Reinvest transaction for managed funds leaves negative cash balance in account

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  • Problem
  • Updated 2 years ago
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I am using ReckonAccounts Personal Plus 2013
I used to use the "Reinvest - Income Reinvested" transactions for recording Distributions from managed funds that are reinvested back into that fund. The value of the distribution would be recorded against the "Fund/Trust" option, with the reinvestment recorded in the lower half of the panel. However I have noticed that as a result of doing this, the transaction is split into separate ReinvLg and Bought records in the transaction list with a net negative cash balance. 
The error this generates is that no cash is involved and so the net investment position is devalued by the negative impact of this cash
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Peter

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Posted 5 years ago

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Tony

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Yes, I found this too!  But I also found I could modified the transaction that had amount against it back to reinvest and it fixed the details; but then it placed them out of order (I had five similar transactions on the one date), so rather than have the transaction with a dividend and the next being shares bought, I now have five dividend and then five bought transactions.  Fortunately it adds to zero.

I'd love to know how to reorder transactions occurring on the same date!

Tony
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Sunder

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Hello, I am having the same issue. This doesn't make sense. Why is there a negative balance in the managed fund account? Is this a bug? In previous versions of Quicken this worked fine. How do I solve this problem?
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Deny Dharmawan, Alum

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Hi Peter,

I would like to get more information about the "Distributions from managed funds that are reinvested back into that fund" process. Are you able to give me a scenario?

For example,

You have 100 shares with company A. Then you receive $20 worth of funds which you reinvested back to the company A, which increases your shares to 110. Share price is $2 each.

Deny Dharmawan

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Sunder

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Hello Deny,

You can reproduce this quite easily as follows with a brokerage account (Investment account).

Choose "Reinvest - income reinvested" option.

Choose security name etc.

In the field "Fund/Trust", enter the amount to be reinvested.

Specify the Shares Issued and zero carry forward balance (typically what happens with managed funds).

Confirm the transaction.

This results in two entries in the account. First one is ReinvLg showing the amount that was reinvested (if you edit the transaction).

The second is Bought action, showing the number of units/shares purchased and the correct cost and price. However the Cash Balance (and Cash Amount) shows a negative amount corresponding to the total amount reinvested. As a result, the account is now showing a negative cash balance.

If you need screen shots etc. I can provide these. But, fairly easy to reproduce.

I am using Reckon Accounts Personal Plus 2015 Release R1


Thanks.



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Craig McKellar

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Why has reckon not responded to this issue. This seems like an obvious bug that must be fixed.
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Deny Dharmawan, Alum

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Hi Craig,

The way so you do not have negative cash balance is to enter the dollar value of the reinvestment into the Franked or Unfranked Dividend instead of Fund/Trust when you use Reinvest - Income Reinvested.

Regards

Deny Dharmawan

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Craig McKellar

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Thanks. But this highlights that this is a bug and we should be getting a software update to fix it. Are we to  change all these entries and now have our accounts not correctly reflecting the transaction.
It is inconceivable that this seems to be introduced by 2015 reckon and no action taken. 
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Sunder

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Hello Deny, although I detailed the steps to reproduce over a month ago, I am disappointed that you (and Reckon) are still intent on giving a work around rather than looking to fix the problem. Do you agree that it is a bug? If yes, why are you people reluctant to fix it?

There are other work around methods possible - like entering the distribution as Income transaction and then entering a buy transaction. But, that is not the point. We buy software in the hope that it will make life easier. Why should we be expected NOT to use an available feature and employ a work around?

Can you please get back to us on why this is not being fixed.

I fully support Craig on this matter and the views he has expressed above.

Thanks, Sunder.



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gavin.nicholson.au

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Yes and of course this "work around" screws you at tax time because you have the wrong amounts in the franked/unfranked/trust subtotals of any reports you run!

So the actual workaround! I have been using is to do two transactions. Firstly "Record an Income Event" with your distribution then BUY the requisite number of units in the trust :-( Yes the *feature* they introduced back then is worse than having nothing at all.
(Edited)
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Deny Dharmawan, Alum

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Thank you for your inputs and feedback.

I will continue to look into this recording distributions from managed funds that are reinvested back into that fund without the so called workaround.

I will post it here when I get the answer. This will take some time. In the mean time, the above suggestions can be used or wait for an update.

Regards

Deny Dharmawan

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Craig McKellar

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Thanks Deny
I look forward to an update. If we find this update does not come till the next version next year then that will be the end of me with this software and paying a yearly subscription. 
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Deny Dharmawan, Alum

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Hi guys,

Apologises for the delay in the update.
This issue is still being looked at. I haven't had a response yet. As soon as I am given a response I will pass it along.

Thank you for your patience.
Kind regards
Deny Dharmawan
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Sal M

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gavin.nicholson.au is correct using Deny's workaround  "enter the dollar value of the reinvestment into the Franked or Unfranked Dividend instead of Fund/Trust when you use Reinvest - Income Reinvested".....  screws you at tax time because you have the wrong amounts in the franked/unfranked/trust subtotals of any reports you run!

but with the workaround suggested by gavin.nicholson.au ..... recording reinvested income as income event...... reckon allocates this  income as a capital gain. This means if you use this method for recording reinvestment of "rebated" funds reckon will again overestimate your capital gains incorreclty including the rebated funds . 


so both methods are inaccurate when it comes to capital gains/distribution/dividend reporting . Reckon is currently unable to record a dividend reinvestment accurately 
any way you try ..... BEWARE IF YOU USE REINVESTMENTS IN MANAGED FUNDS RECKON 2014/2015 is NOT FIT TO USE FOR THE PURPOSE
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Sal M

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I also find this problem in reckon personal plus. to make matters worse the ReinvLg  entry created by reckon when entering a dividend reinvestment , adds onto the capital base /cost base for the investment in addtion to the cost of the new shares giving a double entry for the amount reinvested. This messes up the cost base of the investment with double entries and makes cost base calculations inaccurate . THIS IS SERIOUS ERROR AT TAX TIME AND FOR CALCULATING CAPITAL GAINS. Reckon has a serious flaw and should issue a warning to customers and address this  urgently.   
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Craig McKellar

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How long can an serious issue be "looked at". it appears Reckon is not being accountable for its software and needs to provide customer service. Sal makes a very good point. We are now in the 6th month of a financial year paying for an annual subscription with no updates. 
 Reckon: Stop ruining your client satisfaction and take responsibility for your issues.
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Deny Dharmawan, Alum

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I am still waiting for the official reply regarding this issue. In the mean time, please try the mentioned workaround.

Deny Dharmawan

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Sal M

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Surprised Reckon havent emailed clients that there is a defect in the software that will miscalculate the capital base for funds/trusts where a reinvest income entry is made. Spent quite some time trying to reconcile this and assumed it was my error, not software error. If I pay a subscription and i am a registered user why isnt such a major issue notified to me directly . How many other people are wasting their time resolving the miscalculated capital base numbers or even worse using the  incorrect capital base figures directly from Reckon.
Capital base tracking is a major portfolio function in Reckon and I hope this problem is acknowledged and can be hastily addressed.       
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Craig McKellar

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This thread has been going 9 months and still no fix. This is very poor service from reckon. 
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Sunder

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Hello Reckon employees,

So, a few months have passed and yet you people have failed to address this issue. I can't believe that in this day and age, it takes you people so long to identify the bug and issue a fix. I work for a software company myself and if I made my customers wait 6 months for a critical fix, then I would have a large number of unhappy customers who would give me a lot of bad press.

Is Reckon ignoring us because we are just "little" people? You think we can't raise the heat on this issue?

Please take heed of all our comments and ACT fast. At the very least, update us on what your findings are with this bug and when a fix will be available.

Thanks.

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Mirko, Alum

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Hi all, thank you for your posts and feedback. Explanation and workaround/fix to this issue can be found here: https://community.reckon.com/reckon/topics/reinvestment-workaroung
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Paul Blake

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Unfortunately this is not a "fix". The end result is a managed fund with a negative cash balance (which should be zero) yielding an incorrect Gain/Loss calculation. What is needed is an actual bug fix!
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Colin Cunningham

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It is now 2017 and the bug is still here. I was just updating my unit trust account in Home and business 2017. The fix is not a fix but a lot of extra work to hide a bug and it does not hide it successfully as some reports still come up with wrong numbers (just look at the fix documentation).

In just a few months of recent use I have now come across 2 bugs that cause incorrect reporting. I went to the community page THESE BUGS WERE KNOWN AND RECEIVING CUSTOMER COMPLAINTS UP TO 4 YEARS AGO. Do we have to go to Facebook, whirlpool and other social media to start visibly attacking Reckon for ignoring reporting errors in its Software. I rang consumer affairs and while software with faults is expected notified faults that are not fixed after 4 years that impact taxation reporting was considered an issue that could get attention. In discussion it appears there may also be liability issues because customers have not been notified of a known product defect directly after 4 years that may have resulted in incorrect tax filing. Please advise your plans.
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gavin.nicholson.au

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I really hope you can get some leverage to get this software fixed....
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Rav, Community Manager

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Hi guys,

Obviously a lot of frustration throughout this thread and I'm very sorry to see that it's stretched on for quite some time.

I've had a word with our Product Manager in regard to this and it's been added to the 2018 project and given priority for investigation when work begins on the next iteration. I can't make any guarantees on a fix being implemented at this stage as investigation work needs to be carried out first obviously, but at the very least we're heading in the right direction.

Now in regard to the workaround that's been advised above and here, I'll be honest, I'm not an expert in this area so I'll need your help in this.
For the results of the workaround, are you able to give me details on what results you are expecting to see and which reports you are looking at/impacted?

I will feed this info back to our Product Manager to try find a better solution/workaround in the interim.

Thanks guys

Rav
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Colin Cunningham

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I use personal and business 2017.
The "Reinvest - Income Reinvested" transaction is used for many types of accounts. In the case of a managed fund held within an account that can show a cash balance (eg broker), if you use the "Reinvest - Income Reinvested" transaction in such an account the income received is not shown in the account (assumption that managed fund does not create cash? Makes sense). However then the reinvestment in purchase of additional shares is deducted from the cash account balance. The second transaction forgets this was a managed fund and therefore takes cash from the account as it does anywhere else. This is just my assumption on the way the programming works.

Net result is a growing negative balance that should not exist. The workaround is to create a fake account and simply move the losses into the fake account, then make sure the fake account does not get included in any reports.

It just is bad practice in accounting to create fake accounts and create fake transactions to fix a program that cannot track money properly, leaking cash. I just do not want to be explaining why I have fake accounts and transactions in my accounts if tax wants to audit my accounting................

That's my issue with the workaround. Naturally there are repercussions in capital accounting reporting when there is cash being leaked out of accounts . All of the impacts to capital accounts have been listed by others above. If I was fixing the transaction the first thing I would check is how the transaction handles the original dividend/return. Where does it go? Is it added to capital base - that wont work. etc. The simple solution would be to add cash to the account balance I suppose? This is not complex and if you have good quality control maybe a single day fix? ie 1 hour to code and 7 to test? I expect there is simply a macro around standard transactions that needs to be edited to fit purpose.
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Sunder

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Thanks for pursuing this people. I am hoping Reckon will use all the information provided thus far to fix this properly.
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Paul Blake

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Well said Colin. The Income Reinvested must first go into the cash balance, then that cash balance used to purchase the additional managed fund units. Sometimes some cash may stay in the account for a period (ie. not immediately reinvested), so that needs to be considered as well.
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Colin Cunningham

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Rav,
I noticed something else that might help in bringing this to a conclusion. Firstly I note the issues around the reinvestment transaction are at the core of many other conversations on this website, well at least 5.

As an example the conversation "How do I enter dividend reinvestment data where no additional shares issued?" Also mentions the capital base issues, doubling income reports and cash balance incorrect. Simply do a search on reinvestment and somewhere within the many threads these issues will be mentioned.

It would be good if the reinvestment transaction could also handle 0 shares in the same way it handles 1 to many as requested in the thread I just used as an example.

In short this transaction is at the core of many issues being raised in the forums.

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