Getting companies and associations ready for audit is always a busy time of year for us. If everything has been done correctly then there is nothing to fear. One of the biggest problems we see in bookkeeping is an insufficient categorisation of income and expenditure at the time of entry in the chart of accounts. This makes it hard to track where, how and when a transaction happened.
An auditor will ask this. Be ready 🙂
Your Chart of Accounts
Your chart of accounts is perhaps the most overlooked but vitally important part of efficient and accurate bookkeeping. Setting up and maintaining a chart of accounts that matches your business will allow the business owner to pull reports at any time. Your chart of accounts can quickly get messy and hard to read if you have multiple income streams, you are project-based or you have multiple locations.
Cost Centres
Cost centres work hand in hand with your Chart of Accounts enabling comprehensive reporting and a better view of your business activity. Create expense accounts and income accounts for every cost centre and apply your transactions to those, this will keep your Chart of Accounts simple and easy to read.
As an example, perhaps you have 4 branches and you want to track sales for each branch. Don’t create 4 different sales accounts in your chart of accounts. Create one sales account which covers all income for your organisation and then create 4 cost centres with income and expenditure applied to the correct branch
Reporting across business units
By accurately allocating your income and expenses to cost centres it is easy to get the reports you need from your accounting system.
- Report across business units and cost centres and easily compare them.
- Easier to build custom reports
- Annotate material anomalies
- Provide deep analysis
Keep it Simple
Simple is better. Build your system for you and not for your accountant. If it doesn’t make sense to you then it doesn’t work.
If you need some help getting set up, or just getting things in order, then we are happy to work with you to build your accounting system to work for you.