Account Structure

Every cashbook entry needs a breakdown/analysis in terms of what it represents: Payments represent expenditure, e.g., grass cutting, clerks salary; Receipts come from a particular source, e.g. Precept, VAT refund.

The analysis is achieved by allocating the amount of the cashbook entry to one or more accounts. The account represents the expenditure or source of income, e.g., there will be an account for clerk's salary.

The Accounts are structured hierarchically, as can be seen in the above screen shot.

The Account Structure determines how receipts and payments are analysed, and the information about a councils financial position the accounts are able to provide. So it is worth thinking carfully about how you setup this structure.

The accounts have an initial structure, that is determined by the requirements of the AGAR and the functionality of the software. These initial Accounts cannot be deleted, but new Accounts can be added as a Sub-Account. Most of the Accounts that you create, especially if you are reporting on a Receipts and Payments basis, will be under PAYMENTS. You can create a flat structure, as you would have with a spreadsheet, with all the expense accounts under PAYMENTS or you can structure it more hierarchically.

There are 3 types of account:

• Balance

  Accounts of this type have their balances carried over from one year to the next. Eg. CIL, VAT, VAT126. They can have sub-accounts of any of the 3 types. Only this type of account can have an opening balance

• Income

  Accounts of this type start each year on a balance of zero, and at year end have their balance consolidated into their parent balance account. E.g PRECEPT, CIL RECEIPTS. Sub-accounts of this type are automatically of the same type , i.e. Income.

  If reporting is done on the basis of Income and Expenditure, Box 3 on the AGAR is the sum of the Account Entries made to accounts of this type - PRECEPT.

• Expenditure

  Accounts of this type start each year on a balance of zero, and at year end have their balance consolidated into their parent balance account. E.g PRECEPT, CIL PAYMENTS. Sub-accounts of this type are automatically of the same type , i.e. Expenditure.

  If reporting is done on the basis of Income and Expenditure, Box 6 on the AGAR is the sum of the Account Entries made to accounts of this type - LOANS - STAFF COSTS.

The Accounts are structured hierarchically, as can be seen in the above screen shot. Accounts under RECEIPTS AND PAYMENTS, e.g., PRECEPT and SALARY, start each year with their balance at zero. Accounts outside of RECEIPTS AND PAYMENTS, e.g., VAT and CIL have their balance brought forward. Consequently, it is only these accounts that can have opening balances entered.

The accounts have an initial structure, that is determined by the requirements of the AGAR and the functionality of the software. These initial Accounts cannot be deleted, but new Accounts can be added as a Sub-Account. Most of the Accounts that you create will be under PAYMENTS. You can create a flat structure, as you would have with a spreadsheet, with all the expense accounts under PAYMENTS or you can structure it more hierarchically.

Expenditure Accounts have debit balances shown as positive, all other Accounts have credit balances shown as positive.

Initial Structure

• CIL (Balance)

  This maintains a balance of the CIL

  • CIL RECEIPTS (Income)

  • CIL PAYMENTS (Expenditure)

• RECEIPTS AND PAYMENTS (Balance)

  All the accounts under this start each year with their balances at zero.

  • RECEIPTS (Income)

    Create extra accounts under this account if you have sources of income other than the precept.

    • PRECEPT (Income)

  • PAYMENTS (Expenditure)

    Create all the necessary accounts to analyse the council's expenditure under this account. You can arrange the accounts hierarchically.

    • LOAN REPAYMENTS (Expenditure)

    • STAFF COSTS (Expenditure)

• TRANSFERS (Balance)

  Use this account for transfers between cashbooks, e.g., from the bank account to petty cash.

• VAT (Balance)

  This is used to accumulate VAT to be reclaimed by a VAT126

• VAT126 (Balance)

  This records VAT refund claims and the receipts from HMRC

Reserves

If you use reserves it is best to setup a RESERVES account under ACCOUNTS. Then setup each individual reserve under RESERVES. So, if you provide allotments, where the rent is used exclusively for the allotments, you can set up the following structure:

• ALLOT - is a balance account that shows the balance of allotment income and expenditure
• ALLOT RENT - is an Income account, which shows the rent received during the year
• ALLOT EXP - is an Expenditure account, which shows the spending on the allotments during the year

NOTE: In this example, if you are reporting on a receipts and payments basis you don't need ALLOT RENT, and ALLOT EXP. However, without them you will loose the ability to easily report on them, on a year by year basis.

Parish Halls

If as the sole trustee of a parish hall, you reclaim its VAT by paying the gross invoice, and then being reimbursed by the parish hall for the net, you would need to setup a balance account as shown above.

When you pay an invoice from the parish hall, it will be analysed into net and VAT, as with any other payment. But instead of the net going to one of the expense accounts under PAYMENTS, it will go to this account, which will show how the balance of how much the parish hall needs to reimburse.

Importantly this balance account does not have Income and Expenditure sub accounts, because the receipts and payments count as neither.

Adding Accounts

1. Select the Accounts tab.
2. In the tree view on the left, expand the tree until you can see the Account under which you wish to create the Sub-Account.
3. Select the Account.
4. Click the Add Sub-Account button (the Name and Description fields will clear).
5. A dialog will open.
6. Enter the Name, description and Account Type.

   The Name identifies the Account and must be unique. It must consist of one or more strings of uppercase characters separated by a single '.', '/', '-' or ' '. E.g. 'GRASS', 'GRASS CUTTING', or 'GRASS-CUTTING'.

7. Press Ok

Setting the Opening Balance

Opening balances can only be set for the first year of the accounts. Subsequent years have the balance carried forward, or reset to zero, according to account type.

Opening balances cannot be set for Income or Expenditure Accounts.

Typically you will only need to set the opening balance of the CIL and Reserve Accounts. If the account has money left to spend, enter the balance as positive.

Entering Budget

1. Check the Associated Budget check box.
2. The Budget field will appear.
3. Enter the buget for this year.

Budget performance can be monitored here.