Transcript

Month End Recommendations Pickerings Auto Group

A600 – Month End Processes

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

2

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

Contents

Contents .................................................................................................................................................. 2

Business Policies ..................................................................................................................................... 3

Introduction ............................................................................................................................................ 6

Month End Checklist ............................................................................................................................... 7

1. Finalise all Debtor Entries by Close of Business Last Day of Month ........................................... 8

2. Close all Completed Repair Orders by Close of Business Last Day of Month ............................. 8

3. Close any Parts Invoices that have been Supplied ...................................................................... 8

4. Run Debtor Statements .............................................................................................................. 9

5. Run Debtors Month End Process ................................................................................................ 9

6. Run a Work in Progress Listing for Service ................................................................................ 10

7. Reconcile Bank Account/s before Processing New Month Bank Entries .................................. 11

8. Ensure all Deals for the Month are processed .......................................................................... 11

9. Check that all Creditors’ Transactions are entered................................................................... 11

10. Process Fixed Assets Month End ............................................................................................. 11

11. Process General Ledger Journals ............................................................................................ 12

12. Process General Ledger Standing Journals ............................................................................. 13

13. Run General Ledger Reconciliation Report ............................................................................. 14

14. Reconcile Balance Sheet Accounts that may Affect Profit ...................................................... 14

15. Run Profit and Loss Reports and Review ................................................................................ 15

16. Run Month End Reports .......................................................................................................... 15

17. Reconcile Remaining Balance Sheet Accounts........................................................................ 15

18. Run BAS Audit Report and Reconcile ...................................................................................... 16

19. Perform BAS Transfer .............................................................................................................. 17

20. Close Accounting Period ......................................................................................................... 18

Appendix ............................................................................................................................................... 19

Scheduled Account Reconciliations .............................................................................................. 19

General Balance Sheet Account Reconciliations........................................................................... 21

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

3

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

Business Policies

Business Policy – A600-01

Reporting Timelines

Day 4: Management Accounts Exec Summary to Dealer Principals

Day 5: Final Management Accounts

Day 5: AutoTeam KPI Reporting

Day 15: OEM Reporting

Day 21: eProfitFocus Reporting

Day 21: Business Activity Statement (BAS)

Process Owner: Financial Controller

Business Policy – A600-02

Weekly / Ongoing Tasks

The following tasks are to be completed on a weekly basis, or prior to Month End:

- Deal processing: within 48 hours of vehicle delivery

- Intercompany journals

- Debtor/creditor contra journals

Process Owner: Senior Accountant / Financial Controller

Business Policy – A600-03

Pre-Day 1 Tasks (Day 0)

The following tasks are to be completed on the final day prior to Month End:

- ‘As at’ reports (run after hours): Labour Work in Progress Listing, Floorplan Stock Lists

- Fixed Assets depreciation journal

- Oil adjustments

- Download credit card statements

- Payroll accrual (depending on time of last pay run – accrue up to 10 days only)

- Standing journals

o Payroll tax

o Overhead distributions

Process Owner: Senior Accountant / Financial Controller

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

4

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

Business Policy – A600-04

Month End Timeline

Aim: Reporting of completed Management Accounts on Day 5.

Day 1:

- Month End Banking & Bank Statement Reconciliation (backdated)

- Process deals from previous day’s deliveries

- Remaining standing journals: IT, rent, utilities (if not processed pre-Month End)

Day 2:

- All (remaining) vehicle deals to be processed by close of business.

- Floorplan Interest expense

- F&I Income

- Payroll Accrual (if pay run during month end period)

Day 3:

- Advertising expenses/accruals

- Final creditor invoices to be posted (communicate cut-off to other departments)

Day 4:

- Accrue any remaining F&I income (if income statements not available)

- Expense Allocation & Review

- Writedown/provision adjustments

- DP Executive Summary due by close of business

Day 5:

- Review Exec Summary with Dealer Principal

- Complete any final adjustments

- Finalise Management Accounts.

Process Owner: Financial Controller

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

5

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

Business Policy – A600-05

Reconciliation Timeline

Reconciliations must be performed in accordance with the following frequency:

Daily:

- Any cash-related account, e.g. Bank Statement, tills

Weekly:

- Deal Deposits

- Wholesale Vehicle Debtors

- Suspense Accounts

Monthly:

- Parts Returns

- Sublet Clearing

- Purchase Orders Clearing

- Holdback – accruals and debtors

- Warranty

- Factory Claims

- Cost Estimates

- Floorplan / Inventory

- BAS

- Payroll on-costs

Process Owner: Financial Controller / Dealership Accountant

Business Policy – A600-06

Review/Escalation Template

Dealer Principals must be engaged to be made aware of financial risks to the Dealership. Contribute to regular review and resolution of key ongoing issues.

Work in Progress – aged items and/or customer issues

Factory/fleet claims – ensure Bulletin details are distributed/available

Purchase Orders outstanding

Inventory / Floorplan reconciling items

Cash inflow: aged debtors/warranty

1. Alert

2. Critical

3. Write Off

Process Owner: Financial Controller / Dealer Principal

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

6

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

Introduction Because UNITS® is driven by date entry, there are a few processes which we strongly recommend be done on the last day of an accounting period (after all daily processing) or at least, as soon as possible into the next month. With the exception of debtors there is no month end roll over to be processed. However, there are many accounting functions that need to be performed in order to finalise your month end. This document is not intended to be a comprehensive list and your dealership requirements may need to be added. If necessary, you should seek advice from your accountant.

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

7

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

Month End Checklist 1. Finalise all trade debtor entries by close of business last day of month.

2. Close all completed open Repair Orders by close of business last day of month.

3. Close any Parts invoices that have been supplied.

4. Run Debtors statements.

5. Run Debtors month end process

6. Run a Works in Progress (WIP) listing for Service

7. Reconcile Bank Account/s before processing new month bank entries.

8. Ensure all deals for the month are processed

9. Check that all creditors’ transactions are entered

10. Process fixed assets month end

11. Process General Ledger Journals

12. Process General Ledger Standing Journals.

13. Run General Ledger Reconciliation Report.

14. Reconcile Balance Sheet Accounts that may affect profit (e.g. Stock, Vehicle Debtors, etc.)

15. Run Profit and Loss Reports and review

16. Run Month end reports

17. Reconcile remaining Balance Sheet accounts.

18. Run BAS Audit Report and reconcile

19. Perform BAS transfer

20. Close Accounting period.

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

8

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

1. Finalise all Debtor Entries by Close of Business Last Day of Month

All debtor entries should be processed by the end of the last business day. However, It is possible to back date transactions by changing your log in date if necessary. Before running statements and end of month roll over all debtors transactions must be processed. These include:

Repairs orders closed

Parts invoices completed

Sundry Invoicing

Rental Invoicing

Standing Journals

Debtor Journals

Before closing the debtors, check for the following;

Internal debtor accounts that should be cleared

Finance charges on overdue accounts

Allocation of credits / payments not completed

Write offs to be processed

2. Close all Completed Repair Orders by Close of Business Last Day of Month

Repair orders should be closed as they are completed. However, in reality this does not always happen. A WIP report should be run several days before the end of the month. All open repair orders should be accounted for. Any open repair orders that have been completed should be closed prior to the end of the month.

3. Close any Parts Invoices that have been Supplied

As with Repair orders, parts invoices should be closed when completed. However, there may be some that have not yet been finalised. Ensure all parts invoices are closed before the end of the month.

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

9

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

4. Run Debtor Statements

When all debtor transactions have been completed the Debtor statements can be run and/or saved to file. There are 2 options to run statements; 1) Statement Print - this will print statements as at “now”. 2) Statement Print As At – this will print statements as at a selected date. Statement Print must be done either last thing on the last day of the month or first thing the next morning before any processing commences. Alternatively you can use Statement Print As At. You can run this a couple of days into the month using the as at date of the previous month end.

5. Run Debtors Month End Process

This process ages each transaction by one increment. E.g. current transactions become 30 day, and 30 becomes 60 etc. BEWARE THE FIELD NAMES Next Month Start Date – this is the first day of the new month. Archive Transactions - all transactions with a zero balance will move from the Current Transactions tab to the Archived Transactions tab. Archive Transactions To Date – This should be last day of the month you are processing. Please note that the default is the first day of the next month. Perform Year End – only do for the last month end of your financial year

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

10

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

6. Run a Work in Progress Listing for Service

This report is used to calculate the journal required to move the unapplied time expense from the Labour Clearing general ledger account. It cannot be run retrospectively. The WIP Month End Journal Entry has the following ingredients to consider;

- Payroll Journal and completed weeks. For example, a Pay Run may finish on a Monday with the Month-end Wednesday – you may

consider accruing those 2 days.

Not recommended if on Weekly Payroll cycle.

- Ensure anyone clocking to RO’s has their Payroll going to Labour Clearing Account in UNITS® For example, a Service Manager that is clocking to RO’s for 50% should have the proportion

going to Labour Clearing GL Account with the

balance going to Service Manager Wage Expense Account.

- Hourly Cost in Technician Maintenance should be Prime Labour Cost for the Technician – not loaded….

- On-Costs, Payroll Tax, Superannuation, Work Cover etc. should be directly expense and not put through Labour Clearing Account.

- Ensure any overtime that is done and paid to Technicians is setup in Cost Factor in Technician Maintenance.

Please remember no posting to Labour Clearing occur until the RO is Invoiced. DR. Cost of Labour Sales CR. Labour Clearing Account Payroll Entry. DR. Labour Clearing Account CR. Bank/Creditors With a KPI of 85% RRF => you must expect 15% Loss Time per Technician per month on average.

This value of the Labour Clearing account should be journaled to equal this total. Any excess is probably represented by unapplied time. Extremely large values should be investigated.

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

11

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

7. Reconcile Bank Account/s before Processing New Month Bank Entries

Bank Accounts must be reconciled daily. The final bank reconciliation at the end of the month should be kept on file for future reference. Also the matched transactions can be cleared, once the final reconciliation is completed for the month. It is recommended that matched transactions only be cleared monthly. The month end bank reconciliation must be done before any bank entries are processed for the new month. It cannot be run retrospectively.

8. Ensure all Deals for the Month are processed

Before closing off the month, check that all deals are processed.

9. Check that all Creditors’ Transactions are entered

All creditors’ invoices and credit notes for the month should be processed prior to closing off month.

10. Process Fixed Assets Month End Fixed assets month end process is run to post depreciation and lease entries for the month. Ensure the login date is changed to a date within the month you wish to run your entries.

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

12

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

The month end depreciation can be calculated numerous times until you are satisfied with the results. Only when you are happy with the results should you perform the update.

11. Process General Ledger Journals

Process any General Journals for the month. General Journals can be back-dated in the update screen - there is no need to change the log-in date. The exception to this is when a period crossed a year-end, then it may be necessary to back-date your log-in for current-year journals.

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

13

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

12. Process General Ledger Standing Journals

Any Standing entries that have been set-up can be process through General Ledger update.

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

14

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

13. Run General Ledger Reconciliation Report

Before finalising the month end, you should ensure that the sub ledgers are in balance with the General Ledger.

14. Reconcile Balance Sheet Accounts that may Affect Profit Before finalizing the profit and loss report for the period, Balance sheet accounts which may contain adjustments that will affect profit should be reconciled. These accounts will include but may not be limited to:

Vehicle debtors

Stock

Floor plan

Prepaids

Accruals

Provisions Adjustments should be made to these accounts in the period they relate to. Should the reconciliations fall behind, they should be made to the period being currently reconciled. Back dating too far will mean previous reports are incorrect and the BAS will also be affected. Please refer to appendix for reconciliation recommendations.

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

15

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

15. Run Profit and Loss Reports and Review

When all transactions have been completed, a first draft profit and loss report should be run. This report should be reviewed for any unexpected variances. There may be processing errors that you could pick up in this review. If you have a valid budget, it may be useful to use the budget variance. Otherwise it may be beneficial to run the Monthly Profit and Loss by Department. This is a trend report for the year which will show if any accounts have varied on other months. Any profit and loss report can be used however. It is personal preference. Make any correcting adjustments necessary.

16. Run Month End Reports

When the period is finalised the month end reports should be run.

Profit & Loss

Balance Sheet

Trial Balance

17. Reconcile Remaining Balance Sheet Accounts

Once the accounts are finalized, all remaining balance sheet account should be reconciled to ensure accuracy. Depending on movement and volume, some accounts may be reconciled less than monthly. This is determined by internal processes. Any adjustments made as a result of these reconciliations should be processed in the new month; otherwise they will result in the month-end reports being incorrect. Please refer to appendix for reconciliation recommendations.

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

16

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

18. Run BAS Audit Report and Reconcile

Run the BAS Audit report in detail and review for any errors. This report then needs to be reconciled to the GST accounts in the ledger.

Once satisfied that the BAS audit is correct, a copy of this report should be kept on file for audit

purposes.

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

17

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

19. Perform BAS Transfer

When satisfied with the values in the GST and LCT accounts you can run the Business Activity Statement and perform the transfer. Depending on how you process transactions, the Business Activity Statement may not be reliable. Therefore check it and if it is not correct, use the BAS Audit to fill in the fields for the Business Activity Statement. Regardless of the Business Activity Statement, the GST transfer is performed from this program.

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

18

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

20. Close Accounting Period

To ensure no entries are posted when you have finalised the period, close the accounting period.

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

19

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

Appendix

Balance Sheet Reconciliations There are 2 types of balance sheet reconciliations for Units. 1) Scheduled Account Reconciliations

2) General Balance sheet Account Reconciliations

Scheduled Account Reconciliations Scheduled Accounts use References. If used correctly the references will perform the majority of the reconciliation for you. An example of referenced accounts would be stock, floor plan, holdback etc. The reference used depends on the account. Stock Account References are the stock number as is floor plan. Almost any account can be used as a scheduled account. Accruals, provisions and prepaids can be set up as scheduled accounts. It is only required that the referencing be used correctly. The requirement for a scheduled account is that there will be transactions in and out of the same reference. (E.g. Holdback). The reference may be the stock number. When the stock is brought in, the holdback account is credited awaiting the sale of the vehicle. Then the same reference is used when the vehicle is sold, clearing the reference for that holdback value. When a transaction is posted to a scheduled account it must be used consistently, otherwise the referencing will not work or will require journals to correct. The bank account is not a good account to schedule, references will never clear.

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

20

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

When reviewing a scheduled account, the references and their values make up the general ledger balance of this account. It is necessary to review and adjust scheduled accounts if they are not correct. For example, if the holdback account reference for a vehicle that has been sold, but has a balance, you will need to determine why and post an adjustment entry to correct. Ensure that you enter the correct reference to correct the reference balance within the account.

Month End Recommendations Administration Module Process Map - A600 – Month End Processes

21

Month End Recommendations for UNITS® © Auto-IT Pty Ltd | All rights reserved

General Balance Sheet Account Reconciliations General balance sheet account reconciliations are performed to ensure what is in the account should be in the account. They should explain what the account balance is made up of. There is no special requirement for these reconciliations.

Business Policy – A600-05

Reconciliation Timeline

Reconciliations must be performed in accordance with the following frequency:

Daily:

- Any cash-related account, e.g. Bank Statement, tills

Weekly:

- Deal Deposits

- Wholesale Vehicle Debtors

- Suspense Accounts

Monthly:

- Parts Returns

- Sublet Clearing

- Purchase Orders Clearing

- Holdback – accruals and debtors

- Warranty

- Factory Claims

- Cost Estimates

- Floorplan / Inventory

- BAS

- Payroll on-costs

Process Owner: Financial Controller / Dealership Accountant