Structuring a client's chart for audit workتنظيم شجرة حسابات العميل لعمل التدقيق

Two tools handle almost every "I need this split finer" request an audit engagement raises: one extra level in the chart, and an auxiliary record. Knowing which one to reach for - and stopping there - keeps a client's chart short enough to still be readable a year later.

1. Split a mixed account by tax treatment, one level

A single expense account often carries both VAT-eligible and non-eligible postings. Reports built around VAT read the account's own VAT checkbox (see §5 of How to open an account), so a report cannot pull the two kinds of posting apart from one undifferentiated account, and the account's total cannot be checked cleanly against the registered rate (11.000 for a Lebanese company - see §5 of How to set up a company).

The fix is one extra level. In the worked example below, the account 6262 Maintenance And... starts as a single account with nothing under it:

Two children are opened under it - 62621, with VAT ticked, and 62622, with VAT left clear - and the taxable and non-taxable charges are posted to whichever child matches:

Stop at one level. Split exactly the taxable/non-taxable distinction that account needs and post there - don't open a third level under either child. Anything finer than "taxable or not" belongs on an auxiliary record instead, not on another rung of the chart.

2. Reach for PID instead of another chart level

Once a split like that exists, a finer question - which building this maintenance was for, which part of one bill was VAT-eligible - is answered with an auxiliary record on the account, not with a third chart level. Tick PID on the account (§5 of How to open an account) and create the auxiliary records you need.

Building-linked maintenance: the taxable child from §1 was opened with PID ticked, and two Other-type auxiliary records were created under it - one naming a building, one naming its electricity - so a maintenance entry can be tagged with which building it belongs to, without a separate account per building.

A bill split without touching the chart at all: a utility bill that has to be divided between a VAT-eligible portion and a municipality-billed portion can be entered as two lines on the very same expense account, each carrying a different Other-type auxiliary record naming its own portion - two lines, one account, told apart by their auxiliary rather than by opening two accounts for one supplier.

3. PID locks the moment it posts

Decide before the first entry, not after. Tick PID while the account still has no postings on it - once one entry has gone through, with or without naming an auxiliary, the setting can no longer be changed (see §5 of How to open an account and Key rules).

4. Why auxiliary accounts exist at all

An inherited chart with one ledger account per client or per supplier is one of the harder things to hand an auditor on day one. The auxiliary layer exists to avoid ever building one: clients, suppliers, employees and banks are not opened as separate chart accounts at all - they are auxiliary records that sit on one shared account for their kind (see The Auxiliary Accounts screen). That is what makes a statement, an ageing report or a Top-10 clients/suppliers list possible without a chart that grows by one account for every party a client ever deals with. A chart built the other way tends to run long enough that unrelated account families end up numbered close together, and every new counterparty means opening another account before you can even post an entry.

5. What is worth filling in for tax and audit work

The auxiliary screen itself is documented field by field in The Auxiliary Accounts screen; three fields are worth flagging for the kind of work an audit engagement does:

• List decides which chart accounts a record can even sit on before you pick one - Clients, Suppliers, Banks, Employees or Other.
• Financial no's small box, filled only when the party is VAT-registered, and Company, the party's full registered name, are what the Top clients/suppliers report prints - see VAT §4. Leave them blank on a party with no fiscal number and tick Non resident instead.
• Each record follows the Currency of the account it is opened on, useful to know when a client works with parties who only ever deal in one currency.

Attachment turns the record into a small archive: scan and attach a trade licence, a VAT certificate, a signed contract, so a document a client hands over during the engagement sits with the party record itself instead of in a separate folder.

See Working across many client companies for building this chart once, in a template company, before copying it into every client.