Lebanese accounting system specifics

Lebanese accounting system specifics

• Lebanon follows the International Financial Reporting Standards (IFRS) for accounting.
• Differences in the Lebanese system necessitate modifications to standard accounting software.
• These adjustments are vital to meet the specific requirements of Lebanon’s accounting rules.

Multi Currencies support

• Currency Handling: Software stores journal vouchers in the main currency with extra data for multi-currency support.

• Lebanese Requirement: Auditors in Lebanon need to view journal vouchers in Lebanese Pounds and foreign currencies.

• Additional JV Data: Our system captures currency-specific debit/credit at transaction exchange rates.
• Currency Reports: Financial reports are generated per currency, aligning with Lebanese accountants’ preference for transaction date rates.
• Handling Discrepancies: At closing, any differences between financial reports in different currencies are posted as exchange discrepancies.
  

Multi Exchange Rate

• Official rate: $1 = 1,500 LBP.
• Bank rates: 4,500 and later 8,000 LBP.
• Sayrafa rate.
• Black market rate.

• Application of Rates:

• • • B2C dealings: Netting amounts in LBP based on the black-market rate, with taxes also applied at this rate.

• • • B2B dealings: Billing in USD, collecting in USD, VAT initially priced at official rate, then 15,000 rate, and finally Sayrafa rate. VAT paid in LBP.

• Challenges Faced:

• • • Accurate Financial Reports: Solely using the official rate made fiscal declarations challenging, hindering the accuracy of financial reports.
    • Payment Allocation Issues: Paying invoices in USD and VAT in LBP complicated the allocation of payments, making it difficult to mark invoices as closed.
    • Stock and Account Inaccuracies: Resulted in incorrect stock valuation and inaccuracies in bank and cash accounts.

Automatic closing vouchers

• Closing Vouchers Usage:

• • • Lebanese accountants use closing vouchers regularly, not just annually.

• Quarterly VAT Declaration:

• • • In Lebanon, VAT is declared quarterly.
    • Azkatech’s accounting module automates this by summing VAT received and paid, adding the difference to the appropriate account for payment to VAT authorities.

• Azkatech Automation:

• • • Azkatech’s module automates the process, selecting and consolidating the right amounts, generating a draft Journal Voucher. Optional consolidation with all relevant VAT transactions is ready for auditor approval.
     

Top 10 Customers, top 10 Suppliers

• Ministry Requirement in Lebanon:

• • • The Ministry of Finances mandates businesses in Lebanon to submit top customer and supplier lists to combat tax evasion.

• Azkatech’s Solution:

• • • Azkatech’s accounting module links every customer and supplier to transactions at the Journal Voucher level, facilitating accurate generation of top 10 customer and supplier lists to meet ministry requirements.
     

Per customer/supplier accounts & VAT

• Accounting Complexity:

• • • Traditional systems merge customer, supplier, and VAT accounts, posing issues for Lebanese accounting distinctions.

• Lebanese Accounting with Azkatech Odoo:

• • • Azkatech’s Odoo accounting allows the same partner to serve as a customer, supplier, or asset supplier with separate accounts and VAT accounts.

• Simplified Transactions:

• • • Users select the purchase type (e.g., asset or raw material) during transactions, ensuring accurate financial logging under the right accounts.
     

Postdated check – specific to Lebanese accounting

• Azkatech’s system manages postdated checks in Lebanon for guaranteed payments.
• It credits the partner account upon check receipt, debits a temporary account instead of the bank.
• Generates a report of checks due, sent to the bank for collection.
• Upon the bank’s confirmation, credits the temporary account and debits the bank account.