees. This information includes (but isn’t limited to):

• Levy statements • Bank balances • Levy arrears • Balance sheet information (trustees only) • General ledger information (trustees only)

A NOTE ON DEPRECIATION

For the purpose of sectional titles fixed assets are not depreciated on balance sheets as common property, including assets fixed to it, is not beneficially owned by the body corporate and is therefore not depreciable. Non-‐fixed assets that are purchased by the body corporate are beneficially owned by it, but the purchase cost is expensed upon acquisition and not depreciated.


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2.0 INTERACTION BETWEEN LEDGERS

Strataware comprises four main account ledgers (there are more than four in total).

These are:

1. General Ledger 2. Accounts Receivable Ledger 3. Accounts Payable Ledger 4. Section Ledgers

The interaction between them is automated, some examples of their interaction include:

Action: A levy payment is receipted in the General Ledger. Effect: It appears in that apartment’s Section Ledger.

Action: An invoice is entered in the Accounts Payable Ledger Effect: It appears in the General Ledger available for payment.

It is important to note that levies are not raised from the Accounts Receivable Ledger; a special levy invoicing module exists to perform this function as it is heavily customised for the sectional title and HOA industry.


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2.1 GENERAL LEDGER

The General Ledger (“GL”) in Strataware is the closest thing to a cash ledger you will find in the system, in most cases it should closely resemble the bank statement with the exception of post-‐dated and uncleared cheques/payments.

Whenever you transact in the GL you affect cash, either by paying a bill (expense) or receipting revenues (income).


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2.2 ACCOUNTS RECEIVABLE LEDGER

The Accounts Receivable Ledger (“AR”) is used to raise sundry invoices from the property to a third party. Levies are not generated here.

An example of a sundry invoice might be an invoice sent from the property to a company for allowing them to advertise on the common property.

Once an invoice is raised it will increase the “Accounts Receivable” asset on the balance sheet.


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2.3 ACCOUNTS PAYABLE LEDGER

The Accounts Payable Ledger (“AP”) is where all invoices received are entered. Once entered this increases the “Accounts Payable” liability on the balance sheet. It does not affect cash (as this can only happen in the GL).

Invoices can be either entered directly into the AP or generated from an existing Work Order (where the Procurement process has been used).


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2.4 SECTION LEDGERS

Section Ledgers are what non-‐sectional title/HOA systems would refer to as a “Customer Account”.

Most transactions in the Section Ledgers are populated from either the General Ledger (payments) or the levy invoicing system (invoices). These items cannot be edited from the Section Ledger as they are just a representation of a record in another ledger.

The only entries that can be made directly into a Section Ledger are journals.


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3. CREATING A BUDGET

Budgeting within Strataware is important as it enables reports to be generated comparing budget versus actual expenditure for a period. The process of creating a budget also forms a chart of accounts for the property.

Budgets are created and managed in the “Budgets” screen (Property > Accounts > Budgets).

To create a new budget:

1. Navigate to the Budgets screen 2. Click the “New” button in the command bar 3. You will be prompted to choose the financial year that you wish to budget for, select

the appropriate year from the drop down and click “OK”

4. You can now add an optional description to your budget using the “Budget Description” box at the top of the screen


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5. Add categories to the Admin/General fund and Sinking/Reserve fund expense sections using the “+” buttons

6. Once clicked the system chart of accounts will be displayed, find a category you wish to add and click on it to insert

7. Repeat the above process for all required categories

Tip: Account codes have head and sub categories. If an arrow is next to a category, click it to view available sub categories.


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Tip: For new buildings, use the “Add Standard Account Categories” button (top right) to populate your budget with commonly used account categories.

8. When all categories are in place enter the budgeted amount in the “This Yrs Bdgt” columns

9. If you don’t want to use a category, simply leave its budget value at “0.00” and it will be removed when the budget is saved

10. Once all categories have been budgeted for click the “Summary” tab

Note: The “Summary” tab is used to tweak your budget by way of opening balances and surplus/contingency values.

11. Complete “Summary” sections for both funds. You can change the: a. Opening bank balance b. Amount of “planned reserve” at end of period (sometimes referred to as

“contingency”) c. Amount to raise (per fund) d. Amounts to raise per period


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12. Once complete click the “Save” button in the command bar 13. The process of saving a budget creates an official budget PDF for distribution or

publication, there are a number of options available for this PDF including: a. PDF Options b. File name type c. File name


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14. Once saved the PDF will be ‘attached’ to the budget and is available in the “Attached Documents” panel


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4. PAYING INVOICES

Paying an invoice in Strataware is usually broken into two components (although there are exceptions to this rule):

1. Creation of an accounts payable entry (in the Accounts Payable Ledger) 2. Execution of a payment (in the General Ledger)

4.1 ENTERING AN ACCOUNTS PAYABLE ITEM

1. Navigate to the property’s ledger screen (Property > Accounts > Ledgers) 2. By default the General Ledger will be displayed, use the drop down at the top left of

the screen to change to the Accounts Payable Ledger

3. Once on the Accounts Payable Ledger (“AP”) click the “New” button in the command bar to create a new entry

4. Click the “Enter new invoice”


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5. You will be prompted to select a contractor, note that the contractor must already be in the address book before you can enter an invoice. By default the system will show your most used contractors (called “Quick Pick”), if working in a new building this will be blank, use the “Type” drop down to find an appropriate contractor.


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6. Enter appropriate information in the details panel at the bottom of the screen

7. To add an account category (or “code”) click the “+” button under the category box


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8. The property’s budgeted categories will be displayed for you to choose from, simply click on the category you wish to use

Note: If the property has no budget or you want to use a non-‐budgeted category, use the drop down menu at the top and change to “All category selection” to see the whole chart of accounts.

9. Specify how much of the invoice you would like to take from which fund (Eg: General/Reserve, Admin/Sinking etc.) against each category entered

10. Click “Save” in the command bar to save the AP entry


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4.2 EXECUTING A PAYMENT

Once an invoice has been entered into the AP an accounts payable liability is created, however the cash in bank is not affected as the invoice is not yet paid (or “executed”). Execution of accounts payable items is done via your General Ledger (“GL”), the GL is basically the cash ledger for the property.

1. Navigate to the general ledger screen (Property > Accounts > Ledgers) 2. Click “New” in the command bar to create a new transaction 3. Click the button labelled “Pay accounts payable invoice” to execute an AP item

4. A list of invoices that have already been entered into the AP will be displayed, click on the invoice you wish to pay


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5. Details of the invoice will be filled automatically from the information held in the AP entry, minor changes (such as amount paying) can be made at this point if required

6. Make any changes (if required) and click “Save” in the command bar to save the transaction


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5. RECEIPTING LEVY INCOME

Receipting of levies can happen in two ways:

1. Manually through the GL 2. Automatically from the credit card payment gateway

For the purposes of this document we will be focusing on the manual entry of levies and issuing receipts.

1. Navigate to the GL by going to “Property > Accounts > Ledgers” or by using the dashboard shortcut

2. Click “New” in the command bar 3. Click the “Receipt Levy” button in the Income section


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4. Click on the section you would like to receipt

Tip: On large buildings use the search icon to quickly locate the section you are looking for.

5. The system will automatically populate the owner’s name and reference, it will also populate the “Total Received” with the amount currently outstanding, this can be changed if necessary.


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6. The “Process” and “Received Date” will populate as ‘today’s date’, this can also be changed if required. No category selection is required as the system will automatically use the appropriate categories.

Note: The “Process” date is the date that the transaction will be processed in the Section Ledger, where the “Received Date” is the date the transaction will be processed in the General Ledger. In most circumstances these should be the same, however there are cases where you may wish to process a transaction in the Section Ledger a few days earlier than its actual receipt (to avoid penalty interest without journaling for example).

7. Once all values have been entered appropriately click “Save” in the command bar to enter the transaction into the GL.

8. If the owner of the section has a valid email address listed in the address book you will be prompted to send a receipt via email. Click “OK” to immediately email a receipt to the owner.


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6. ACCRUING AN INVOICE OVER TIME

Often it is desirable to accrue large invoices over the period of time to which they relate. A common example of this is accruing the insurance premium invoice over the period of insurance cover.

1. Start the process by entering your insurance invoice into the Accounts Payable ledger, either manually or via the procurement system

2. Complete all information in the “Details” panel as normal

3. Set your accrual period by clicking the “Show Accrual Dates” button on the details panel

4. Enter the dates over which you wish to accrue the invoice

Note: When accruing invoices messages will popup notifying you that you are in-‐fact accruing an invoice over time. These are not error messages, rather informational messages to advise that you are accruing the invoice to avoid input errors.

5. Click “Save” in the command bar to save the invoice

Note: Accrued invoices will have a ‘tick’ in the “acc” column in the AP.


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ACCRUED INVOICES ON THE BALANCE SHEET

In the above example the insurance invoice is accrued from 01/02/2014 to 31/01/2015, for the purpose of providing reporting examples we will assume this property has no other Accounts Payable liabilities and a financial year of 01/01/2014 to 31/12/2014.


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In that example the balance sheet as of 31/01/14 would report no Accounts Payable liability:


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However, as we move forward in time to 31/03/14 we can see that an Accounts Payable liability appears on the balance sheet for the insurance:

The amount of 2,424.66 represents a proportion of the insurance invoice. The balance sheet will continue to accrue this amount until it reaches the end of the accrual period as entered against the invoice.


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7. END OF FINANCIAL YEAR ACCRUED EXPENSE

This function is used to take into consideration any invoices for the last month of the financial year that are invoiced in arrears (or often come late) enabling you to generate accurate financial statements.

Note: Assume a January to December financial year in the following examples.

A typical example of this is in relation to utilities, such as electricity for the common areas. You know that you will receive the December common area electricity invoice in January, however you need to prepare the financial statements before the invoice arrives.

In this situation you can enter a “FYE Accrued Expense” for the common area electricity. You are required to take an educated guess as to the amount (since you don’t have the invoice yet), adjustments are then made in January when the real invoice arrives.

FYE Accrued Expenses are a function of the “Accounts Payable Ledger”.

7.1 ENTERING A FYE ACCRUED EXPENSE

1. Navigate to the Accounts Payable screen 2. Click “New” in the command bar 3. Click the “FYE Accrued Expense” button

4. Select the contractor from the list as you would a normal invoice


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5. Enter the details of the accrued expense including an amount, reference and account category

6. Once entered click “Save” in the command bar


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FYE ACCRUED EXPENSE ON THE BALANCE SHEET

In the above example the accrued expense of 5,400 for common area electricity appears as a Liability called “Accrued Expense” on the Balance Sheet.


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FYE ACCRUED EXPENSE ON THE INCOME & EXPENDITURE STATEMENT

In the above example the accrued expense of 5,400 for common area electricity will appear on the Income and Expenditure statement as a proportion of the normal expense line item in the appropriate category. As well as being listed in the transaction list for that category.


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7.2 FYE ACCRUED EXPENSE ADJUSTMENT

When the financial year for the property rolls over Strataware will automatically reverse the accrual entry by way of a negative expense on the Income and Expenditure Statement:

No user intervention is required for this process.

When the common area electricity bill arrives in January, simply add it to the Accounts Payable Ledger as normal, however note that if you are accruing the invoice ensure the accrual start date is not before 01/01/2014 (as the FYE Accrual is already in place for December).


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8. SECTION LEDGER JOURNALS

There are often times where a section ledger needs to be changed directly without effecting cash. One example of this might be to remove a section’s penalty balance, or to put a direct debit against their section without sending an invoice (bounced cheque fee for example). In these situations a journal is able to be made directly into the section’s ledger.

Note: Making a journal into the section’s ledger will affect different categories depending on the journal type.

Type Category Ordinary Levies – normal Reversal of LOD Discount Levies – normal Reversal of Penalty Other Charges – penalty interest


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8.1 TO MAKE SECTION LEDGER JOURNAL

1. Navigate to the “Ledgers” screen (Property > Accounts > Ledgers) and use the dropdown to find the Section Ledger you wish to add the journal to

2. Click the “New” button in the command bar 3. Click the “New Journal Entry” button 4. The Journal Entry screen will appear


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In this screen a journal can be made to various “funds” including:

Admin Fund Levy Admin Fund Penalty Reserve levy Reserve penalty

It is important to ensure that journals are made to the correct funds as incorrect allocation can cause confusion in reports.

5. Enter an appropriate date for your journal 6. Enter an appropriate description for your journal

7. Enter the amount you wish to journal in the appropriate fund box a. To add a debt to the section ledger enter the value as a negative figure

(eg: -‐500.00) b. To add a credit to the section ledger enter the value as a positive figure

(eg: 500.00)


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Note: It is possible to journal multiple funds in a single transaction, including positive and negative amounts.

8. Enter any notes as required

9. Click “OK” to save your journal


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Note: Journals will appear in the Section Ledger in green with the prefix “Journal –“


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SECTION LEDGER JOURNAL ON THE BALANCE SHEET

In the above example the Section Ledger journal will increase the Levies in Arrears asset by 500.00.


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SECTION LEDGER JOURNAL ON THE INCOME AND EXPENDITURE STATEMENT

In the above example the Section Ledger journal will appear on the Income and Expenditure Statement in the “Levies – normal” revenue category. However if a different journal type was used the penalty or discount categories could be affected.


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9. CREATING NEW LEDGERS

A number of new ledgers or ‘accounts’ can be created within Strataware including:

Investment accounts Loan accounts Holding accounts Security deposits

There is no limit to the number of ledgers that can be created within these groups.

9.1 CREATING AN INVESTMENT ACCOUNT

1. Navigate to “Property > Accounts > Accounts Setup” 2. Click on “Investment Accounts” in the navigation tree

3. Click “New” in the command bar 4. Complete all details in the “Investment Account Information” panel, these include:

a. Financier (address book search)


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b. Account type, options include: i. Interest bearing term deposit ii. Interest bearing deposit iii. Bonds iv. Debentures v. Property vi. Shares vii. Other

c. Account Name d. Branch Code e. Account Number

5. Complete all details in the “Investment Account Settings” panel, these include: a. Account start date b. Amount invested c. Interest rate (pa) d. Maturity date (required, enter in the future if not actual maturity date exists) e. Fund f. Notes (optional)

A tick box to “Debit the general ledger” also appears on this screen, by ticking this box a GL entry will be made to debit the account to the value of the investment account.


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6. Click “Save” in the command bar to create the account

Note: After creating the account it will appear in the “Investment Accounts” navigation tree in the “Accounts Setup” screen.

Access your newly created ledger by navigating to the “Property > Accounts > Ledgers” screen, using the ledger drop down you will note that your new ledger now exists as a sub ledger within the “Investment Accounts Ledger” tree.


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Simply click on the ledger to access its functions.


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INVESTMENT ACCOUNT ON THE BALANCE SHEET

In the above example the investment account will appear on the Balance Sheet as an asset.


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9.2 CREATING A LOAN ACCOUNT

1. Navigate to “Property > Accounts > Accounts Setup” 2. Click on “Loan Accounts” in the navigation tree

3. Click “New” in the command bar 4. Complete all details in the “Loan Account Information” panel, these include:

a. Name of Financier (address book search) b. Purpose for loan c. Term d. Account type, options include:

i. Principle and interest ii. Interest only iii. Balloon payment iv. Insurance funding v. Other

e. Account Name f. Branch Code


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g. Account Number

5. Complete all details in the “Loan Account Settings” panel, these include: a. Account start date b. Finish date c. Loan amount d. Interest rate (pa) e. Type of interest (fixed/variable) f. Fund

A tick box to “Credit the general ledger” also appears on this screen, by ticking this box a GL entry will be made to credit the account to the value of the investment account.

6. An additional panel called “Miscellaneous Settings” exists on the loan account to record any additional information including security held, payment details or other notes. These are all optional fields.


Note: After creating the account it will appear in the “Loan Accounts” navigation tree in the “Accounts Setup” screen.


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Access your newly created ledger by navigating to the “Property > Accounts > Ledgers” screen, using the ledger drop down you will note that your new ledger now exists as a sub ledger within the “Loan Accounts Ledger” tree.



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LOAN ACCOUNT ON THE BALANCE SHEET

In the above example the loan account will appear on the Balance Sheet as a liability. Note that if you chose to ‘credit the GL’ your cash asset will also increase.


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9.3 CREATING A HOLDING ACCOUNT

A “Holding Account” represents money ‘held’ by the property that needs to be refunded at some point in time. An example of this might be money held as a deposit for a transponder.

1. Navigate to “Property > Accounts > Accounts Setup” 2. Click on “Holding Accounts” in the navigation tree

3. Click “New” in the command bar 4. Complete all details in the “Holding Account Information” panel, these include:

a. Purpose b. Date

5. Complete all details in the “Miscellaneous Settings” panel, these include: a. Term (if any) b. Notes

Both of these fields are option. 6. Click “Save” in the command bar to create the account


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Note: After creating the account it will appear in the “Holding Accounts” navigation tree in the “Accounts Setup” screen.

Access your newly created ledger by navigating to the “Property > Accounts > Ledgers” screen, using the ledger drop down you will note that your new ledger is now exists as a sub ledger within the “Holding Accounts Ledger” tree.



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HOLDING ACCOUNTS ON THE BALANCE SHEET

The creation of a holding account alone will not affect the balance sheet, however once transactions have been entered in to that holding accounts ledger it will appear on the Balance Sheet as a liability since these are funds held that will be retuned at a future date.


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9.4 CREATING A SECURITY DEPOSIT

A Security Deposit is money paid by the property to a 3rd party. For example a payment made for a security deposit to a utility provider.

1. Navigate to “Property > Accounts > Accounts Setup” 2. Click on “Security Deposits” in the navigation tree

3. Click “New” in the command bar 4. Complete all details in the “Investment Account Information” panel, these include:

a. Purpose b. Name c. Holder Name d. Date


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5. Complete all details in the “Miscellaneous Settings” panel, these include: a. Term (if any) (optional) b. Amount held c. Interest rate (pa) (optional) d. Fund (general/reserve) e. Notes (optional)


Note: After creating the account it will appear in the “Security Deposits” navigation tree in the “Accounts Setup” screen.

Access your newly created ledger by navigating to the “Property > Accounts > Ledgers” screen, using the ledger drop down you will note that your new ledger is now exists as a sub ledger within the “Security Deposits Ledger” tree.


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SECURITY DEPOSITS ON THE BALANCE SHEET

Security Deposits appear on the Balance Sheet as an asset since it is money paid to a third party that can be recovered in the future.


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Mystrata Pty Limited

Phone: +61 7 3839 3199 Fax: +61 7 3036 6143

Mystrata South Africa Pty Limited

Phone: +27 21 202 9903 Fax: +27 21 686 3951

Mystrata Middle East FZ LLC

Phone: +971 4 422 5747 Fax: +971 4 422 4746

Mystrata Malaysia Sdn Bhd

Phone: +603 6201 2127 Fax: +603 6201 0240