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Note: This article is the second article in a two part QuickBooks year-end procedures series. To read part 1, Performing a Year-end Close with QuickBooks, go to www.nacpb.org/new/newsletter/091207.cfm.
Restricting Access to Prior-period Data
Unlike other accounting software, QuickBooks does not require users to close their books at the end of a fiscal year. Consequently, users can continue posting transactions to a fiscal year even after the bookkeeper has recorded all adjustments for the year and prepared financial statements. However, bookkeepers can request that users protect that data in QuickBooks by performing the following procedures:
Setting the Closing Date. The first step in restricting access to prior fiscal year transactions is to set the closing date so that QuickBooks users cannot add or change transactions dated on or before that date. Bookkeepers may want to restrict access to prior periods more frequently, for example, quarterly or monthly. This would narrow the period in which users can delete or change previous transactions. The QuickBooks Administrator (or the External Accountant) can set the closing date and password as follows:
- Select "Set Closing Date" from the "Company" menu. (Alternatively, select "Preferences" from the "Edit" menu, then select "Accounting" from the scroll-down list, and then select the "Company Preferences" tab. Or, select "Set Up Users and Passwords" and then "‘Set Up Users" from the "Company" menu and click the "Closing Date" button in the "User List" window.
- Enter the date through which books are closed (i.e., the ending date of the fiscal period) in the "Set Closing Date and Password" window.
- Enter and confirm the password and click "OK." (This step is optional.) QuickBooks will require users to enter the password when they post to a closed period.
The QuickBooks Premier-Accountant user with permission can set the closing date and password by selecting "Set Closing Date" from the "Accountant" menu and then following the same steps as the Administrator. While bookkeepers working with an accountant's copy cannot set the closing date, the client is prompted to set or update their closing date and password after importing accountant's copy changes. See NACPB's QuickBooks Year-end Procedures Guide. The QuickBooks Administrator and the External Accountant are the only users who can set the closing date in QuickBooks Pro and Premier. In QuickBooks Premier-Accountant, a user other than the Administrator or External Accountant may set the closing date and password protect it, if he or she has been given permission to sensitive accounting activities. QuickBooks Premier and Premier-Accountant include a "Closing Date Exception Report" that shows transactions dated on or before the closing date that were either modified or entered after the Administrator or External Accountant established the closing date. To reach the report, select "Accountant & Taxes" and then "Closing Date Exception Report" from the "Reports" menu.
Note: QuickBooks users should be aware that changes or deletions of closing dates are not reflected on the "Audit Trail" report.
QuickBooks does not allow any access to be denied to the QuickBooks Administrator or External Accountant. Consequently, the QuickBooks Administrator or External Accountant can continue to add, change, or delete transactions dated on or before the closing date, even after the closing date is set. However, QuickBooks displays the following message if the QuickBooks Administrator or External Accountant user tries to add, change, or delete a transaction dated on or before the closing date:
At least that message might help prevent the QuickBooks user from accidentally posting a transaction that affects a prior fiscal period. If the QuickBooks user ignores the message and posts a transaction to a prior fiscal period, the only way to track the change is through the "Audit Trail" report.
Setting up Access Permissions. Even though the closing date does not restrict the QuickBooks Administrator's or External Accountant user's access to prior-period transactions, it can be used along with access permissions to restrict the access of other QuickBooks users. Consequently, the second step in restricting access to prior fiscal year transactions is to set up permissions that restrict access to transactions dated on or before the closing date. The QuickBooks Administrator can restrict the access of other users to specific areas within QuickBooks (such as sales and accounts receivable or purchases and accounts payable). However, even users that have access to those areas cannot change or delete previously recorded transactions unless they are specifically given that permission. Even if a user has permission to change or delete transactions in areas in which they have access, the QuickBooks Administrator can prohibit the user from adding, changing, or deleting transactions recorded before the closing date. The QuickBooks Administrator can restrict access to prior-period transactions as follows:
- Select "Set Up Users and Passwords" and then "Set Up Users" from the "Company" menu.
- Click the "Add User" or "Edit User" button (as applicable) in the "User List" window.
- Click "Next" at the bottom of each window until reaching the "Changing or Deleting Transactions" window.
- Select "Yes" or "No," as applicable, in response to the first question, "Do you want this user to have the ability to change or delete transactions in the areas they have access to?"
- Select "No" in response to the second question, "Should this user also have the ability to change or delete transactions that were recorded before the closing date?" (QuickBooks automatically selects "No" and prohibits the administrator from answering this question if "No" is selected in response to the previous question.)
The QuickBooks Administrator always should deny users access to transactions dated before the closing date. If a user whose access has been restricted tries to add, change, or delete a transaction dated before the closing date, QuickBooks displays the following warning:
As discussed in paragraph above, if the user has access to add, change, or delete transactions before the closing date and a password is set, QuickBooks will display a warning message.
Detecting Changes in Prior Year Data QuickBooks allows users to set a closing date, select a password, and set up access permissions, but bookkeepers still should verify that the beginning balances for each balance sheet account equal the adjusted ending balances from prior years. The following methods may be used to detect changes in prior year balances:
Backing up QuickBooks Files As discussed in NACPB's QuickBooks Year-end Procedures Guide, both the client and the bookkeeper should make a backup copy of the client's QuickBooks file after all adjustments have been posted at the end of the fiscal year. In addition, bookkeepers should file and archive hardcopy documents related to the file.
Cleaning up Prior Year Data QuickBooks allows users to clean up their prior year data. The clean up data feature deletes detail transactions dated on or before a specified date and replaces them with transactions summarized by month. Although current fiscal year data should not be removed, bookkeepers can help their clients determine whether to clean up data from prior fiscal years. Data from the preceding fiscal year should not be removed until after the bookkeeper has made all necessary adjustments to that data and the client has filed all required payroll, sales tax, income tax, and 1099 forms for the specified date. QuickBooks requires users to make a backup copy of their files before cleaning up data. NACPB's QuickBooks Year-end Procedures Guide provides detail guidance on cleaning up data.
For more information on QuickBooks year-end procedures, refer to NACPBs QuickBooks Year-end Procedures Guide. |
