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v.5 Financials: Handle Mistakes

(Course #V220)

Presented by: Bill Ballou Shelby Training Manager

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Objective

This session focuses on how to locate and fix financial mistakes using good practices and Shelby Tools. The discussion includes taking a look at common set-up and data entry mistakes, good techniques for correcting errors, and how to use various Shelby Tools in the correction process.

This session presents the following topics:

• From each of the Shelby v.5 financial modules:

o Is each financial module linked correctly to the General Ledger?

o How do I avoid common mistakes when posting transactions—“Let the modules do the work for you.”

o What are some common mistakes? Or “OOPS! I forgot.” – Shelby Tools do correct mistakes.

o Why dates and the post-to period are sooooo important

• Why are transactions missing from Bank Reconciliation?

• Posting Journal entries to the General Ledger – how often and who updates? “Watch the Filters”.

• When do I use Reverse/Copy journal entry?

• Why are the financial reports out of balance?

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Accounts Payable

Watch your company settings

The two mandatory items here are establishing your interface with the General Ledger and deciding whether to use the cash or accrual system.

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Invoice posted incorrectly

Occasions may arise that require you to change or delete an invoice that has already been finalized to the unpaid invoice file. You cannot change or delete a paid invoice. The process below describes how to undo an invoice, which removes the unpaid status allowing you to access the invoice via Invoice Processing. The invoice is then changed as required or even deleted if the invoice is no longer needed. From the Accounts Payable Home Base screen, click the Inquiries option.

Use the Invoice Inquiry Criteria screen displays to . . .

1. Select the Company to which the invoice is originally posted. 2. Select the Bank Account to which the invoice is originally posted. 3. Select the Invoices check box. 4. Select the Unpaid radio button to include only unpaid invoices. 5. Select the Vendor. 6. Click the OK button.

From the Invoice Inquiry screen select the invoice to undo. You must open the invoice in order to see the Undo Invoice button.

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Click the Undo Invoice button.

The following message displays and essentially asks the user, “Do you really want to do this?” Click the Yes button to continue.

The Post Entries to General Ledger window displays. Watch your POST-TO PERIOD and DATE OF ENTRY. Click the OK button.

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Sample – A/P G/L Undone Invoice Register

The invoice is moved back to the invoice work file ready to be changed or deleted.

REMEMBER—Any invoices that have been paid cannot be changed or deleted. However, they can be voided. If you are on a cash basis of accounting, you have to void the check.

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Adjustments An adjustment can be made to an invoice that is finalized, but not paid, and needs to be adjusted due to either an error or a credit issued. You can make multiple adjustments to an existing invoice. This procedure does not change the original invoice but adjusts the amount to be paid to the vendor. You can also use an adjustment to track a Credit Memo, or a credit issued by the vendor for defective product or services or for some other reason.

In this example sales tax is not on the original invoice and needs to be added.

On the Invoice Inquiry screen you see both the original invoice and adjustment.

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Modify 1099 information after posting an invoice

From Invoice Inquiry, 1099 information is added/changed or deleted.

1. Select the Vendor and invoice that is missing 1099 information. 2. Locate the 1099 column. Click the drop-down icon and select Miscellaneous. 3. Once selected, click the OK button and close inquiry. The 1099 information is now

added.

If the invoice has multiple lines of distribution and one line has incorrect 1099 information, click the drop-down icon and select None.

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You must have update rights to Modify 1099 Status within security to make this change.

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Add/Change a Project Code after an invoice is finalized Using the same instructions that corrected the 1099 information, locate the Project column and add or change your project. A warning is displayed which indicates that correcting the project does not affect any journal entries in the General Ledger. Go to the General Ledger to correct projects there.

Void a check correctly 1. Click the Search icon to select the Vendor. 2. Enter the Check # of check to void. 3. Enter the Check Date or use the Search icon to select the date (to auto fill the date and

amount). 4. Enter the Amount of the check (if not auto filled from the Search selection). 5. Select the check box to Keep Detail Lines as unpaid. (LET US TALK ABOUT THIS!) 6. Click the Add to Grid button.

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When you click Add to Grid, you receive this message: Do you really want to do this?

If bank reconciliations are already finalized for prior periods, void the check in the current period. You can also add a description for this entry (optional).

Outstanding AP invoices do not balance to the General Ledger

Why?

1. Incorrect invoice date 2. Invoice posted to wrong period 3. Check date incorrect 4. Journal entries not posted 5. A manual journal entry posted to the Accounts Payable GL account

Dates and post-to period MUST follow the Shelby Rule. When using Accounts Payable, you

must make the transaction date (invoice date or check date), posting period, and entry date all fall within the same month.

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Payroll

Employer Information – Make sure your General Ledger links are correct. Various steps are required in order to begin using Payroll. Company and Account information is set up in General Ledger first. Check your GL links.

Compensation and Deduction information ALL the major Compensation and Deduction types are set up for you. It is recommended (PLEASE) that you use these existing types and only add new ones if absolutely needed (last resort). Certain information on some of the existing compensations/deduction types cannot be accessed or changed. The most common Compensation type is “Salary/Hourly” (regular wages). Use the predefined “Salary/Hourly Regular Wage” compensation type for all employees, including ministers. You do not have to create a special compensation type for ministers. Do not confuse “Subject to” with actually withholding taxes. Ministers are subject to Federal and State taxes even though you may not be withholding them. Do not worry about the “Subject to Social Security and Medicare” option for a minister. By selecting the “Check here if Minister” check box when setting up the minister’s record, the withholding of Social Security and Medicare taxes is overridden.

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Misclassifying Pastors Make sure the “Check here if Minister” check box is selected on the Employee Information screen if the employee is a minister. Selecting this check box causes an override of the compensation being subject to Social Security and Medicare taxes. No Social Security or Medicare taxes are withheld on a minister. It exempts ministers from federal withholding (Minister can opt to have voluntary federal/state withholding.). It also allows the use of compensation types that pertain to ministers only, such as a housing allowance.

Taxes – make sure the Filing Status for the Minister is Exempt – Do not use Tables

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State or Local Taxes missing (including Pastors) Make sure that ALL employees have State/County/Local Taxes included on the Tax tab, if required. This puts the amount of compensation that is subject to State Tax in box 16 and the amount of state withholding in box 17 on the employee’s W2.

SHELBY TOOLS – Add State and Local Taxes If the amount of compensation is not included in the amount subject to state and local taxes (basis), correct it using the ADD STATE AND LOCAL TAXES utility. From the Shelby dashboard select the General tab and then the Utilities link. From the Utilities Home Base select the Shelby Tools option.

THIS UTILITY ONLY AFFECTS THE AMOUNT SUBJECT TO STATE AND LOCAL TAXES (BASIS).

Something to think about: Prior quarters–how are they affected? You might want to consider issuing a manual check.

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Payroll Dates Need Correction

SHELBY TOOLS -> Change Payroll Check Date – Run this utility to change a check date on payroll checks. This tool changes EVERY check with that date.

THINK: WHICH CHECKS MIGHT HAVE THE SAME DATE??

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Correcting hours entered prior to running checks After you complete the process of entering hours for hourly employees, the Employees to Pay screen displays. On this screen verify and make changes to each employee, if needed. To view the paycheck details or make changes to an employee’s pay, double-click on the employee to change. The Add/Change Time Card Information screen displays for you to update or delete compensation, non-cash, and deductions as well as correct hours. What other changes might you need to make?

Void a check correctly Two methods are available for voiding a previously written check: Void Check or negative Manual Check.

The method you choose depends on whether the tax deposit has been made or not.

If the tax deposit has NOT been made, then use the Void Check option under Utilities.

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If the tax deposit HAS BEEN made, use the Manual Check option to enter a negative check using the same check number as the original and use the date of your next payroll. This results in your Federal Tax deposit being properly calculated. When finished, the net amount of the manual check is the same as the original check.

COMPENSATION tab

DEDUCTION tab

TAX tab

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Housing Allowance Issue

Here is a true scenario from one of our training team – Trainer received a call in early January a few years ago from ABC Church. In October of the prior year the Church Board approved the Pastor’s request to adjust his housing allowance for the remainder of that year. There were four remaining payroll periods for that year. The payroll department adjusted the housing allowance manually when running the November 5 payroll. After the November 5 payroll was run, the payroll department forgot to change the employee’s (Pastor’s) payroll information to reflect the change in the housing allowance the Church Board had approved. The next three checks the Pastor received that year were incorrect and did not reflect the approved housing allowance change for the remainder of the year. Sooooooo…… just dealing with the facts, the Pastor’s earnings for the last three payrolls in 2013 needed to be corrected. ABC Church needed a solution.

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Using the Manual Check Utility, distribute a negative $1,500 to Pastoral Salaries and a positive $1,500 to Pastor Housing. The trainer dated the manual check for December 31 and gave a check # of 000000.

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GOOD TIPS!

Use only existing compensation and deduction types. Only add new ones if absolutely

needed. (LAST RESORT)

What drives payroll reports?

Watch your quarterly reconcile for 941 and State reports. Make sure the totals for your quarterly reports equal your W2 totals before you print

your W2s.

Dates and post-to period must follow the Shelby Rule. When using Payroll, make the check date the date you want all records and reports to use. The check date is also used when choosing the posting period and entry date.

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Contributions

The Change Purpose utility

This is useful when you post giving to the wrong purpose

Use the Change Purpose utility to change all giving posted incorrectly to one purpose, starting at a certain date, to the correct purpose. Keep in mind that this is not a date range. All giving after the begin date is transferred to the new purpose.

Select the purpose from which you wish to remove the giving (Old Purpose) and choose the purpose to which you wish to post the giving (New Purpose). In this example 2018 Pledge gifts were posted to 2017 Pledge Purposes in early January 2018.

Undo incorrect contributions entry This utility enables you to undo Contributions saved to the wrong Contributor or Purpose. It is only used when the Contributions Summary radio button is selected on the Contributions Inquiry screen. This utility completely removes the transaction from contributions history. From the top menu of the Contributions Inquiry screen select Utility -> Maintenance -> Undo Contribution.

If a contribution is posted incorrectly, the Undo Contribution utility moves a posted contribution back out to the Contribution Processing area where it is changed and finalized correctly. It also creates a journal entry to reverse the income account balance by the amount of the original contribution.

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Bounced Check The donor’s check is returned by the bank. WHAT DO YOU DO?

When a check or credit card contribution is returned for insufficient funds or credit card issues, you have two options: Undo the original contributions entry or enter a negative check. IT IS YOUR CALL! If you desire to keep a trail of the transaction in contributions history, then create a new batch with a negative dollar balance. Enter:

1. The date the check or credit card charge is returned 2. The original check number or type of credit card 3. A negative amount 4. The original purpose code(s)

Use the Memo tab to further document the reason for the negative transaction.

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Transferring Contributions The Transfer Contributions option is used to transfer all contributions from one individual’s record to another when:

• Contributions are posted to the wrong individual • Contributions history needs to be transferred to a surviving spouse – when and why • What about “The Estate of”? • No further need exists for keeping contributions history for an individual – need to

remove from GlobaFILE – transfer to “Removed from GlobaFILE” person. From the top menu of the Contributions Home Base screen select Utility -> Maintenance -> Transfer Contributions.

1. Choose the Name to Transfer From or enter envelope number. 2. Choose a Starting Date from which the transfer starts if correcting from a specific date.

If no date is entered, ALL contributions are transferred. 3. Choose the Name to Transfer To or enter envelope number. 4. Select the Delete Pledge(s) Instead of Transferring check box if desired. If selected, the

pledges and any references to those pledges are removed.

Click the OK button when finished.

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SHELBY TOOLS – Change Contribution Dates Use this utility to correct the contribution dates if you find a WHOLE batch is posted to the WRONG date.

This changes all contributions with that date. THINK FIRST ABOUT WHAT YOU ARE DOING!

1. Enter the date that was wrong. 2. Enter the date that you want it to be in New Date. 3. Decide if you want All Batches or Specific Batches.

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My Contributions reports do not balance to the General Ledger! Gift Dates are used for all Contributions/DonorGift reports.

Post contributions to a gift date that corresponds to the month (period) when the gifts are received. Make sure the giving date matches the posting periods in the General Ledger.

The deposit date comes from the Date of Entry, not the Batch Date.

Post all the batches for a given Sunday at the same time so the General Ledger journal entry and the Bank Reconciliation deposit amount match the bank deposit amount.

Create a “Loose Plate Offerings” record to handle gifts that are loose cash.

How are you handling your online gifts posting (yearend/time difference)?

Make sure each purpose is linked to the correct Fund, Bank Account, Income Department, and Income Account. If you use funds, enter the correct fund for the purpose. TRUST THE SYSTEM!

FAITHFULLY run and double check the edit list to find errors and correct them before posting.

CHECK YOUR WORK! CHECK DATES! UPDATE CONTRIBUTIONS BATCHES!

Run reports weekly to confirm that you are in balance with the General Ledger.

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Dates and post-to period must follow the Shelby Rule. When using Contributions or Donor Gifts, select the contributions date you want all records and reports to use. The date of entry is the date of the deposit used in Bank Reconciliation. You must make the gift date, posting period, and date of entry all fall within the same month (period).

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Accounts Receivable

Revenue Centers and Item information Make sure links to General Ledger are correct.

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Change/Delete Unpaid Invoice Occasions may arise that require you to change or delete an invoice that is already finalized to the unpaid invoice file. Unpost Invoice removes the unpaid status allowing you to access the invoice via Invoice Processing. The invoice is moved back to the invoice work file where the invoice is changed as required or even deleted if the invoice is no longer needed.

Any invoices that have payments applied cannot be changed or deleted.

From the Accounts Receivable Home Base screen select the Inquiries option.

On the Selection Criteria window:

1. Select the Customer.

2. Select the Invoices radio button.

3. Select the Open Invoices Only check box.

4. Select the Removable Invoices check box.

5. Click the Ok button.

Once the record is opened, select the invoice to unpost and click the Unpost Inv button.

Now that the invoice is moved back to the invoice work file, it is ready to be changed or deleted.

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Void a Payment Any payments that are entered and finalized within the Accounts Receivable module (e.g. a returned check) can be voided. This process makes the necessary adjustments in the General Ledger work file, Accounts Receivable, and Bank Reconciliation.

If you have several payments to void, the program creates a journal entry to back out each one. If the payment you are voiding has multiple lines of distribution, the void reverses each line.

Possible reasons outstanding AR invoices do not balance to the General Ledger: 1. Incorrect invoice date 2. Invoice posted to wrong period 3. Incorrect check date 4. Journal entries not posted 5. A manual journal entry posted to the Accounts Receivable account

Dates and post-to period must follow the Shelby Rule. When using Accounts Receivable, you must make the transaction date (invoice date or check date), posting period, and entry date all fall within the same month (period).

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Bank Reconciliation

Get the opening balance and outstanding beginning items correct When you set up an existing bank account in the Bank Reconciliation module for the first time, you need to set the beginning balance for this account using the ending balance from your last reconciled bank statement as your opening balance. (Hint: You only need to do this once.) If you have multiple funds and reconcile to only one physical account at the bank, then define the main bank account in the main general fund. Each bank account number in each fund must be the same for this one physical bank account. You reconcile to ONLY ONE bank account in Bank Reconciliation. TRUST THE SYSTEM.

In your GL make sure you use the same account number across funds.

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Next, key in items that are outstanding as of your last bank reconciliation, from your previous system, or manual records. Key check/withdrawal/deposit under Add/Change Outstanding Items. This process puts these items into the system to be reconciled.

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Missing transactions Check Express is a useful tool for recording transactions to your General Ledger and Bank Reconciliation such as:

• Miscellaneous Deposits – Interest or deposits that do not originate from other financial modules

• Miscellaneous Withdrawals – Bank charges, credit card fees, auto withdrawals,

electronic funds transfers, or transfers between bank accounts

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Creating bank reconciliation entries from manual journal entries Once this option is selected, each time you post a manual journal entry that affects an account that is already set up in Bank Reconciliation, the system creates an outstanding item(s) entry for each related manual journal detail line. If a checking account is listed three times in one manual journal entry, the system creates three corresponding items in Bank Reconciliation.

SUGGESTIONS

Check Express creates a better audit trail than a Manual Journal Entry. Try to avoid a Manual Journal Entry that affects an account that is set up in Bank Reconciliation.

Monthly Bank Reconciliation

When you reconcile, the Difference should equal zero, and the Ending Balance match the ending balance on your bank statement. (Questions: What is the correct date you use for the Statement Date? Do you balance to the General Ledger?)

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Monthly Bank Reconciliation Reports Note the General Ledger balance.

All three Bank Reconciliation reports should be run each month. (This does not mean just checking off items that have cleared the bank.)

1. All Items report – Hint: should balance to General Ledger!

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2. Cancelled Items report – Hint: should match your bank statement!

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3. Outstanding Items report – ending Bank Statement balance reconciled to General Ledger balance

For Bank Reconciliation reports to balance to the General Ledger, the General Ledger posting period and the check/withdrawal/deposit date MUST MATCH. General Ledger account balances are only updated when a journal entry is posted. Make sure you use the correct Bank Statement date and correct Bank Statement ending balance when reconciling.

Check for consistent dates.

CHECK FOR CONSISTENT DATES!

CHECK FOR CONSISTENT DATES!!

Make sure all items on your bank statement are included in both your General Ledger and as outstanding items in Bank Reconciliation.

Watch online/merchant deposits!

Look for unposted journal entries!

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General Ledger

Check your Company Setup Select the Require Journal Date and Period Match check box. If the box is not checked, you can finalize journal entries where the Date and Period do not match. You do not receive an error message.

Avoid manual journal entries when possible. Allow other financial modules to feed transactions to your General Ledger (AP, AR, CN, CK, PR, FA). TRUST THE SYSTEM!

Update journal entries Do this daily, weekly. Clear filters before updating.

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Make sure that journal entries are posted to the correct period Before you update journals LOOK THEM OVER to make sure the dates fall within the Period to Post to. Journals that do not match cannot be finalized if you have checked the box under Company Information to Require Journal Date and Period Match.

The Edit Report shows errors.

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Reverse/Copy a journal entry Why, when, and what period

In this example the Credit Card Entries are posted to the wrong Period. Reverse from the wrong period and copy to the correct period using the same date of 03/16/18.

Why financial reports are out of balance:

1. Missing Closing Account 2. Total lines are set up incorrectly. 3. Opening Balances have been changed and are out of balance.

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Q&A

Class Discussion

Bill has been a part of the Shelby training team for over 19 years and trains on both v.5 and ShelbyNext. He greatly enjoys working with the gifted trainers on his team. Bill brings a vitality and life to training software and uses humor to help customers feel at ease with new ideas. He has helped dozens of churches find solutions to tracking financial and gifts information so they can do ministry more effectively. While Bill has been known to geek out over finding a new trick in Excel or in MS Reporting Services, his real excitement comes at that moment in training when he can see that a trainee has made a key connection and has that "ah-ha" moment light in his or her eyes. Bill worked for almost twenty years on staff at various churches, so he has an appreciation for the questions and challenges of many of our users.

Bill Ballou Shelby Training Manager bill.ballou@shelbyinc.com