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.

     

    Lebanese Chart of account structure

    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

    Top 10 customers

    • 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

    Postdated checks

    • 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.