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General, Essential Accounting Checks

Run the following procedure monthly to confirm that…

1. your Accounts data is in good order

2. you are not holding transferable commission in the Client Bank account

3. that you have sufficient funds in your Client Bank Account to pay your insurers

1. Confirm Accounts Data is Correct

If your computers are joined in a network you are advised to do the following on your server computer rather than a workstation (to save time), and without any other users on the system (to prevent system crashes). First run an “Accounts, Integrity Check” to ensure that none of your accounting records are missing, and that your accounts data is correctly linked and in good working order. Afterwards you may optionally “Rebuild the Nominal Ledger Totals”, though this is only essential if you had errors reported during your integrity check.

2. Move Transferable Commission

Next run the “Transferable” commission routine to clear any transferable commission from your Client Bank Account, which the FSA requires you to do at least every 28 days. Immediately afterwards you should go to the Cashbook and use the “Cash-up to bank” option to complete the process of moving your commission between bank accounts. It is essential that you use the same date for the cashing-up as you used for the commission transfer. After this the Client Bank account will contain…

  • net premiums you owe to your insurers
  • bank interest received
  • any remaining commission for part-reconciled transactions (which the transfer routine ignores until complete)
  • 3. Check Client Bank Account has Sufficient Funds

    It is essential that you use the same date for the following two General Insurance reports, illustrated above, as you used for the cashing-up and the commission transfer, otherwise you will not get a correct overall position…

  • Net premiums owed to insurers”, which shows the total amount you owe to insurers, including for policies that the clients haven’t settled yet, where the premiums cannot therefore be in the Client Bank
  • Net premiums not received”, which shows the total amount of such un-received premiums
  • So to verify that your Client Bank account has sufficient funds to pay your insurers you need to deduct the second report’s total from the first, then check that this (i.e. the amount of net premiums you owe and have received) is less than the current balance of your Client Bank account. Remember that the current balance may also include bank interest and possibly some part-transferred commission, hence should be slightly greater than the amount of net premiums.