We love the Xero GST Reconciliation Report, but it's overlooked by some bookkeepers. Take a good look at how it can create peace in your practice by ensuring you have everything covered.
This report checks that all BAS published match the manual journals posted. It checks that the balance in the GST account is correct and that no entries have been made after the BAS was published. It will also identify any amounts paid or received in the next quarter which have invoices or bills dated in the current quarter.
To check that the BAS is paid, run an Account Transaction Report on the Unpaid ATO Liabilities account and reconcile it against the ATO Integrated Client Account. (This should be done every quarter as part of the BAS process).
GST Collected & GST Paid Section
The top section of the GST reconciliation report shows the GST collected and GST paid according to what has been reported.
The filed column will show the amounts reported on the BAS which has been published.
Note: Ensure that the first period is prior to using Xero and shows $0 as filed in both sections. If you don’t do this, you’ll find discrepancies going forward. Ensure you do this every time you run the report
There will be cents showing on this report. Every quarter, process a journal to reduce this to zero. The journal should be dated the last day of the quarter. The figure is grossed up, so if you are out by 5c in GST collected, the figure will be .05x11=.55
This is the journal.
Run your GST Reconciliation Report again, and the unfiled cents will be cleared. This journal is for if you’re out by a positive amount. If the amount is showing as negative, do the reverse of the journal entry (eg dr instead of cr).
GST Account Transactions
This section shows the manual journals posted by the bookkeeper when the BAS is completed. There’s no reason to review this each quarter except to make sure journals are posted.
The opening balance should be zero. See my tips at the end of this paper if it’s not.
GST collected and filedis the GST which has been collected – see the section at the top of the report.
GST paid and filedis the GST which has been paid – see the section at the top of the report.
Less payments madereflects the manual journals posted when the bookkeeper processes the BAS.
Check that the closing balance is zero. It should be because the GST paid and filed (reported when you publish the BAS report) should equal the manual journals the bookkeeper has processed each quarter.
If this doesn’t equal zero, the manual journal processed will be different to the BAS published.
GST Account Summary
GST owingshould be zero because we’ve cleared the GST account when we processed the manual journal entries.
GST in accounts receivableis the amount of GST owing on invoices we’ve processed. The GST on these invoices will be accounted for in the GST account already. Run the Aged Receivable Detailed Report and in account settings select “outstanding GST”. Deselect ageing periods and update. Change the date to be the last day of the BAS period. You can now confirm that the GST in accounts receivable is correct.
GST in Accounts Payable. This is similar to GST in accounts receivable. It is for bills which have been raised before the end of the BAS period, and which have not been paid yet. The GST component is showing in the GST account. Run an Aged Payable Detail report and filter in the same way as the Aged Receivables Detail Report so that you can identify the GST component.
Unfiled GST. This should be zero. If not, review the unfiled columns to identify the error. If it is a larger amount, investigate (see below). If it is rounding, process a journal as mentioned above.
The Balance at xx/xx/xx and GST Account Balanceshould match. If they don’t match, it will be because a transaction dated AFTER the end of the BAS period has been paid BEFORE the end of the BAS period.
To find this transaction, run the Customer Invoice Report for the next month (eg, doing June BAS, run it for July). Scan down the “paid date” column and look for any dates during the BAS period that you’re processing.
Below is the Customer Invoice Report. You can see the “date paid” was 15 September, but the invoice was raised on 4October. This is what would throw the balances out. You can leave it and enter a comment on the BAS reconciliation.
If you can’t locate an amount paid during the BAS period for an invoice dated after the BAS period, it may be a bill instead.
Run the Supplier Invoice Report and in a similar way as above, scan down the “date paid” column looking for an amount paid in the BAS period, for a bill raised after the BAS period.
To further confirm that the GST Account Balance is correct, you can run an account transaction report on the GST account. However, this isn’t necessary as the amount showing in GST Account Balance is taken from this report.
All amounts posted to the GST Account have been accounted for.
The published BAS Report has had the Manual Journals entered correctly.
Also, reconcile the ATO ICA by running an account report. This will confirm that what was owing has been paid.
These processes will ensure:
That the client has paid their BAS. Reconcile the ATO ICA each quarter.
That what has been reported to the ATO is the same as what has been paid. The BAS reconciliation report checks the journals are correct, and the ICA reconciliation will confirm what has been paid.
That PAYGW is correct. Reconcile the PAYGW account each quarter.
If there is an opening balance in GST Owing, check the conversion balances. It may be that an amount was entered directly into the GST account and may need to be rectified.