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Accounts - reconciling client opening balances with practice ledger file

Article Objective: To assist users in navigating Active Ledger & Reporting to reconcile opening balances with the practice ledger file.  


Context: Active Ledger & Reporting relies on the client's accounting file being the source of truth. You may find that when you connect your client's source file (such as Xero, MYOB or QBO) to a dataset, that your closing balances per your clients accounts as at the last finalised year may not agree to what you have in your comparative year dataset from your practice ledger (where the financial statements are issued from). This would occur due to not having pushed balancing/alignment entries to the client file in the past, or if the client has backdated transactions to previous financial years.  


Please refer to the Glossary for definitions of key terms used in this article.             


TABLE OF CONTENTS


How to correct opening balances to reconcile with practice ledger file

Example

The client has a MYOB Accountright Live accounting file. The last finalised year in your practice ledger, XPA, is 30 June 2022. You notice that the balances that your client has in their accounting file as at 30 June 2022 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 added your 2023 MYOB dataset to Active Ledger & Reporting, your opening account balances do not agree to the closing balances you had within your XPA comparative dataset.


What do you need to do to set yourself up for success within Active Ledger & Reporting?


You will first need to have added datasets to your clients Active Ledger & Reporting file. If you have not yet added datasets, see this knowledge article: Datasets - overview.


To align your 2023 MYOB dataset opening balances with the 2022 XPA dataset closing balances, there are a few options:


Option 1 - use the 'Compare Datasets' tool (Recommended)


This tool automatically compares the balances between two datasets. Generally this function will be used to compare the closing practice ledger dataset balances to the opening balances in the client accounting file, thereby negating the need to manually perform an alignment journal entry. To proficiently use this tool, you must map all accounts correctly, ensuring any accounts that are the same but exist across both sources are merged. 


For example, there are two trade debtor accounts, one from each source. These must be merged into one account by dragging and dropping one account on top of the other. This will ensure that the 'Compare Datasets' tool views these as one account rather than two, for it to appropriately compare the account balances between the datasets. 


For more information on how to drag and drop accounts, see the knowledge article: Accounts - overview.         


After this is complete, if you click the pencil icon next to the account and scroll to the bottom, the source accounts will be listed as below.



To use the tool, navigate to the Datasets screen and click Compare Datasets.           



From this screen, you are able to input a reference dataset and a target dataset. In this case, the reference dataset will be the prior year comparative data, while the target dataset will be the current year client accounting file. The target dataset will be selected as the 'Opening Balances' dataset which will take the 2022 XPA closing balances, compare them to the 2023 MYOB opening balances and generate a list of balancing amounts and associated accounts. From here, you are able to click Draft Balancing Journal which will generate a balancing journal to post.                



Note: The balancing journal generated in this process will only be posted in Active Ledger. The checkbox for 'Flag as Pending Export to Client File' must be selected in order to be included in the year-end adjustment journal to be posted back to the accounting file. To learn more about posting journals back to the client file, see the knowledge article: Datasets - balances - trial balance.            



Option 2 - perform an alignment entry in the clients accounting file 

Perform an alignment entry in the clients accounting file as at the end of the last finalised year, in this case 30 June 2022. Take the trial balance from XPA and MYOB as at 30 June 2022 in Excel, compare the two and prepare a balancing journal in the MYOB account names and numbers. Post this balancing journal into the MYOB file as at 30 June 2022. Once done, come back to Active Ledger & Reporting and press Load Data on the dataset. 



Option 3 - perform an alignment entry in the Active Ledger & Reporting file with the 'Export Journal to Client File' ticked

Perform an alignment entry in the Active Ledger & Reporting file for the client as an 'Opening Balance Adjustment Journal'. Take the trial balance from XPA and MYOB as at 30 June 2022, compare the two and prepare a balancing journal in the MYOB account names and numbers.  


Select the 2023 MYOB dataset.



Select the journals tab, then + New Journal.



Select the journal type as Opening Balance Adjustment Journal, date at 1 July 2022 and provide a memo.



Type your journal. Ensure that the Export Journal to Client File button is ticked to ensure that this adjustment journal will get sent back to the client file with the other balancing journals for the 30 June 2023 year.


Click Add Journal. 



Your opening balance adjustment journal is now within Active Ledger & Reporting and your opening balances within the 2023 MYOB dataset will agree to the closing balances per the 2022 XPA dataset.


Option 4 - perform an alignment entry in Active Ledger & Reporting with 'Export Journal to Client File' not ticked (only where the client will not allow any alignment journals to their accounting file)

Perform an alignment entry in the Active Ledger & Reporting file for the client as an 'Opening Balance Adjustment Journal'. Take the trial balance from XPA and MYOB as at 30 June 2022, compare the two and prepare a balancing journal in the MYOB account names and numbers. 


Select the 2023 MYOB dataset.



Select the journals tab, then + New Journal.



Select the journal type as Opening Balance Adjustment Journal, date at 1 July 2022 and provide a memo.



Type your journal. Ensure that the Export Journal to Client File button is NOT ticked to ensure that this adjustment journal does not get sent back to the client file with the other balancing journals for the 30 June 2023 year.


Click Add Journal. 



Your opening balance adjustment journal is now within Active Ledger & Reporting and your opening balances within the 2023 MYOB dataset will agree to the closing balances per the 2022 XPA dataset.


When you create your 2024 MYOB dataset (and every future year MYOB dataset) within Active Ledger & Reporting, ensure to tick the Roll over opening balances checkbox and rollover from the last completed MYOB dataset in Active, in this example you would roll over from 2023.       



This will mean that your 2024 MYOB Dataset will use the closing balances from your 2023 MYOB dataset, rather than the closing balances from the MYOB file itself.


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