FNSACC312 Administer subsidiary accounts and ledgers Assessment Guide
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1. Report
Instructions
You will need to research information to assist with your responses for this task.
What you will need to complete this task
- Research materials such as books, internet, magazines, workplace documentation etc.
- Access to legislative and regulatory documentation relevant to own state or territory.
You should use a variety of sources to gather information including training resources, workplace policies and procedures (if you are able to access these) and government and industry bodies.
You are required to provide information about the following points and complete both tasks. You must prepare a written response to each point, which can be supported by example documentation as required. Ensure material is referenced appropriately.
Word limit
To complete this activity, you are required to submit a written response of a:
For this task you must research each of the following topics and complete a basic report on your findings. You may reference online user guides for your chosen software and accounting information resources.
1. Identify and describe the key features of:
a. Debits and credits
Business transactions are events that have a monetary impact on the financial statement of an organization. When accounting for these transactions, we record numbers in two accounts, where the debit column is on the left and the credit column is on the right.
- A debit is an accounting entry that either increases an asset or expenseaccount or decreases a liability or equity account. It is positioned to the left in an accounting entry.
- A credit is an accounting entry that either increases a liability or equity account or decreases an asset or expense account. It is positioned to the right in an accounting entry.
Whenever an accounting transaction is created, at least two accounts are always impacted, with a debit entry being recorded against one account and a credit entry being recorded against the other account.
The totals of the debits and credits for any transaction must always equal each other, so that an accounting transaction is always said to be “in balance.” If a transaction were not in balance, then it would not be possible to create financial statements. Thus, the use of debits and credits in a two-column transaction recording format is the most essential of all controls over accounting accuracy.
b. Accounting systems
Some of the key features of a good accounting system are:
- Accounts payable & receivable
- Financial closure
- Project accounting
- Time and expense capturing
- Fund accounting
- Inventory management
- Data sharing
- Security
2. Describe how bad or doubtful debts are identified.
A bad debt is an account receivable that has been clearly identified as not being collectible. This means that a specific account receivable is removed from the accounts receivable account, usually by creating a credit memo in the billing software and then matching the credit memo against the original invoice; doing so removes both the credit memo and the invoice from the accounts receivable report.
A doubtful debt is an account receivable that might become a bad debt at some point in the future. You may not even be able to specifically identify which open invoice to a customer might be so classified.
3. Describe the key requirements of:
a. Legal systems and procedures
Legal Requirement means any federal, state, local, municipal, foreign, or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling, or requirement issued, enacted, adopted, promulgated, implementedor otherwise put into effect by or under the authority of any Governmental Body.
There are two main types of legal system in the world, with most countries adopting features from one or other into their own legal systems, Common Law and Civil law.
A legal system and procedure should be:
- Efficient
- Measurable
- Up to date
b. Relevant legislation or regulations
The main requirement of a legislation is to prepare the validation of a law through the process. It includes evaluating, amending and voting on proposed laws. It is used to communicate values, judgement, and proposal purpose.
c. Industry codes of practice
The key requirement of industry codes of practice is to provide practical guidance on how to comply with a general or specific duty. An industry code of conduct will set out a structure for consistence through arrangements e.g.
- Risk Management systems
- Applicable rules and principles and practices
- Dealing with objections with plans
- Outlined process for periodic review of the code
4. Outline the key requirements of your organisational policy and procedures relating to reconciling and monitoring financial accounts.
Reconciliation of financial accounts is comparing the financial records kept by the company with the external financial accounts to check for any errors and ensure that they are corrected. Organisational policy and procedures play a role in reconciling and monitoring the accounts. They also act as a source of reference in reconciling and monitoring the accounts. Most of the time these policies and procedures provide a clear guideline on how accounts should be reconciled and monitored. The procedures show how the accounts are monitored and how the errors are reconciled if there are any. A key feature of a procedure is the establishment of responsibility, issue bills to customers, pay invoices from suppliers etc.
5. Describe measures to collect monies and features of recovery plans
The most adequate measure of collecting monies owing is to document everything in order to have proof of purchases and to know your rights as a business.
Some good features of recovery plans are:
- Be assertive
- Negotiation
- Follow-through
- Communication
- Tackle the problem from various angles
6. What are the key features of debt recovery plans?
Normally when the arrangement with your customer is not honored or it keeps defaulting, the collection process will continue accordingly. The main features of debt collection recovery plans are:
- Telephone Call
- Make sure that you are fully aware ofall of the relevant documentation surrounding the debt before you make the phone call.
- A Letter of Demand that serves several purposes
- It warns the debtor of the company’s intention to commence legal proceedings unless payment is made
- It provides the debtor with one more opportunity to pay
- The letter is a document which might be tendered in evidence during court proceedings as written proof of the company’s claim of the debt owed to it.
- It provides evidence of the attempts the company has made to settle the matter.
- Legal Action
- Legal action is the last resort available to your company to recover their money and it needs careful consideration before it is undertaken.
2. Portfolio
Instructions
Now that you have completed the unit of competence FNSACC416 Setup and Use a Computerised Accounting System, FNSACC311 Process financial transactions and extract interim reportsand the requirements for this unit of competence FNSACC312 Administer subsidiary accounts and ledgers and attempted the “Try this for yourself” activities provided in each unit you will have created a comprehensive company file.
For this assessment you will again be using MYOB AccountRight or MAC Account Edge. You are to create and submit the following documents and reports using your chosen software.
The following task must be conducted in a safe environment where evidence gathered demonstrates consistent performance of typical activities experienced in the accounting field of work and include access to:
- Office equipment, technology, software and consumables required to reconcile and monitor accounts receivable data systems
You are to complete the following tasks to demonstrate your ability to administer, reconcile and monitor subsidiary accounts and ledgers in accordance with industry compliance requirements and organisational policies and procedures by creating and curating a range of documents and submitting these with this assessment.
Tasks
1. Review the accounts receivable requirements through completion of the following actions:
a. Check the receipts entered that you have entered into the accounts receivable system to confirm their accuracy, consistency and completeness, identifying and accurately recording the incorrect entries according to type and source of receipt.
b. Identify and investigate discrepancies between monies owed and monies paid according to organisational policies, procedures and guidelines.
c. Record these investigations, including the outcome of your investigation.
d. Amend the receipts entered into the accounts receivable system, according to the procedures provided in your Element Reading and Review Activities.
Provide evidence of all correct and amended receipts in the provided excel template. FNSACC312 Portfolio Task 2.1 – Ageing of Accounts Receivable Report Template and submit the excel report with this assessment.
2. Complete the following steps to identify bad and doubtful debts:
- Review the debtor ledger, identifying and recording outstanding monies, and seeking further information where required
Liaise with the debtors to verify the status of bad and doubtful debts. Document the process for these liaisons and submit with this assessment.
Accurately complete the reporting procedures and required documentation for bad and doubtful debts, according to the organisational policies and guidelines by completing the “Bikes Incorporated Collections Policy and Legal Action Template” and specifying the amounts and trading terms in the template. Submit your completed Collections Policy and Legal Action with this assessment.
3. Perform the following steps to review client compliance with the terms and conditions and to plan recovery actions, in accordance with the organisational policies and operating procedures:
In this task you will create a Debt Recovery Action Procedure that details the following actions:
3.1 The process of:
a. Identifying the clients who are in default of trading terms.
i. Contacting the identified clients, and promptly and courteously make satisfactory arrangements for the payment of outstanding monies. Document the arrangements made.
ii. For monies owing that constitute breach of organisational credit policy, actioning the organisational policy and procedures. Documentation of these clients, their breach and the actions implemented.
iii. Reviewing the previous activities and communication with clients to establish if the follow-up procedures were adequate and determine whether the usual organisational recovery avenues have been exhausted. Document these review activities and the outcomes determined.
iv. Pursuing debt recovery or to initiate legal action, with measures completed in line with organisational policies, guidelines and timeframes
Submit your Debt Recovery Action Procedure with this assessment.
4. Prepare reports and file documentation as required through completion of the following actions:
a. Prepare reports that document the accounts receivable, debt recovery type and cause, and debt recovery plan, and distribute these to the supervisors, managers, and other designated parties
b. File the documentation and reports according to organisational policy and procedures. Document or provide the policy/procedures used for file storage.
Create an Aged Receivables Detail report that aligns with the bad debts ageing as per your Collections Policy and submit it with this assessment
5. Distribute creditor invoices for authorization through completion of the following steps:
a. Identify invoice discrepancies, and investigate, rectify, encode and record the invoices correctly.
b. As required, request authorization for payment from designated personnel.
Create and print a Summary Trial Balance
This report to identify incorrectly entered amounts. When reviewing this report, check for:
- entries that seem unusually large or small for the account that has been affected
- debit amounts for accounts that normally have credit entries, and vice versa
- unusually high or low ending balances
- an unusually high or low number of entries for a specific account.
Submit your Summary Trial Balance with this assessment.
6. Complete the following steps to remit payments to creditors, in line with the organisational guidelines:
a. Draw up and ensure the authorisation of cheque requisition.
b. Collect and accurately record the data relating to creditor details and amounts paid, and prepare this information in a report for ratification by management
c. Prepare the creditor payment, and accurately prepare the journal to record the payment
Create and print and Aged Payables Report and submit it with this assessment.
7. Reconcile any outstanding balances through completion of the following steps:
a. Where required, obtain statements of outstanding balances from suppliers.
b. Reconcile the balances outstanding to invoices received. Document this reconciliation.
Undertake to review your purchase and submit a screenshot of the report: Analyse Purchases. This report displays your company’s monthly purchases.
Short Answer Questions
Instructions
Answer the questions below by writing in the space provided. If you require more space, use a blank sheet of paper. Alternatively, you may like to use Microsoft Word and print out your answers to each question.
What you will need
- Research materials such as books, internet, magazines, workplace documentation etc.
- Access to legislative and regulatory documentation
- Your Learner Guide for this unit of competence
Answer the following questions with written responses.
1. What do you need to check the receipts entered into manual accounts receivable system for?
| Receipts entered into manual accounts receivable system must be checked for accuracy, consistency and completeness. |
| All receipts entered in accounts receivable need to be 100% right and complete. |
2. What are three examples of incorrect entries or discrepancies to identify and make a record of, according to the type and the source of receipt?
| Sales or supply invoices underpaid or overpaid |
| Invoices paid twice |
| Incorrect bank charges |
| Invoice discrepancies are normally rectified by contacting the other party. |
3. What is it essential to apply when investigating discrepancies identified between monies owed and monies paid?
| It is important that you identify and investigate discrepancies between monies owed and monies paid, according to your organisation’s relevant policies and procedures. You must be thoroughly familiar with your organisation’s policies and procedures relating to reconciling and monitoring financial accounts, including your organisation’s credit policy. You must know where these key documents are located, how to access them, and how you are expected to apply them in different situations in your day-to-day work. |
| The first step in ensuring data accuracy- and, therefore, in identifying and investigating discrepancies is the checking of source documents. Documents should show all relevant details for a transaction. |
4. Briefly discuss the amending of receipts entered into manual accounts receivable system
| When a debtor makes a payment, it is necessary to update the ledger to reflect the changes/payment. |
| Sometimes debtors will make payments by the end of the period in which they are
due, but the payment will not be receipted until the next period, that isif the payment is sent through the mail or is a direct credit shown on a bank statement after the close of the accounting period.Enter the payment into all the relevant ledgers. |
| The debtors ledger mirrors the debtors entries in the general ledger. |
| The debtors ledger shows monies owing by the debtor while the general ledger shows amounts owed by transaction date. |
5. Why is it important to verify bad and doubtful debt status through liaison with debtors?
| A debt that is not collectible to the creditor is considered a bad debt.
A doubtful debt is a debt which the organisation considers might possibly not be paid. |
| Once you have checked and confirmed all supporting documentation, it is an acceptable practice to then verify these debt with the relevant debtor in order to help portray an accurate financial statement as the bad debt expenses can be reported as an operating expense on the Income Statement. |
6. Explain the importance of completing the reporting procedures and required documentation for bad and doubtful debts
| It is important to complete reports for bad and doubtful debts as it is a way of ensuring that the financial position of the Company is accurately reported as otherwise the accounts receivable would be overstated. |
| Bad and doubtful debts are treated as part of the double entry bookkeeping system in the same way as any other transaction would be. |
| When you decide that there is no probability of collecting an overdue amount and declare it a bad debt, you need to change the accounts to reflect this.
Bad Debts: o When you decide that there is no probability of collecting an overdue amount and declare it a bad debt, you need to change the accounts to reflect this. o To do this, you need to reduce the balance of that customer’s account to zero. o The next step is to reflect this expense in your accounts and transfer the balance to the profit and loss account. o The entries to reflect this expense in your accounts are: o First of all, you need to debit the bad debt account o Next, you need to credit the customer’s account Doubtful Debts: o You now need to transfer this information to the final accounts. o To do this, you need to debit the Profit and Loss account. o To complete the accounting treatment, you need to credit the bad debt account. o The entries to reflect the doubtful debt in your accounts are: o The first step is to debit the profit and loss account. o You then have to make a credit entry in the provision for bad debts account. |
| It is important for management to receive regular reports on accounts receivable because of the significance of these accounts. Problems of bad or doubtful debts should be highlighted, and the success of collection efforts should be part of the reporting cycle. Reports are generally provided on a monthly or weekly basis depending on the size of the organisation. |
7. What will be used to identify clients in default of trading terms?
| Tools that will be used in identifying clients in default of trading terms could be things like:
o Organisation’s policies and procedures o Their operating system o Their credit policies o Payable aged trial balance |
8. What are the standards that you will need to adhere to when contacting clients in default of trading terms promptly and courteously to make satisfactory arrangements for the payment of their outstanding monies?
| Company policy and procedures must be followed at all times |
| Legislative guidelines and codes of practice must be followed |
| EFT code of conduct |
| Privacy act |
| Relevant code of practice (banking, insurance etc.) |
9. Discuss an organisational policy/procedures that could be implemented for monies owing that constitute breach of organisational credit policy
An organizational policy/procedure that could be implemented for monies owing that constitute breach of organizational credit policy are:
|
10. What types of information could be obtained from a review of the previous activities and of communication with clients?
| Records could be collated to give information about:
o Number of customer contacts o Reasons for the contacts o Any difficulties encountered o Calls that either required or did not require escalation o Levels of customer satisfaction o Levels of customer service |
11. What do you need to ensure when preparing and distributing reports that document accounts receivable, debt recovery type and cause, and debt recovery plans?
Always ensure you complete these records in a timeframe that is in line with your organizational policies and procedures. When preparing and forwarding reports:
|
12. What types of accounting documentation will need to be filed, according to the organisational policies and procedures? List five examples
| Customer Invoices |
| Unpaid supplier invoices |
| Paid supplier invoices |
| Bank statements |
| Payroll records |
13. What documentation would you require to identify, investigate and rectify creditor invoice discrepancies?
You will potentially require the following in order to identify, investigate and rectify creditor invoice discrepancies:
|
14. Who are the designated personnel you might request the authorisation for payment from?
| Policies and procedures for authorisation to make payments will be contained in written documentation which should be available for relevant staff members to access. Employees must be aware of the policies, procedures, and guidelines of the organisation.
You may find that authorisation to make payments is often set for different amounts. For example, a supervisor might be able to authorise payments up to $1,000. A manager might authorise amounts up to $10,000while a director will perhaps be required to authorise amounts in excess of this. |
15. What information will need to be drawn up on cheque requisition forms?
| Current date |
| Payee – complete name and address of individual/company to be paid |
| Payment description – general description of what is being paid |
| Account to be charged |
| General ledger account number |
| Invoice number |
| Amount (incl GST) |
| Signature of employee generating cheque requisition and the authoriser |
16. Where would you record data collected relating to creditor details and amounts paid?
| Accounts payable schedule – the accounts payable schedule indicates the amounts owed for goods or services received from a supplier |
| Accounts payable subsidiary ledger |
| You will need to enter the initial transaction into the trade creditor journal, normally from the invoice |
17. What must be considered when preparing creditor payments?
| Preparing creditor’s payments in an accurate manner must be performed in a timely manner. Your organisation will have expectations regarding accuracy and timeliness of application to ensure a high level of satisfaction and to ensure that processing is carried out in an efficient and accurate manner.
Employees must ensure that they are competent in processing manual or electronic transactions within the necessary time requirements of their role within the businessand that they are always completed accurately. |
18. Where should creditor payments be recorded?
| Creditor payments should be recorded in the balance sheet under the current liabilities account |
19. Who could you access to obtain statements of balances the organisation has which are outstanding?
| You could contact the company supplier/provider. It could be the Account Manager or Financial Manager. |
20. Briefly explain how to reconcile balances outstanding to invoices received
| This is the process that compares multiple sets of records, to ensure that both records match to each other. Reconciliation is essential, as it used to ensure that money leaving accounts, matches to the actual spending of the business.
You will need to check and reconcile invoices and payments. When you download or receive a statement, you will need to reconcile the actual payment against the statement. It should match!
Reconciling procedures must be done on a regular basis and should be a priority for your organisation. |
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