Auditors are having issues with GST content in Palace not matching old systems

Hi Phil
 
I spoke to Ron and he said that with every Console and Rest conversion, the trial balance report that we use to enter opening balances into Palace already has the GST split out (regardless of whether the disbursement has actually been made to owners and creditors). The difference is that the GST amount may be calculated on the total amounts in some systems, whereas Palace calculates it on each transaction. Both practices are acceptable in Australia and New Zealand as per below:
 
 
Palace, like the accounting system, Xero, calculates GST on a per line basis, rounding to two decimal places, and then sums the tax totals of each line to calculate the total GST.
This approach is acceptable to both the IRD in New Zealand and to the ATO in Australia.
"These acceptable approaches may result in differences in liability amounts, but the benefits of flexibility far outweigh any marginal differences"   (Australian Tax Commissioner Michael Carmody)
 
An example from one of the statements explains the difference:
 
Rent Fees GST Rounded
$420.00 $27.30 4.0950 $4.10
$420.00 $27.30 4.0950 $4.10
$420.00 $27.30 4.0950 $4.10
$420.00 $27.30 4.0950 $4.10
       
$1,680.00 $109.20 $16.38 $16.40
The rounding function sometimes results in a slightly higher GST figure, and sometimes a slightly lower figure.
For example, if the rent rate was $425, the rounding function would drop off the fractions of a cent for each line, :

Rent Fees GST Rounded
$425.00 $27.63 4.1438 $4.14
$425.00 $27.63 4.1438 $4.14
$425.00 $27.63 4.1438 $4.14
$425.00 $27.63 4.1438 $4.14
       
$1,700.00 $110.50 $16.58 $16.56
 
The figures from Palace are usually posted to an accounting system such as Xero, and these systems will often maintain a GST rounding account.
 
I would suggest that Sherlock are having problems balancing because it is a complex task to re-enter transactions from an accounting system that calculates GST using a different, but correct, method.

 

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