Wednesday, 1 October 2014

What I asked at the GST Expo & Conference 2014

The GST Expo kicked off today 1st October 2014 and it was rather crowded considering it being a working day. My interest was centered on finding good GST compliant accounting software but only managed to ask 3 vendors: SQL, QnE & Wavelet due to my time rush.

Hopefully, this feedback could prove useful to you all. Please do leave a comment if you have anything to add on…

I don’t claim to be an expert in GST or Tax and only took about a day to pick up some pointers here and there from Google and my student, Helen Phang to help clarify some technical terms. So, do help to correct me for any unintended mistakes and inaccuracy if any.

I got requests from some students regarding which accounting software is good and GST compliant. Thus, I have listed some questions which you may be asking when shopping for GST compliant accounting software (You need some basic knowledge of GST to understand the software system requirements):

1.     Auto calculate GST for Sales amount and/or auto include GST within the Sales figure function

Most software will auto calculate the 6% GST based on the sales amount but some software may be less flexible when you want to absorb the GST for your customer. For example, Selling price is $100 and GST should be $6 (6% X $100) but if you absorb the GST then the customer only pays you $100 but you still need to allocate for 6% of GST. Thus, the system should be able to auto INCLUDE GST (Sales $94.34 and 6% GST $5.66). SQL and MYOB have such feature. Also check other software as I didn’t managed to ask them.

2.     Most GST compliant software can autofill all your data for the GST 3 Form to be submitted to Customs every quarterly?

Companies are required to submit quarterly GST 3 Summary Report to Customs and each GST transaction needs to be grouped into specific categories in accordance with their standardized form. If the software doesn’t have this feature then the poor Accounts Assistant has to manually categorize and fill in the forms every 3 months, a very daunting task indeed. SQL, MYOB and Tally.ERP9 have such features and perhaps some others also have.


3.     GST kept for at least 7 years?

GST records should be kept for a minimum of 7 years and Customs may request you to provide a detailed listing of all this transactions. Check that your remote server or cloud computing allows your records to be stored for such long period, taking into consideration the volume of your transactions, storage space, storage costs, etc.

4.     GST Audit File (GAF) format for tax audit by Customs

Customs may request you to provide a detailed listing of all transactions via a fixed formatted text file GST Audit File (GAF) that can be submitted online via customs GST portal to assist their audit. This file is automatically generated.

5.     Which server; either Microsoft SQL or Firefox or ‘whatever’?

Your data would be stored in their servers and they could be running on Microsoft SQL or Firefox or something. Check how much do the vendors charge annually for data storage. You should also check the processing capacity of the servers and I heard that Microsoft SQL handles large data well. Not too sure about others. Not much of an IT geek, can someone please comment further, thanks.

6.     Keeping track of the 21 Days rule

Tax Invoice must be issued within 21 days after the D.O. or services performed. Most system can’t keep track of the 21 days and send a reminder for you to track and prevent any late issue of invoice. QnE can track the 21 days. Others probably can too.

7.     Bad Debt relief adjustment

You have included GST for Tax Invoice but that customer failed to pay you and became a bad debt but you have already paid the GST portion on his behalf. The software should allow you to list out such GST amount for you to get a refund.

If later on after 180 days, the same customer pays you back the amount, then, you need to be able to track back the bad debts and pay back again that portion of GST to Customs.

8.     Generate Notification letter for Bad debts relief

When you claim back the GST for Bad debts, the system should be able to generate out a Notification letter for Bad debts relief to be sent to your customer. QnE can print out such Letter. I am not sure but I think others may not.


9.     The system should already have all the 23 Tax Codes and most have more (up to 30 Tax Codes) to allow for different circumstances e.g. purchase for own use

There is a total of 23 Tax Codes eg. Purchases exempted from GST, Purchases (GST not claimable), Sales (GST not claimable), etc. and you should be able to set for each customer regarding their GST status, the same applies to suppliers as some input tax may not be claimable while others are claimable. The big problem with this is that the same supplier may sell you goods which are GST claimable and also other goods which are not GST claimable. Your system should be able to handle the different combination well for different customers, suppliers and also GST claimable and not claimable goods. If you are selling to a Labuan customer, then, you can’t charge the customer GST at all.

10.            The system should automatically enter the double entry for Input tax, Output tax, Payable tax, etc.

Another issue is that sometimes goods are purchased for own use, then, you can’t claim the GST but have to charge it as part of your expenses or capitalized within asset purchased. The system should be able to handle the journal entries. Claimable GST (Input tax) should be capitalized as an asset while Payable GST (Output tax) is recognised as liability (not tax expense). However, GST paid to supplier that is not claimable is recognised as expense. I know this gets very confusing so get some help if you don’t get this…

11.            Convert from DO to invoice or POS to invoice? Which is better?

I heard that some system can do automated data entry from the point of sales. Meaning to say, there is no need to key in the data for sales. I don’t how it works as the technical guy was busy showing others and I didn’t get a chance to see how. Furthermore, it handles Point of Sales from many branches and allow for group reporting of GST. Wavelet has that function and uses cloud computing.

12.            E-voucher claim

Make sure you claim RM1,000 when you purchase the GST compliant accounting software. Ask the vendor how to claim otherwise you might end up paying the full price of the software.

13.            iPad, Android access

Most systems runs on multiple devices such as iPad or iPhone, Android devices as well as Window based computers. Better check with the vendors and test where possible. One freelancer I met that day told me his client complained about the font size of the reports which is too small for his eyes and that is why he used QnE as there is a magnifying function. However, the client still complained about it every now and then. Using other touch screen devices may help to magnify the figures in the reports.

14.            Free training 6 months to one year

Also check out the free training offered by vendors; which ranges from 6 months to one year. Mostly they limit to one or two staff and will charge for any additional staff. This has always been a problem because staff turnover is very high for companies. I know that UBS becomes popular as the training is widely available in Malaysia. Better to go for one where training is solid and well supported. But I was surprised that UBS and Sage were not represented in the Expo.


Hope the above information helps. Happy software hunting!

Wednesday, 21 May 2014

Exam Guide June 2014 (P2 Corporate Reporting) by Joe Fang

Topics
Question 1
(a)   Consolidated Financial Statements (Do not Spot!)
-          Group cash flows
-          Vertical/Mixed group
-          Foreign operation (Closing Rate method)
-          Piecemeal acquisition
-          Disposal

Accounting standards integrated in Consolidated Financial Statements (At least 3 from below):
-          IAS 16 Property, Plant and Equipment
-          IAS 38 Intangible Assets
-          IAS 19 Employee Benefit
-          IAS 21 The Effects of Changes in Foreign Exchange Rates
-          IAS 28 Investments in Associates and Joint Ventures
-          IAS 37 Provisions, Contingent Liabilities and Assets
-          IFRS 9 Financial Instruments
-          IFRS 2 Share Based Payments

(b)   Theoretical element on group context
-          IFRS 8 Operating Segment
-          IFRS 9 Financial Instruments
-          IFRS 3 Business Combinations
-          IFRS 11 Joint Venture Arrangement
-          IFRS 10 Consolidated Financial Statements
-          IFRS 13 Fair Value Measurement

(c)    Ethics
-          Explain the difference between being ethical and mere compliance of the Accounting Standards
-          The case mentioned contains element of “Creative accounting” to mislead financial user
-          Student need to address the unethical behavior or accounting treatment proposed by the Director
-          Recommend a proposed solution

Question 2
(1 or 2 Accounting standard(s) )





At least 6 of the followings:
-          IAS 10 Post Reporting Events
-          IAS 12 Taxation
-          IAS 16 Property, Plant and Equipment
-          IAS 17 Lease
-          IAS 18 Revenue
-          IAS 19 Employee Benefit
-          IAS 24 Related Party Transactions
-          IAS 36 Impairment of Assets
-          IAS 37 Provisions, Contingent Liabilities and Assets
-          IAS 38 Intangible Assets
-          IFRS 9 Financial Instruments
-          IFRS 11 Joint Venture Arrangement
-          IFRS 10 Consolidated Financial Statements
-          IFRS 3 Business Combination
Question 3
(At lease 4 Accounting Standards)
Question 4
-          IFRS 9 – Draft Chapter 6 Hedge Accounting
-          ED Revenue from contracts with customers
-          ED Investment Entities
-          ED Financial Instruments: Amortised Cost and Impairment (inc
-          expected loss approach)
-          ED Improvements to IFRSs

Monday, 28 April 2014

Exam Guide for June 2014 (F7 Financial Reporting)


Question 1
Consolidated SOFP
-          Parent and Subsidiary
-          Calculation of Full goodwill
-          Fair value adjustment and additional depreciation
-          Unrealised profits
-          Goods in transit
-          NCI Calculation

Consolidated SOPL
-          Parent, Subsidiary
-          Fair value adjustment and additional depreciation
-          Calculation of Full goodwill
-          Unrealised profits
-          Inter company interest income/expense cancellation
-          Apportionment of Other Comprehensive Income between Parent’s shareholders and NCI
-          NCI calculation
Question 2
Preparation of SOFP, SOPL and SOCE
-          Depreciation adjustment i.e. straight line and reducing balance
-          Nominal interest vs effective interest; Calculation of Amortised cost for Loan payable
-          Revenue and Cost of Sales adjustments i.e. Sale or return, Agent vs Principal income recognition (IAS 18 Revenue)
-          Current Tax and Deferred Tax adjustment (IAS 12 Taxation)
-          Dividend calculation
-          Accounting standards (Two of the followings):
-          IAS 8 Accounting policies, changes in estimates and errors (Fraud)
-          IAS 33 Earnings per share
-          IAS 36 Impairment of Assets
-          IAS 38 Intangible Asset
-          IAS 32 Financial Instruments:Presentation (convertible loan note)
Question 3
Statement of Cash Flows
Ratio analysis
Question 4
(a)   Accounting concepts i.e. Faithful representation, Accrual, Relevance, etc. from the Conceptual Framework for Financial Reporting
(b)   One or more of the following standards:
-          IAS 10 Post Reporting Period Events
-          IFRS 5 Non-current Assets Held for sale and Discontinued operation
-          IAS 37 Provisions, Contingent liabilities and assets
-          IAS 32 Financial instruments: Presentation
Question 5
One or more of the following standards:
-          IAS 8 Accounting policies, changes in estimates and errors
-          IAS 36 Impairment of assets
-          IAS 38 Intangible Assets

Monday, 25 November 2013

P2 Dec 2013 exam Tips

Exam Guide Dec 2013 (P2 Corporate Reporting)
Question 1
(a) Consolidated Financial Statements (Do not Spot!)
- Vertical/Mixed group
- Foreign operation (Closing Rate method)
- Piecemeal acquisition
- Disposal
- Group cash flows
Accounting standards integrated in Consolidated Financial Statements (At least 3 from below):
- IAS 16 Property, Plant and Equipment
- IAS 36 Impairment of Assets
- IAS 38 Intangible Assets
- IAS 19 Employee Benefit
- IAS 21 The Effects of Changes in Foreign Exchange Rates
- IAS 28 Investments in Associates and Joint Ventures
- IAS 37 Provisions, Contingent Liabilities and Assets
- IFRS 9 Financial Instruments
(b) Theoretical element on group context
- IFRS 9 Financial Instruments
- IFRS 3 Business Combinations
- IFRS 13 Fair Value Measurement
- IFRS 11 Joint Venture Arrangement
- IFRS 10 Consolidated Financial Statements
- IAS 27 Separate Financial Statements
- Analysis on the group cash flows
- Difference between direct and indirect method
(c) Ethics
- Explain the difference between being ethical and mere compliance of the Accounting Standards
- The case mentioned contains element of “Creative accounting” to mislead financial user
- Student need to address the unethical behavior or accounting treatment proposed by the Director
- Recommend a proposed solution
Question 2
(1 or 2 Accounting standard(s) )
At least 6 of the followings:
- Restructuring: Transfer of Subsidiary to Sub-subsidiary or vice versa (Refer Q2 Dec 2011)
- IAS 10 Events after reporting date
- IAS 16 Property, Plant and Equipment
- IAS 17 Lease
- IAS 18 Revenue
- IAS 24 Related party disclosures
- IAS 38 Intangible Assets
- IAS 19 Employee Benefit
- IFRS 2 Share Based Payment
- IAS 37 Provisions, Contingent Liabilities and Assets
- IFRS 9 Financial Instruments
- IFRS 11 Joint Venture Arrangement
Question 3
(At lease 4 Accounting Standards)
- IFRS 10 Consolidated Financial Statements
- IFRS 12 Disclosure of Interest in other entities
- IFRS 13 Fair Value Measurement
- IAS 27 Separate Financial Statements
- IFRS 5 Assets Held for Sale
- IFRS 3 Business Combination
Question 4
- IFRS 9 – Draft Chapter 6 Hedge Accounting
- ED Revenue from contracts with customers
- ED Investment Entities
- ED Financial Instruments: Amortised Cost and Impairment (inc
- expected loss approach)
- ED Improvements to IFRSs

F7 Tips for Dec 2013 exam

Exam Guide for Dec 2013 (F7 Financial Reporting)
Question 1
Consolidated SOPL&OCI and SOFP
- Parent and Subsidiary
- Calculation of Full goodwill
- Pro-rated income for Sub
- Unrealised profits
- Apportionment for Other Comprehensive Income between Parent’s shareholders and NCI
- NCI Calculation
Consolidated SOPL
- Parent, Subsidiary
- Fair value adjustment and additional depreciation
- Calculation of Full goodwill
- Unrealised profits
- Inter company interest income/expense cancellation
- Apportionment of Other Comprehensive Income between Parent’s shareholders and NCI
- NCI calculation
Question 2
Preparation of SOFP, SOPL and SOCE
- Depreciation adjustment i.e. straight line and reducing balance
- Nominal interest vs effective interest; Calculation of Amortised cost for Loan payable
- Revenue and Cost of Sales adjustments i.e. Sale or return, Agent vs Principal income recognition (IAS 18 Revenue)
- Current Tax and Deferred Tax adjustment (IAS 12 Taxation)
- Dividend calculation
- Accounting standards (Two of the followings):
- IAS 8 Accounting policies, changes in estimates and errors (Fraud)
- IAS 17 Lease (Finance lease wrongly treated as operating lease)
- IAS 36 Impairment of Assets
- IAS 38 Intangible Asset
- IAS 32 Financial Instruments:Presentation (convertible loan note)
- IFRS 5 Disposal of Non-current asset and Discontinued operation
Question 3
Statement of Cash Flows
Combination of cash flows and Ratio analysis
Question 4
(a) Accounting concepts i.e. Faithful representation, Accrual, Relevance, etc. from the Conceptual Framework for Financial Reporting
(b) One or more of the following standards:
- IAS 10 Post Reporting Period Events
- IAS 38 Intangible Assets
- IAS 17 Lease
- Substance over From
Question 5
One or more of the following standards:
- IAS 36 Impairment of assets
- IAS 32 Financial instruments: Presentation
- IAS 37 Provisions, Contingent liabilities and assets
- IFRS 3 Business Combination