Article Objective: To assist users in navigating the Active Platform to align client opening balances with the practice ledger file.
Context: There are a few ways in which opening balances can be aligned to the practice ledger file in Active Workpapers depending on whether the preparer has access to the clients accounting file or not.
Please refer to the Glossary for definitions of key terms used in this article.
TABLE OF CONTENTS
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Overview
In Active Workpapers, you are only able to connect to one source per binder, which we recommend to be the clients accounting file. With this, if no balancing/alignment journals have been posted in the client file over the years, the data being pulled into Active Workpapers will not match to the signed financial statements.
Aligning comparative and current year balances
Example
The client has a MYOB Accountright Live accounting file. The last finalised year in your practice ledger, XPA, is 30 June 2023. You notice that the balances that your client has in their accounting file as at 30 June 2023 do not agree to what you have in your practice ledger file. You remember that you have never performed balancing/alignment journals within your clients file to align it to your practice ledger. When you have connected your 2024 MYOB source to Active Workpapers, your opening account balances do not agree to the closing balances you had within your XPA practice ledger file.
What do you need to do to set yourself up for success within Active Workpapers?
You will first need to have connected your binder source to your clients accounting file (in this case, MYOB). If you have not yet connected your binder to a source, see this knowledge article: How to create a binder.
To align your 2024 MYOB dataset opening balances with the 2023 XPA dataset closing balances, there are a few options:
Option 1 - you have access to the client accounting file and can post a balancing journal in the client file (recommended)
Take the trial balance from XPA and MYOB as at 30 June 2023 in Excel, compare the two and prepare a balancing journal with the MYOB account names and numbers. Post this balancing journal into the MYOB file as at 30 June 2023.
Once done, come back to Active Workpapers and press Reimport on the index page.
Option 2 - you do not have access to the client accounting file and cannot post a balancing journal in the client file
To calculate the balancing journal, take the trial balance from XPA and MYOB as at 30 June 2023, compare the two and prepare a balancing journal with the MYOB account names and numbers.
First, post a balancing journal in Active Workpapers as at 30 June 2023 (i.e. the comparative year).
To post the journal, navigate to the Journals screen and click + New Journal.
Fill out the details of the journal, including the date, being 30 June 2023 and add a memo.
Ensure that the column is for the correct year, i.e. the comparative year (2023 in this case), and the Export Journal to Client File button is NOT ticked.
Click Add and Close.
As your binder is connected to the client file, no adjustments made in Active Workpapers will flow through to the following years. With this, you will also need to post a balancing journal in Active Workpapers as at 1 July 2023 (i.e. the current year).
This journal will look slightly different as all profit and loss account adjustments will be posted directly to the Retained Earnings account as they were already accounted for in the profit and loss in the comparative year.
Navigate to the comparative years Journals screen and click on the relevant journal.
From here, click Copy as New Journal.
This will exactly copy the journal.
Update the journal details, including the date (being 1 July 2023) and ensure that the column is for the correct year, i.e. the current year (2024 in this case).
Direct all profit and loss accounts outlined in the journal to Retained Earnings, or an account similar to, and ensure the Export Journal to Client File button is ticked. Ticking this will ensure that this balancing journal is captured in the list of journals to be sent to the client to post to the accounting file once the job is complete.
Note: While you can directly journal to Retained Earnings in Active Workpapers, most other accounting software's do not allow this. If this is the case, we recommend a new historical balancing account is created and used instead of 'Retained Earnings' so the retained earnings can be aligned.
Click Add and Close.
Your journals are now within Active Workpapers and the 2024 MYOB opening balances will agree to the closing 2023 XPA balances.
Moving forward
Once the job is finalised, a balancing journal will need to be posted back to the client accounting file each year.
We recommend that all relevant journals requiring to be exported to the client file have the checkbox selected to 'Export Journal to Client File'. This is appliable whether the binder is connected to a cloud accounting source or not, or if you have access to the clients accounting file or not.
Option 1
If you selected the process under Option 1 above, you have two options to send the balancing journal:
If connected to a cloud accounting file -
From the Journals screen, click Prepare a Balancing Journal.
Select Export Balancing Journal.
This will push the export journal to the clients accounting file directly.
If you need to undo the balancing adjustment, navigate to the Journals screen, click on the journal and select Undo Balancing Journal.
If connected to a non-cloud accounting file -
Navigate to the Journals screen and select Journal Listing. Ensure only 'Pending Export' journals are displayed.
Click Run Report.
Once you have run the report, select to Export to Excel.
This will download an Excel copy of the journals to be posted to the clients accounting file. Proceed to manually post the journal into the clients accounting file.
Once this is complete, navigate to the Journals screen and select Prepare a Balancing Journal.
Click Tag as Exported to indicate to the system that the journal has been posted in the clients accounting file so no double ups occur in future.
If you need to undo the balancing adjustment, navigate to the Journals screen, click on the journal and select Undo Balancing Journal.
Option 2
Navigate to the Journals screen and select Journal Listing. Ensure 'Pending Export' journals are only displayed - this should include the balancing journal posted on 1 July 2023.
Click Run Report.
Once you have run the report, select to Export to Excel.
This will download an Excel copy of the journals to be posted to the clients accounting file. This document can be sent directly to the client so they can manually add a journal into their file.
Once this is complete, navigate to the Journals screen and select Prepare a Balancing Journal.
Click Tag as Exported to indicate to the system that the journal has been posted in the clients accounting file so no double ups occur in future.
If you need to undo the balancing adjustment, navigate to the Journals screen, click on the journal and select Undo Balancing Journal.
If the client has not posted the journal by the time you are starting the 2025 compliance work (i.e. the next financial year), you will need to post the balancing journal that you posted on 1 July 2023, again on 1 July 2024.
You will need to continue this process each year until the client takes up the balancing entry in their client accounting file as Active Workpapers takes the clients accounting file as the source of truth.