The MPC account is the accounting account in which an organization records liabilities for mandatory pension contributions before they are remitted. It is important for an accountant not only to select an account in the chart of accounts used by the organization, but also to verify the analytics by individual, the accuracy of the source data used for the calculation, the accrual entries, and the settlement of the liability after payment. The specific account number and corresponding entries depend on the chart of accounts used by the organization, its accounting policy, and its information system settings. Therefore, the account number should be determined according to the current chart of accounts used by the specific organization.
What the Amount Under the MPC Account Means
The query “amount under the MPC account” may refer to different indicators. Most often, it refers to one of the following three values:
- the amount of MPC recorded for a specific individual;
- turnover on the accounting account for the selected period;
- the outstanding liability that the organization has not yet remitted.
These amounts cannot automatically be considered equal. Turnover arising from recognition of the liability shows the amount recorded for the period, the payment represents settlement of the liability, and the closing balance is determined by taking into account the opening balance, accruals, remittances, and adjustments. Therefore, reconciliation should compare not only the account total but also the movements for each individual and settlement period.
If the amount in the accounting records differs from the calculation statement, the income accrual documents, MPC calculation, manual transactions, refunds, adjustments, and results of reposting documents should be checked sequentially. Particular attention should be paid to situations where a payment is recorded as a total amount while liabilities are accounted for using analytics by individual: the total turnover may match even though unsettled balances remain within the account.
During the analysis, it is important to establish which particular indicator the identified amount relates to. The opening balance may have arisen earlier, turnover for the period reflects only current movements, and a payment may settle liabilities for several settlement periods at once. Without separating these indicators, no substantiated conclusion can be made as to whether a liability is outstanding.
Reconciliation should be performed using data from primary accounting documents, accounting registers, and the information system. This approach is also important from the perspective of tax control: during a tax audit, officials of the tax authority may require accounting documentation and access to software data containing information from primary documents, accounting registers, and taxable items (Article 160 of the Tax Code of the Republic of Kazakhstan).
MPC Account in Kazakhstan in 1C
In 1C, it is better to begin the review not by manually correcting an entry, but with the document that generated the movement. The source of the amount must be identified: income accrual, calculation of deductions, payment document, adjustment, or a manually entered transaction. The accounting entries should then be compared with the calculation registers and accounting settings.
If the software reports that the procedure for calculating income for MPC has not been defined, the organization’s accounting policy settings used to calculate MPC must be checked. The name and location of the parameter in the interface depend on the software configuration and release. After correcting the setting, the source document should be recalculated and the generated movements checked.
Before changing the setting, it is useful to determine the date from which it applies and which documents use its value. This makes it possible to distinguish a setting error from an error in the document’s source data. If the parameter has been completed, the discrepancy may relate to the composition of accruals, the income registration period, the individual’s analytics, or subsequent adjustments.
The procedure in the information system can be organized as follows:
- Open the organization’s accounting policy settings relating to the calculation of MPC.
- Check that the parameters have been completed and verify their effective date.
- Open the document in which the disputed amount was calculated and check the source accruals.
- Recalculate the document after correcting the source data or setting.
- Check the entries and movements in the calculation registers.
- Generate an account analysis broken down by individuals and periods.
If the settings were changed after the documents were created, the documents may need to be reposted sequentially. Before doing so, the affected documents should be identified and the impact on closed periods, previously prepared reporting, and payments already recorded should be assessed. The result must be checked not only against the total amount but also across analytical dimensions.
How an Accountant Can Verify MPC Accounting
It is convenient to perform a practical reconciliation from the initial accrual through to payment. First, identify the document, period, and individual for which the liability arose. Then check the MPC calculation result, accounting entry, and analytics. After that, compare the amount with the payment document and the account balance.
The control procedure includes the following actions:
- generate a trial balance for the MPC liabilities account;
- set the same period in the accounting report and the calculation statement;
- include the available analytics by organization, individuals, and periods;
- compare turnover arising from recognition of the liability with the calculation documents;
- compare turnover arising from settlement of the liability with the payment documents;
- analyze the opening and closing balances separately;
- check adjustments, refunds, reversals, and manual transactions;
- ensure that the payment has been allocated to the correct type of liability and period;
- check that there are no duplicate or unposted documents.
If the discrepancy arose after settings were changed, it is useful to compare the document dates, the accounting policy’s effective period, and the time when the parameters were changed. Reposting may change document movements, so the original indicators must be recorded beforehand and it must be possible to compare them with the result. The organization’s established backup procedure should also be used for the production database.
A liability should not be determined solely from a bank statement. A payment confirms the movement of funds, but reconciliation of the calculation also requires the accrual document, accounting registers, and payment analytics. Likewise, a zero total balance does not rule out errors between individuals or settlement periods.
If the overall total matches but offsetting balances remain for individual persons, the analytics of the accrual and payment documents must be checked. Such balances should not be cleared with a general manual transaction without analyzing the source documents, as this makes subsequent reconciliation of the registers and accounting account more difficult.
It is convenient to document the review results in a reconciliation table. For each individual, it should record the opening balance, amount for the period, remittance, adjustments, and closing balance. This level of detail helps identify the document that caused the discrepancy and confirm the relationship between the calculation statement, accounting records, and payment.
Frequently Asked Questions
Which accounting account should be used for MPC? — The specific number is determined according to the organization’s chart of accounts and the settings of its accounting system. During verification, it is important to use the same account and identical analytical dimensions in all reports being compared.
What does the amount under the MPC account show? — It may represent turnover arising from recognition of the liability, a remittance, or a balance. The meaning of the indicator depends on the type of report, period, and selected analytics.
Why does 1C display a message about the procedure for calculating income for MPC? — Such a message indicates that the relevant accounting policy settings used by the software for the calculation must be checked. After changing the setting, the source document should be recalculated and its movements checked.
Can a discrepancy be corrected with a manual entry? — First, the source document, setting, or analytical dimension that caused the discrepancy should be identified. A manual transaction performed without correcting the cause may leave differences between the accounting account and calculation registers.
How can the remittance of MPC be checked? — The payment document must be compared with the turnover arising from settlement of the liability, and the period, payment type, and analytics by individual must be checked. The total amount shown on a bank statement alone is insufficient for a complete reconciliation.
Sources
- Tax Code of the Republic of Kazakhstan, Article 160 “Rights and Obligations of Tax Authority Officials When Conducting a Tax Audit.”