Virgo Accounts User Manual Appendix D

D. GUIDELINES FOR SETTING UP OPENING BALANCES

Setting up the opening balances on any new computerised accounting system requires careful thought; Virgo Accounts is no different in this respect. These notes are offered for guidance only and should not be taken as prescriptive. If in doubt consult your accountant as to what is best in your circumstances. There are two main options:

Not to input opening balances (other than for the client accounts and client and office cashbooks), and to produce year-to-date figures by combining the manual system and computer system figures. This is the easier option and is the one we recommend if you are not reasonably experienced at book keeping. To take the simple option, follow the steps in sections A and E below.
To input figures that will allow the computer system to recreate the state of the various accounts, analysis of expenditure, debtors’ balances, etc. as at the start of the financial year. To enter full balances, follow the steps in section B below and, optionally, the steps in section C and D to set up the fixed asset balances and depreciation to date. In either case, also follow the steps given in section E.

A. Simple Balances

A.1 Client Accounts

Using Post Client Receipt, post the balance for each client matter on which client money is held with a posting narrative of "Opening balance".

A.2 Office Accounts

Using Post Office Receipt if you have a positive office balance, or Post Office Payment if the office account is overdrawn, post a value equal to the opening balance against the Current account (L520); enter a VAT amount of * to ensure that this transaction is not included in your VAT report.

B. Full Balances

B.1 Client Accounts

Using Post Client Receipt, post the balance for each client matter on which client money is held with a posting narrative of "Opening balance".

B.2 Office Accounts

B.2.1 The principle used here is to start with the opening balance on the office account at the start of the financial year and then post a series of transactions that will show the movements on each account to date. This does not involve posting each transaction that has occurred throughout the year, but you will need to input all unpaid disbursements, all unpaid bills and all unbilled disbursements.

B.2.2 Before starting you will need the following information:

a) for bills paid to date, the total value of fees, disbursements and VAT as separate figures;

b) a list of all unpaid bills giving the bill number, fees element, disbursements and VAT for each bill;

c) a list of all matters that have unbilled disbursements showing the net and VAT amounts for each matter;

d) the total value of VAT paid to HMRC;

e) the value of office expenses for the year to date for each type of expense - a list of nominal accounts set up may be obtained by running a Trial Balance report; you will not need values for depreciation, bills written off or non-recoverable expenses;

f) the opening balance for each office account at the start of the financial year.

B.2.3 Procedure

a) using Post Office Receipt if you have a positive office balance, or Post Office Payment if the office account is overdrawn, post a value equal to the opening balance at the start of the financial year against the Current account (L520); enter * for the VAT amount;

b) using Maintain Client Details and Maintain Matter Details create the following:

a dummy client, say ZYX, and a matter, number 1, for this client, called say "Opening Balance Matter"
each client and matter for which there is an unpaid bill or an unbilled disbursement;

c) using Post Disbursement, post the following:

to client ZYX, matter 1, a disbursement (net and VAT amounts) for the total value of disbursements billed and paid to date
for each bill rendered but not paid, post to the appropriate client matter a disbursement for the value of disbursements included in the bill; enter a narrative which includes the bill number for later reference
for the appropriate client matter, each disbursement that has not yet been billed
if you are setting up full opening balance and the outstanding bills contain disbursements that will not be paid until the bill is paid, do not post the disbursement. Ensure, however, that the disbursement value is included in the bill value - see (e) below. This will create a negative entry for unrecovered disbursements on the profit and loss statement, which will be reversed when the disbursement is posted (after the bill has been paid);

d) using Post Bill, post a bill (number 1) for client ZYX, matter 1 with:

fees billed = the fees element of bills rendered and paid to date
time removed = zero
disbursements = disbursements included in bills rendered and paid to date
VAT amount = VAT included in bills rendered and paid to date
unpaid prof disb = N

select option D, disbursements, to display all disbursements for client ZYX, matter 1; select option M, mark/unmark, and mark all the disbursements other than the single item representing disbursements billed and paid, as W/O = N to ensure that they are not written off - leaving the disbursements billed and paid as W/O = Y; select option U, update;

e) for each unpaid bill use Post Bill to post details of the bill; post it for the relevant client matter, each time entering the fees element, disbursements and VAT as shown on the original bill, and time removed as zero; select option D, disbursements, and mark all disbursements other than the one item representing the disbursements included in that bill as W/O = N; select update;

f) using Post Bill Receipt, post a receipt against bill number 1 to the number 1 cashbook with:

net amount = total fees and disbursements billed and paid by clients
VAT amount = VAT included in bills rendered and paid to date;

g) using Post Office Payment, post payments for each category of expense, the net value being the total (gross) value of expenses for that category to date; post this to the appropriate expense account (E010, E120 etc); ensure that the VAT amount is entered as *;

h) using Post Office Payment, post a payment with the net amount equal to the amount of VAT paid to date to HMRC using account L040; again enter the VAT amount as *;

i) you should now have up-to-date balances for all income and expense accounts, your bills rendered and outstanding and your disbursements booked and outstanding; run off a Trial Balance and a Financial Status report for reference.

B.2.4 If you wish to create the balances for fixed assets and depreciation at this stage, follow the steps given in sections C and D below; otherwise run Period End Processing (on the Miscellaneous Options menu) to set to zero the income and expense balances for this period.

C. Assets

a) using Post Office Receipt, post a receipt to the office cashbook for the total value of all assets to the Capital account (L510); enter a VAT amount of * to ensure that this transaction is not included in your VAT report;

b) using Post Office Payment, post a payment for each asset type to the appropriate asset account (A010, A020 etc), again with the VAT amount entered as *;

c) ensure that the total value of payments is the same as the receipt posted in (b) above.

D. Depreciation

Using the Journal Entry program, transfer the amount of depreciation for each asset type from the appropriate asset account to the Depreciation account (E320).

E. In All Cases

In all cases, when you have finished entering the opening balances, perform the following steps:

a) run the VAT report (on the Accounting Reports menu) and delete the VAT file;

b) using Bank Reconciliation mark and delete all opening balance transactions. Your system will then be ready for use with the appropriate account balances set up.

E&OE