by Jules Breese | May 27, 2015 | Biz News
‘I wasn’t happy with my book keeper and was introduced to Jules. I explained to her the problems I was having and she immediately knew the answers. That’s when she impressed me. I hired her and within 2 days she discovered faults in my accounting system. She managed to get me $8000 in tax refunds from the ATO. What a dream come true.’ Steve T.
Everyone loves a feel-good story and it only took one Saturday morning to achieve this remarkable result. All too often I’m called in when clients feel something is not quite right with their books but they have no means of working out why.
Using my investigative audit skills and methodology I have uncovered many issues similar to this. Through no fault of my clients, it’s often inexperienced contractors or internal staff who are not fully trained or detailed enough in reconciliation procedures.
Perhaps I can help you, too? Are you feeling cash flow poor, or need someone to explain the numbers on your Balance Sheet and Profit & Loss? Or perhaps your business needs a strategic review? If this sounds like you, please contact me for your free 15-minute confidential consultation: jules@breesedynamics.com or call 0447 574 586.
by Jules Breese | Mar 3, 2013 | Biz News
All companies need to regularly reconcile their general ledger (GL) accounts as a key function of their accounting. Given the time and effort spent on reconciliations it is critical that the process is efficient and effective. We cover the important principles of reconciliations as well as key focus and risk areas to be aware of.
There have been many instances where account postings are not processed correctly which may result in ineffective year end reporting and increased costs to the company for their external accountant to fix. Whatever your size or structure, it is recommended to appoint an independent reviewer.
The reviewer is responsible for documenting the process and covers the following main areas:
- Providing a high level review to ensure that issues are appropriately identified and addressed.
- Looks for the potential ‘missing’ reconciliation items
- Review of creditor and debtor status and potential recovery or write-offs
- Review the GL account history
- Check directors loan and other loan accounts i.e. bank loans and HP arrangements
- Look to identify accounting process inefficiencies.
- Educate those involved about the transactions and accounts
The frequency of reconciliations will depend on the volume of transactions and accounts with high volume transactions, such as bank accounts, may need reconciling on a weekly or monthly basis. Other accounts with fewer transactions, such as fixed assets, may only need reconciling quarterly. In these instances, we recommend that the accounts be reviewed on a quarterly basis and before preparing the BAS reports.
Example Risk areas
- IT systems can act as a ‘black box’ for some transactions or the implementation of new systems which may not be complete.
- Over reliance on accounting staff can leave the business exposed if they leave. Ensure processes and information on the transactions are documented to enable knowledge sharing.
- Suspense accounts entries must be reviewed and cleared monthly.
- Excessive use of manual journals, particularly those between critical accounts, can be high risk, as they could be hiding fraud.
- Effective reviews should be conducted at senior level or engage an independent audit reviewer. Companies should not place all reliance and trust on the junior level or book keeper.
- Depending on size of the business effective internal controls can be implemented to reduce the risk of something going wrong. Segregation of duties such as accounts payable and accounts receivable is also important so one person is not doing all.
