Year End Adjustments

This help article has some best practice guidance and useful tips for preparing year end adjustments.


  • Y/E adjustments can comprise of both year end adjustments (closing balance adjustments) and opening balance adjustments.
  • Y/E adjustments need to be prepared slightly differently for sync jobs and manual upload jobs.
  • The Y/E adjustments should be prepared as soon after finalisation as possible, this makes the process much more efficient as you know what the adjustments are for.
  • Before preparing the Y/E adjustments ensure that you have correctly classified the adjustments on Silverfin as internal and external (see help article linked below on internal vs external adjustments) as this has a direct impact on the journal you will generate.
  • Use the terminology from the bookkeeping system (especially if sending to the client) eg in Sage = Bank Receipt whereas in Xero = Receive Money
  • Before adding in new codes to clients system you should check that they have not already been set up in the chart of accounts.
  • If a new code is required make sure and add them in an appropriate place with an appropriate code, which falls in line with the rest of the chart.
  • Once the journals and adjustments have been posted always refresh your sync in Silverfin, mark the external journals as posted (leave internal journals as unposted, you need to select "mark all journals as posted and individually un-post the internal ones) and check that your file is back to normal.

Control Account Adjustments

It is important to make sure that the control accounts are adjusted correctly. Never post a journal entry to a control account. Instead you post the adjustment to a Suspense code and then do a separate adjustment for the control account.

Control accounts normally include Bank Accounts, Accounts Payable, Accounts Receivable.

See below a useful guide to control account adjustments (wording below = Xero / Sage). Please note that these are in general terms and you should be checking the adjustments in Silverfin to confirm exactly what they are for to ensure the below is the appropriate action and to help you understand what your adjustment is doing.


Bank

If the adjustment is:

Debit = Receive Money / Bank Receipt

Credit = Spend Money / Bank Payment


Debtors

If the adjustment is:

Debit = Sales invoice

Credit = Sales credit note


Creditors

If the adjustment is:

Debit = Bill credit / Purchase credit note

Credit = Bill / Purchase invoice


VAT Adjustments

Sometimes the VAT adjustment will need split into different lines depending on what it is that is being adjusted. You need to be aware of the VAT scheme the client is on eg cash/accrual as this could have an impact on your VAT adjustments however this should have been taken into account during the account preparation stage.


  • VAT on bank/debtors/creditors adjustments - VAT relating to these adjustments should be posted to Suspense.

  • VAT under/over claimed in the year - VAT relating to these adjustments should be posted to Suspense and then a further VAT journal is required to ensure it goes on the VAT return. See example below;

  • VAT differences - If you have written off a VAT difference in the year this would not go on the VAT return so it can just be posted straight to the VAT nominal.

The first two VAT adjustment examples will end up pulling through on to the next VAT return. The last VAT example will not.


It is also important that once you post these adjustments on the system that you reconcile the bank adjustments (along with written off transactions that it relates to). For the debtor/creditor adjustments the customer/supplier accounts need tidied up by allocating the invoices/credit notes. You should then run a VAT return and a debtor/creditor report to ensure your adjustments are pulling through correctly in the way you would expect.



NOTE: If there is anything in this help article that needs updated please get in touch with the Silverfin Experts.

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