How to reverse PV for stale cheque after Auditing the Financial Year

Stale Cheque is defined as cheque that has not been deposited or cleared within 6 months of the cheque issuing date, therefore the Cheque is no longer valid.

Reverse PV for Stale Cheque is the function to cancel the Payment Voucher (PV) that was created before.

If the Audit for the financial year has not been executed yet, the PV can be reversed as usual. Refer Reverse PV

The following are the steps needed to be performed after the financial year has been audited, however, there is a stale cheque within that audited financial year.

In this case the company already audit for the Financial year. After audit, company cannot make any change in the system because it will change the audit report.

For Example:

A company bought some inventory from a Supplier worth of RM 100 and GST RM 6 on (30th Sept 2015). The company paid to the supplier via cheque of HSBC Bank amounting to RM 106 and dated 1st Oct 2015. The Company found that the supplier did not use the cheque to the bank within 6 month (from the issued date). So, the cheque has became a Stale cheque (outdated) after 6 month. The company decides to pay the supplier again on (10th May 2016). However, the amount in the system cannot be changed since the Audit which has already been executed for that Financial Year .

The following transactions are separated into 3 different Journal Entries.

1. A company purchased inventory from Supplier worth of RM 100 and GST RM 6 on (30th Sep 2015).

Menu Path: Procurement > Transactions > Direct Receiving Stock or Trading > Purchase > Direct Receiving Stock

The company received Inventory from Supplier and Created GRN (Good Receive Note). The company has not paid to the Supplier. Therefore, the GRN is outstanding.

The transaction for journal entry would be as follows:

Date	GL Code	Debit	Credit
31^st Sep 2015	Inventory	100
	gst_Input	6
	accPayable		106

2. The company paid to supplier via cheque of HSBC Bank RM 106 dated 1st Oct 2015.

Menu Path: Finance > Payment Voucher > Create Payment Voucher

To Pay the Supplier, the company Create Payment Voucher. Under GRN /SINV. using the " Settle Supplier Invoices"

The transaction for Journal entry would be as follows:

Date	GL Code	Debit	Credit
1^st Oct 2015	accPayable	106
	HSBC Bank Account		106

3. The Company found that the supplier did not clear of deposit the cheque to the bank within 6 month (from the issued date). So, the cheque became a Stale cheque (outdated) after 6 months. The company decides to pay the supplier again on (10th May 2016). However, due to the Auditing which was already been done for that Financial Year they cannot make any change on amount in the system.

The supplier did not use the cheque to the bank within 6 month (from the issued date). Now, the company needed to pay the supplier without touching the Audited Financial Year.

There are 6 steps to reverse PV for stale cheque after audit.

In the EMP system, the company has to create a transaction to enable the SINV to be outstanding again.
So that, they can pay to the Supplier and make transaction in the EMP system without affecting Audit report of last Financial year.

The date and amount has to be referred to the above example. Please follow the menu path and wiki link in every step.

Step 1: Reverse the PV-1:

Menu Path: Finance > Payment Voucher > Reverse PV

The PV has to be reversed by creating a backdated transaction on 1st Oct-2015, to cancel the old Payment Voucher (PV).

In the EMP system, the journal transaction will be reversed, therefore, the previous PV number has to be keyed in the text box.

The Journal Transaction would be as follows:

Date	GL Code	Debit	Credit
1^st Oct 2015	HSBC Bank Account	106
	accPayable		106

Step 2: Create New PV-2:

Menu Path: Finance > Payment Voucher > Create Payment Voucher

Create new PV with cashbook (HSBC Bank) and any Contra GL code and the date should be 1^st Oct 2015.

To make the adjustment, a Contra GL Code is used as a medium.

The Journal transaction would be as follows:

Date	GL Code	Debit	Credit
1^st Oct 2015	Contra GL	106
	HSBC Bank Account		106

Step 3: Create a CM-1

Menu Path: Supplier > Credit Memo > Create

Create CM with account Payable and contra GL code on 1^st Oct 2015. Therefore, both the Contra GL code will be cancelled with each other on debit and credit side.

For CM1 The Journal will be:

Date	GL Code	Debit	Credit
1^st Oct 2015	accPayable	106
	Contra GL		106

After performing the journal transactions above, the amount will appear the same as stated in the Audit Report. Please compare the new amount with the Audit report.

Note: Since in Step 1, the PV-1 is reversed, Step 2 and Step 3 are to simulate the effect of PV-1 to ensure the audited amounts remain the same.

Step 4: Create RCT Voucher:

Menu Path: Finance > Receipt Voucher > Create

The RCT should be created on the current date 10th May 2016 with cashbook (HSBC bank) and any contra GL code.

The RCT is created to simulate the flow back of money into the bank account due to stale cheque.

For RCT the Journal Transaction would be as follows:

Date	GL Code	Debit	Credit
10th May 2016	HSBC Bank Account	106
	Contra GL		106

Step 5: Create another CM-2:

Menu Path: Supplier > Credit Memo > Create

This CM should be created on the current date 10th May 2016 with accPayable and Contra GL code.

For CM2 the Journal transaction would be as follows:

Date	GL Code	Debit	Credit
10th May 2016	Contra GL	106
	accPayable		106

Note: Step 4 and Step 5 are performed to simulate the effect of stale cheque, where the money comes back into the bank account and owing to the supplier increases.

Step 6: Contra CM-1 and CM-2

Menu Path: Supplier > Credit Memo > Credit Memo Contra

Contra the CM from 10th May 2016 with the CM from 1st Oct 2015. No Journal would be created here. This change is only at document level.

Note: Upon the completion of Step 6, the amount will be reversed without affecting the Audit Report.