Creating departments in AO Classic General Ledger

The General Department can be used as a full operating department or as a department with accounts that do not relate directly to the operation of other departments.

The General Department (account range 1,000 - 1,999) include all equity/capital accounts, financial information accounts, provision for GST accounts, as well as income, expenses, asset & liability accounts.

The following account ranges are primarily used as departments within the entity. They contain all the revenue, expense, assets & liabilities specific to that department. The only exception is provision for GST which is included in the General Department.

The templates for each entity type include primary production accounts for the General department (1,000 - 1,999) and Department One (2,000 - 2,999). If you require further departments, see the To add a department section.

All equity capital accounts are to be journalled in the 1480-1699 account range. This includes issued shares, reserves, settlement sum, issued units, income tax expense, dividends, distribution to beneficiaries/partners, and retrospective adjustments.

Income allocation is completed in the same manner as a standard ledger. However the accounts have the numeral 1 added to the account number. The income allocation account is automatically set to the correct account within the departmental template.

All financial information accounts are located in the 1,970-1,999 range. These include:

• Abnormal items
• Capital Commitments
• Borrowing Costs
• Operating Lease Commitments
• Franking Account Balance
• Income Tax Reconciliation
• Corporate Trustee Information

Just to mention a few. These accounts are checked whenever you print/preview Notes to Accounts or print certain reports.

Each Departmental template has GST accounts included in the general department. These are:

• 1908 / 01 Output Tax
• 1908 / 02 Input Tax
• 1908 / 03 Output Tax Adjustments
• 1908 / 04 Input Tax Adjustments
• 1908 / 05 Private Adjustments

The GST report within MYOB Accountants Office General Ledger uses these accounts to print an accurate GST Report. If you select different accounts, the GST report may not be accurate.

1. Select the following menu path: General Ledger > Accounts Utilities > Create a new Department. The Create New Department Account codes windows appears.
2. Enter the department code to copy in Enter the Department Code to copy from. Department code is entered

3. Enter new department code in Enter the Department code for the new Department and click OK. The message "Are you ready to create these accounts in Department?" appears.

   

   Always add from the last department created. I.e. If you have four departments (1,000 - 4,999) you should copy from department 4. This will ensure your accounts are uniform throughout the entire entity and when consolidating, all relevant account names will appear.

4. If you are ready to create the new department, click Yes. The message "Process complete" appears.

5. Click OK. The Main General ledger window appears.

   

   Only add departments if required. The more departments that are created within the chart of accounts, the longer the processing time required to prepare and print departmental reports.

Add to Accounts & Stock: When creating a new department, you may need to alter the "Add to Accounts" tag within accounts maintenance for Stock on Hand x710 - x729 to the new department number.

Livestock Valuation: The Account Codes tab may need to be amended to ensure the correct department is selected, so that the automated journals are posted to the correct accounts.

When we consolidate two or more departments, MYOB Accountants Office General Ledger reads the control account name from the General Department, 1,000 - 1,999, i.e. Account 1302 Advertising, whilst the sub accounts names are read from the last department created i.e. Account 3302/01 Yellow Pages.

When a detailed Profit & Loss report is printed, it selects the name of the accounts as follows;

Assume Department Two 3,000-3,999 is the last department created

Example

Two entities within a group can have loan accounts between them. Once these entities are consolidated, the loan account balances counter each other to leave a nil balance.

The same inter-company loan account principle applies to departments whereby departments can loan each other funds and upon consolidation, these loan account balances are eliminated.

This can be achieved by posting the debit & credit amounts of the loan account to the same account number, however in different departments. I.e. Loan from Accounting Practice, 2,000 - 2,999, to Fishing Charter, 3,000 - 3,999, of $50,000.

When consolidated, accounts 2696 & 3696 will form one balance and as the debit balance equals the credit balance, the result will be a nil balance shown in the consolidated reports.

Each department will contribute to the overall tax liability of the entire entity. Each department's liability can be posted within the department; however the Income Tax Expense (Capital) must be posted to the general department (1,000 - 1,999).

Example

The Delete unused Accounts function should be used cautiously when in a departmental client. Please be aware of the following;

When using Delete Unused Accounts

• Never select, "Select All" to delete. Always individually select each account to be deleted.
• Only delete individual accounts in the General Department (1,000 - 1,999) if you are sure the account number is never going to be used in the other departments.
• Deleting unused accounts will improve the speed of printing & pre-processing the Notes to the Accounts reports.

The Asset Ledger within the departmental templates has been amended to use the department number. The default account numbers are all associated with the General Department (1,000 - 1,999). If you use the "Post to General Ledger" option within the Fixed Assets module, you may need to alter the account numbers within the specific asset.

Example

We have plant and equipment for the General Department, Department One and Two. You will need to alter the account numbers for each specific asset when created as follows;

A difference between a departmental structure and a standard structure client is the balance sheet. A true balance sheet will only balance if it includes equity, assets and liabilities for the entire entity. As equity cannot reliably be dissected into departments, we have created a longform balance sheet, which includes;

• General Department, 1,000 - 1,999: Assets, Liabilities
• Entity as a whole: Equity
• Other Departments: Net Assets/Liabilities

The statement of Assets & Liabilities shows all assets and liabilities of single department. It should be read in conjunction with the Departmental Longform Balance Sheet and Consolidated Balance Sheet to give the reader a comprehensive record of assets & liabilities for the entity.

These general reports are located in the departmental master that relates to the entity type. There are other reports such as Directors Report, Partnership Distribution Statement etc. These reports have all been amended to cater for departments and should be added to your report listing as needed from the appropriate master.

Ensure the relevant account code is in the General Department, 1,000 - 1,999.

Ensure the account name is correct in the last department created. If incorrect, you will need to change the name. There could also be another issue, due to the chart integrity being incorrect. Please refer to the Maintain your Chart of Accounts section.

To add the name of a department to a report, change the account description in account;

• 1,000, General Department.
• 2,000, Department One
• 3,000, Department Two etc. Account number change will allow you to efficiently change a large amount of account numbers from one department to another or from a standard chart of accounts structure to the departmental, i.e. xxx/xx to a department xxxx/xx.