How to correct brought forward balances after running the Year End

Check which profit and loss nominal codes have brought forward balances

1. Nominal codes > Trial balance.
2. Select Printer > Run.
3. Criteria window > Period drop-down list > choose Brought forward > OK.
4. Once you run the trial balance, check which profit and loss nominal codes have a balance > refer to the following sections for details of how the balances may have occurred, and, if necessary, how to correct them.

TIP: If you're using the default nominal code structure, the profit and loss codes are those in the range 4000 to 9999.

Profit and loss nominal codes missing from the chart of accounts

If a profit and loss nominal code is missing from the chart of accounts when you run the year end, the balance doesn't automatically clear. When you check the activity for that nominal code, no ledger year end journal appears.

 

Check the chart of accounts for missing nominal codes

1. Nominal codes > Chart of accounts.
2. Select the chart of accounts layout you want to check > Edit > Check.
   
   If there are any errors in your chart of accounts, a chart of accounts window appears prompting you for the output. Select the relevant Output > Run.

If there are profit and loss nominal codes missing from the chart of accounts, you must correct the chart of accounts then manually amend any brought forward balances on these nominal codes.

If the profit and loss nominal codes are not missing from the chart of accounts, please proceed to the section To check for and correct previous year adjustments later in this article.

Correct the chart of accounts

1. Nominal codes > Chart of accounts.
2. Select the chart of accounts you want to correct > Edit.
3. Amend the chart of accounts to add the missing nominal codes.
4. Save > Close.

You've now checked and amended your chart of accounts layout and are ready to manually amend the brought forward balance.

Manually move the brought forward balance to the profit and loss account

NOTE: The information you need for the following steps appears on the brought forward trial balance you printed in the earlier section To check which profit and loss nominal codes have brought forward balances.

1. Nominal codes > Journal entry.
2. Enter a reference and a date in the previous financial year > when a warning appears about the date, click OK > to clear the brought forward balances, enter the relevant information.
   
   

   NOTE: This journal must be dated in the previous financial year, so it affects the brought forward period rather than the current financial year.

   For example, to correct a brought forward debit balance of £/€100 on nominal code 7000 Gross Wages, post the following journal entry, dated the last day of the previous financial year:

   N/C	Name	Dept	Details	T/C	Debit	Credit
   7000	Gross Wages	Dept	Correction of brought forward balance	T9		100.00
   3200	Retained Profit and Loss Account	Dept	Correction of brought forward balance	T9	100.00

3. Save > Close.

You've now moved the brought forward balance from the affected nominal codes to the profit and loss nominal code. The next time you print your management reports the figures will be correct.

To check for and correct previous year adjustments

A previous year adjustment appears in the capital and reserves section of the balance sheet if you:

• Post a transaction dated before the current financial year to a profit and loss nominal code.
• Delete or amend the value of a transaction dated before the current financial year.

NOTE: To find out which nominal codes are affected, please refer to the brought forward trial balance you printed earlier in this article.

To correct the brought forward balance on the profit and loss nominal code, you must find the transaction that caused the previous year adjustment. You can then:

• Correct the transaction if you've used an incorrect date.
• Leave it as a brought forward balance.
• Clear the balance into the profit and loss nominal code, by default, 3200.
• Move the effect of the transaction into the current year's management reports.

If you're unsure where the balance should go, you should check with your accountant.

Find the transaction that caused the previous year adjustment

NOTE: To check for amended or deleted profit and loss transactions dated in the previous financial year, you can run an audit trail report for deleted transactions. For more information, refer to the section To print an audit trail for deleted transactions.

1. Nominal codes > select the profit and loss nominal codes with brought forward balances > Activity.
2. To display the transactions dated before the current financial year > Show drop-down list > Custom Range > Date Range To > enter the last day of your previous financial year.
   
   Backdated transactions appear on the activity after the year end journals. If you have cleared the audit trail, it may not be possible to view all of these transactions.
   
   
3. Close.

You've now found the transactions that caused the prior year adjustment, and should take the appropriate action.

Correct a transaction date

1. Transactions > select the transaction to be amended > Edit.
2. Created on > enter the new date for the transaction.
3. Save > Yes.
4. Repeat steps 1 to 3 for any other transactions that you want to amend.

You've now corrected the date on the transaction that made up the previous year adjustment, and the capital and reserves section of your balance sheet is now correct.

Clear the brought forward balance

NOTE: The information you need for the following steps appears on the brought forward trial balance you printed in the earlier section To check which profit and loss nominal codes have brought forward balances.

1. Nominal codes > Journal entry.
2. Enter a reference and a date in the previous financial year > when a warning appears about the date, click OK > to clear the brought forward balances, enter the relevant information.
   
   

   NOTE: This journal must be dated in the previous financial year, so it affects the brought forward period rather than the current financial year.

   For example, to correct a brought forward debit balance of £/€100 on nominal code 7000 Gross Wages, post the following journal entry, dated the last day of the previous financial year:

   N/C	Name	Dept	Details	T/C	Debit	Credit
   7000	Gross Wages	Dept	Correction of brought forward balance	T9		100.00
   3200	Retained Profit and Loss Account	Dept	Correction of brought forward balance	T9	100.00

3. Save > Close.

You've now moved the brought forward balance from the affected nominal codes to the profit and loss nominal code.

Move the effect of the transaction into the current year

NOTE: The information you need for the following steps appears on the brought forward trial balance you printed in the earlier section To check which profit and loss nominal codes have brought forward balances.

To move the balance from the brought forward period into the new financial year, you must post two journals. The first dated in the previous financial year to move the balance to the profit and loss account. The second dated in the new financial year to move the balance from the profit and loss account back to the original nominal code.

1. Nominal codes > Journal entry.
2. Enter a reference and a date in the previous financial year > when a warning appears about the date, click OK > enter the relevant information to clear the balance into the profit and loss nominal code.
   
   

   NOTE: This journal must be dated in the previous financial year, so it affects the brought forward period rather than the current financial year.

   For example, to move a brought forward debit balance of £/€100 on nominal code 7000 Gross Wages, post the following journal entry, dated the last day of the previous financial year:

   N/C	Name	Dept	Details	T/C	Debit	Credit
   7000	Gross Wages	Dept	Correction of brought forward balance	T9		100.00
   3200	Retained Profit and Loss Account	Dept	Correction of brought forward balance	T9	100.00

3. Save > enter a reference and a date in the relevant month of your new financial year > enter the relevant information to move the balance from the profit and loss nominal code to the relevant nominal code.
   
   

   NOTE: This journal must be dated in the relevant month of the current financial year.

   To restore the brought forward debit balance of £/€100 on nominal code 7000 Gross Wages, post the following journal entry, dated in the new financial year:

   N/C	Name	Dept	Details	T/C	Debit	Credit
   7000	Gross Wages	Dept	Correction of brought forward balance	T9	100.00
   3200	Retained Profit and Loss Account	Dept	Correction of brought forward balance	T9		100.00

4. Save > Close.

You've now moved the balance from the brought forward period to the current financial year.

Correct fund transactions posted to profit and loss nominal codes

Charitable fund balances carry forward into the next financial year. If you set up a charitable fund and link it to a profit and loss nominal code, when you run the year end the balance on this code isn't cleared down. This leaves a brought forward balance on the nominal code. To correct this, you must set up a new fund linked to a balance sheet nominal code and transfer the balance.

Check for fund transactions posted to profit and loss nominal codes

1. Nominal codes > Chart of accounts > Edit.
2. Check which nominal codes are part of the profit and loss areas.
3. Charitable funds > Activity.
4. Check whether profit and loss nominal codes have been used.

Once you identify which funds are using profit and loss nominal codes, you can set up new funds and transfer the balances across.

Create a new fund and transfer the balance

1. Charitable funds > New.
2. Enter the details of the first fund you need to replace > N/C > enter the balance sheet nominal code you want to use for the fund.
3. OK > Close.
4. Charitable funds > Fund transfer.
5. Enter a transfer from the original fund to the new fund for the brought forward amount > dated on the last day of the previous financial year.
6. Save > Close.
7. Repeat steps 1 to 6 for each fund that was originally set up with a profit and loss nominal code.

Print an audit trail for deleted transactions

If you delete or amend the value of a transaction which was posted to a profit and loss nominal code and dated in the previous financial year, it causes a brought forward balance to appear. If you haven't run the clear audit trail option for the relevant period, you can run an audit trail report for deleted transactions.

1. Transactions > Audit trail report.
2. Complete the Audit Trail Report window as follows:
   
   
   • From the Audit Trail Type area, select Deleted Transactions.
   • From the output area, select the relevant output type.
     
     
3. Click Run.
4. Criteria window > Transaction Date From and To > enter a date range from 01/01/1980 up to the last day of your previous financial year > OK.

You can now check the deleted transactions to see which ones have affected the brought forward balances.

NOTE: If you've amended the value of a transaction, this shows a deleted transaction for the old amount. The brought forward balance caused by the amendment is equal to the difference between the old transaction amount and the new amount.