Ask: Is this a local or an overseas supplier?

Yes, whenever you receive a supplier invoice denominated in a foreign currency, ask yourself this question. 

This will help you determine what amounts to report in your GST F5 return under Boxes 5 and 7.

​Let's break it down.

Your supplier may prefer to invoice in a foreign currency even though you've made a local purchase.

Should the supplier be GST registered, then the supplier is required by GST regulations to indicate the local SGD equivalence for the invoice amounts based on an acceptable exchange rate. Like this:

Here, accounting and GST reporting differ.

For accounting purpose, you may ignore the supplier's SGD amounts and use a different rate to record the transaction into SGD. 

For example, you may record in SGD @ 1.5 as follows:
Dr  Purchases                   1,500
Dr  GST Input Tax               105
Cr     Accounts Payable                    1,605

However, for GST purpose, you should use the supplier's SGD equivalence for declaring the taxable purchases and input tax:
Box 5 :   1,400
Box 7 :        98

You can understand the rationale for this approach when you see that the supplier would have reported an output tax based on the SGD amount shown on their invoice. As such, IRAS cannot be made to gain or lose from the same output/input tax.

When you import goods, the supplier - being an overseas supplier - does not charge and collect GST on behalf of IRAS. 

Take note of two things here:

(1) The import value calculated by the customs on the import permit generally differs from the supplier invoice because the customs adds extra charges, e.g., insurance and freight, and uses its own published exchange rate to convert to Singapore dollars. 
(2) The date to declare the GST (both input tax and purchase amounts) is the date of the import permit, not the supplier invoice.

For QuickBooks users, learn how to account for import GST in QuickBooks at Qcom's website here.

Related: ​GST Return F5: Can the Value of Revenue (Box 13) Differ from the Total Value of Supplies (Box 4)?

​The only shower room in the building is closed. I just had my morning walk and am all sweaty. I don't have a backup plan. What a sticky way to start Monday! 

In the office, we face the same situation. Computers break down. Computers get infected with viruses. Computers fail.

What is your backup plan?

Backup is a big topic ranging from business continuity to data backup. 

Let's address some basic questions at the lowest level of data backup:

Who is responsible?
You. Nobody else.

What needs to be backed up?
Your data, i.e., all sorts of files - documents, pictures, videos.

Where to store backup copies?
Any storage medium other than the original location.

When to do it?
When you don't have the time. 

Why?
Because... computers break down, computers get infected with viruses, computers fail.

How?

Yes. According to IRAS, "the value of your revenue should be extracted from your profit and loss account. It does not have to be aligned with GST reporting."

Sounds confusing? Let's break down this statement into 3 situations where differences may arise:
​

1. Revenue recognition
2. Revenue definition 
3. Supply scope

​First, understand that the QuickBooks accounting system comprises 3 components:

• QuickBooks program (application) - you must have installed this.
• Data file (*.QBW) - you use the QuickBooks program to create this.
• Data file location (folder) - you decide where you want to save the data file. 

Therefore, after installing QuickBooks, use QuickBooks itself to create a blank data file. Read more at QCOM's website here.

You're puzzled by all the QuickBooks file extensions in your computer: .QBW, .ND, .DSN, .TLG. "Do I need to know them?" You ask.

​I'll explain the following file extensions to you in a while:
​

• Main working file (*.QBW)
• Backup file types (*.QBB, *.QBM)
• Database support files (*.ND, *.DSN, *TLG).

Before that, let's begin by understanding how a software program reads data files. For example:

Software Program : Data File
MS Word : Filename.docx
MS Excel : Filename.xlsx
MS Powerpoint : Filename.pptx
Adobe Reader : Filename.pdf 

Similarly, this is then how the QuickBooks program reads a data file:

QuickBooks : Filename.qbw 

​This filename.qbw is what we commonly call a QuickBooks ​company data file (or data file, or company file, or QuickBooks file in short). It is the main data file where all your company financial records are stored.

​Now, where does QuickBooks save this data file? 

In QuickBooks, with a company file opened, press F2 to call up a Product Information page like this:

Here, you'll see some crucial information about your QuickBooks and data, including the (Data) File Location.

​Suppose you want to backup your company data, you can do so by using the internal backup function in QuickBooks (File > Back Up OR Create Copy).

What then are the file formats for QuickBooks backup files?

You are a busy (owner-)manager and you don't have time to oversee every transaction. Yet you want to ensure that money is not wasted or stolen. So you set up preventive controls to protect your assets. For example: 

• You sign every cheque.
• Every payment must be supported by valid documents to pay.
• Every document must be counter-checked by a competent person. 

But fraud is still closer than what most people are willing to admit ("I trusted him/her"). A survey by KPMG in 2014 showed two key findings:

• Out of 4 companies, at least 1 had encountered fraud incident(s) over the past two years. 
• Of the companies that experienced fraud, almost 3 cases out 4 were perpetrated by internal staff.

(Source: KPMG-SMU Singapore Fraud Survey Report 2014)

No wonder you go to sleep every night wondering whether you've missed out anything. 

Yes, you have.

​If you ignore simple detective-control reports you can get from your accounting software. What are these?

Preventive vs Detective Controls

First, let's understand the difference between preventive and detective controls. 

Preventive controls aim to prevent errors or fraud. For example, keeping the cheque book under lock and key, and all the measures listed in the opening paragraph above. 

On the other hand, detective controls hope to uncover errors or fraud had they happened. For example, checking the drawer and discovering that the cheque book is lost.

While fraud prevention is important, early fraud detection is necessary to minimise any loss. That's where your reports come in useful.

Remember the moonwalking bear? 

Do you mean?

You may think that some words sound professional, but they're not. At all.

In fact, they're dead giveaways that you've copied from somewhere - you didn't learn them in school. 

So, do not misuse the following words in your writing:

1. Find (redundant)
2. Perusal (legalistic)
3. Kindly (old-fashioned)
4. Revert (does not mean reply)

Note: Revert means to return to a former habit, practice, belief, condition, state, topic, etc.

​How about the word "enclose" vs "attach"? Strictly speaking, an email does not have "enclosure(s)" (unlike a letter, parcel, or package). Instead, an email can come with "attachment(s)". Therefore, "attach" is a better choice, but "enclose" is acceptable.

​Here's an amended version of the above email:

Better still, why not just keep it simple (and use "I" instead of "we/us")?

Interestingly, which of these five words do you see in QuickBooks?

• Attach
• Find
• Peruse
• Kindly
• Revert

​Take a moment to test yourself before continuing...

What is a desire line? It is a path made by walkers, as opposed to one that is officially planned, and represents the shortest or most easily navigated route between an origin and a destination. 

Dr Chong Keng Hua, an architecture academic at the Singapore University of Technology and Design, shares his opinion on this phenomenon in public areas:

(Source: Well-trodden paths unearth what pedestrians desire, The Straits Times, 19 Jan 2017.)

Consider the following picture I took at Beauty World MRT. In the context of your work, how resilient are you? ​

To apply to QuickBooks, let's create some "desire lines" alongside the menu bar to reduce cursor movements and mouse ​clicks: ​

1. Dress up the Favorites menu. 
   
2. Employ the right-click of the mouse.
   
3. Be a keyboard warrior, use keyboard shortcuts.

Buying a piece of software is like getting your office built-in cabinet - you cannot resell it, however good or expensive it is. This means that if you get it wrong, you either live with it or dispose it away. You don't have to make some common mistakes when buying an accounting software.

How?

By NOT talking to a prospective supplier like going out on a first date.

You know what people do on traditional first dates? They don't reveal too much and say only the nice things. Like these:

• It’s easy to use 
• You don’t need accounting knowledge 
• You don’t need computer knowledge 
• The software can do all these 
• We can do a non-obligatory demo ​

I'm going to uncover some hidden messages to you so that you can decide for yourself better. See my slide deck here.

Most people see 3. The answer, 6. Why do I show you this?

Because your eyes can play tricks on you.

And cause you to be tricked.

Like this letter that you just received...

Beware, the last paragraph reads (emphasis added):

Did you miss the "not" on your first reading?

Yes, this is the same company that ACRA has brought charges against (78 charges as at last count - maybe ACRA decided to keep the number auspicious).

In the meantime, enjoy the video below (same quiz):