How to Record Errors and Omissions Insurance in AccountEdge

There are several ways for a Market Center to account for E&O. Confirm with your OP how your particular Market Center handles E&O. The following steps illustrate how to account for E&O monthly when your Market Center collects E&O per transaction as part of the DA. Per KW Policies and Guidelines, the excess E&O funds must be kept in a separate bank account.

Note: If your Market Center charges a flat E&O expense through AccountEdge, the Agent Invoice should be set to have these fees automatically booked to the “KWR Excess E&O Reserve/Payable” account. Skip to step 5.

Step 1

Using the Closed Sales Volume Report, highlight the amount of E&O collected through the DAs for the month.

Step 2

In AccountEdge, click Accounts. Click Record Journal Entry.

Step 3

Using the last day of the month in which you are transmitting, book the following journal entry using the amount listed on your Closed Sales Volume Report.

• Debit the account “E&O Collected from Agents.”
• Credit the account “KWR Excess E&O Reserve/Payable” up to 10% of MC's average sales price or 25% of next year’s E&O Premium.
• Credit the account “Special Events Payable” for the excess above 10% of MC's average sales price or 25% of next year’s E&O Premium.

The balance for the account “KWR Excess E&O Reserve/Payable” should never exceed the IALC Profit Sharing Accounting Guidelines allowance without Regional Director and KWRI approval. If the account reaches the allowed balance, the excess can be placed in a Special Events account. For more information, refer to the Profit Share Accounting Policies and Guidelines in the Policies & Guidelines Manual found on KWConnect.

Step 4

Click Record.

Step 5

The funds that make up your KWR Excess E&O Reserve/Payable need to be transferred to the KWR Excess E&O Cash account. Create a journal entry using the Transfer Money to move the money from where it has been deposited to the Excess E&O Cash account.

NOTE: After creating the journal entry, don't forget to make the actual transfer with your bank.