OK, from the previous two Blogs in this series we have gone through the process of establishing a potential bookkeeper is qualified, experienced and professional to do your bookwork. The final hurdle is what value to your business can they be. Good bookkeepers will recommend good financial processes and systems to ensure sound financial controls. Further, they will use audit controls, back-ups and reconciliation reports to ensure control and accuracy of the accounts. Good bookkeepers will have the skill and knowledge to develop financial reports required by your business and assist with cashflows and budgets. Check that your bookkeeper:
- suggests and recommends changes to financial processes and systems to ensure better financial controls.
- uses quality systems and controls.
- uses audit controls in their bookkeeping.
- can produce management and financial reports regularly to support you and your business.
- can assist with the development of cashflows and budgets.
In the previous Blog we looked at how to make sure your bookkeeper has sufficient accounting knowledge and skill to accurately look after your books. In addition, good bookkeepers should be a member of an accredited industry body (eg. CPA Australia, Institute of Certified Bookkeepers) and can demonstrate commitment to continuous development so they are up to date in their knowledge and skill. If a bookkeeper will be preparing your BAS they need to be registered with the Tax Practitioners Board and comply with all their requriements. Good bookkeepers will have appropriate insurances (eg, professional indemnity) and conduct themselves professionally. Questions to ask a prospective bookkeeper are:
- are they members of an accredited industry body.
- are they a registered BAS Agent.
- can they demonstrate commitment to continuous development.
- do they have appropriate insurances.
In the final installment in this series, we will look at the value add a bookkeeper should be providing to a business owner/manager.
Accurate, professional bookkeeping is the first step in managing your business’s finances successfully. It is important that the bookkeeper can demonstrate accounting knowledge and skill and not simply have learnt through using software. A good bookkeeper must know the difference between cash and accrual accounting, and have demonstrated sound knowledge of GST, tax code usage and the treatment of financial transactions. Ask your potential bookkeeper to demonstrate:
- their accounting knowledge and how did they got it.
- their bookkeeping experience and how did they got it.
- they are competent in accounting software (eg, MYOB) and can use if efficiently and effectively for your business.
- registration to be a BAS provider.
- the difference between accrual and cash accounting.
- what the various tax codes are and when to use them.
- how to treat capital, depreciation and other different types of transactions.
- how they use the Suspence Account (note: good bookkeepers will “park” transactions in the Suspence Account until sufficient paperwork or information on the treatment of the transaction is obtained to then post to the correct and appropriate accounts).
- reconciling bank and credit card accounts and how regularly they recommend doing it (note: bank and credit card accounts should be reconciled at least monthly).
Over the next 2 Blogs we will continue this series covering other questions and information which should be sought when choosing a bookkeeper.
Interesting article in the CPA Australia July 2011 “In The Black” publication titled “Cloud Accounting”. Generally, the article discussed the benefits and growing move towards using cloud accounting software and compared MYOB LiveAccounts, Saasu and Xero.
It is agreed that the ability for the client and accountant to have on demand access to data is more beneficial than the “freezing” of use by the client of a file when it is with the accountant. Although cloud use appears to be more advanced in other countries, Australia’s cautious approach makes good business sense.
Firstly, like all good business practices, business owners need to investigate whether the technology is cost effective for their business, now and into the future.
Having said this, as the technology and products are still relatively new, a major concern must focus on the security of the systems particularly in relation to hacking and who can legally access data.
As mentioned in the article, hackers have made a name for themselves in recent times and clearly get the biggest kick from hacking into major systems because it brings the greatest attention and largest impact. Even though big providers have more ability to provide security they need to because in reality they face the greatest risk should their systems be hacked. Small micro business’s biggest threat revolves around adequate backup procedures including, for example, keeping backups offsite.
Also of concern are the questions as to:
- who can legitimately access data;
- are business owners aware of who is and/or who can access their data; and
- do business owners have control in relation to their data access through cloud accounting.
Recent information indicates part of the answer lies in where the proprietary system resides (that is, in what country the system resides) because that will determine who has authority to access the information. In other words if the proprietary systems or backups resides outside of Australia then the information may well be governed by laws very different from Australian laws.
It is suggested that this is a question that needs to be discussed by cloud providers with prospective users to ensure transparency and security for the business owner.
Yes, there are great advantages of cloud accounting, but, remember, it is your business’s information. (Blog author – David Balwin CPA – Balanix Solutions)