In most cases the financial year runs 1st July to 30th June the following year. This is the time when the businesses close their books for the year and then start afresh for the new financial year. To enable the business to close their books, most bookkeepers have the unenviable task of dotting all the Is and crossing all the Ts. Each business needs to have their books reflect the exact financial position at year end.
Monthly Procedures that can help at EOFY
With the end of financial year nearly upon us, planning ahead can assist with completing all the tasks required. When you have great procedures already in place at the end of the month and end of quarter, this really helps burden the load throughout the year rather than have it all to be completed at once. By introducing these procedures monthly, it means that a lot of items have already been checked come end of year. Here is a list of some items to check on a monthly basis so there are no surprises that pop-up end of year:
• Statement Balances – All bank accounts can be checked every month, including credit cards, back to the physical statement. Online accounting software with bank feeds is fantastic, but it’s still worth double-checking.
• Wages Payable – Confirming wages paid every month matches with payrolls generated in the online system.
• General Ledger – Ensure all transactions have been coded to the correct account along with the correct GST Coding.
• Manual Journals – Complete all end of month journals as required including accruals and prepayments.
• Review Balance Sheet – Look for any movements and ensure all items are coded correctly.
• Profit and Loss – Check through the report to notice any consistent patterns. Any significant variances are to be checked and corrected if necessary.
• Inter Entity Accounts – Ensure these are reconciled and match in both bookkeeping software accounts.
• ATO Liabilities – check the amounts agree with the ATO Portal.
Procedures for EOFY
Once a final check as above has been completed on a monthly basis, the task of finishing the end of year checks becomes a bit easier. All of the above need to be checked over again for the entire financial year as well as the following:
• Confirm that the trial balance from the last financial year matches with the year-end balance per your accountant as they will often make minor adjustments to your file.
• Acquire the bank statements so they can be added to the work papers to show all bank balances and credit cards are correct, allowing easy verification for your accountant
• Ensure the payment summaries match up with the wages figures on the profit and loss and the monthly/quarterly activity statements during the year.
• GST Reconciliation – ensure that this is all matched up and reconciled for the year, matching the monthly/quarterly activity statements and reconciling with any adjustment between cash and accrual accounting.
• Have all invoices and bills been entered so a list can be completed to see how much money is owed to creditors and how much is still to be received from debtors.
• Confirm all current year activity statements are completed and lodged in order to ensure that any necessary adjustments are included in the final BAS
Once these checks have all been completed, the work papers are compiled which confirms all balances at the end of the financial year.
This saves time for your accountant as the checks have already been completed for them and they can concentrate their efforts on proactive advice for your business. Happy accountants + happy bookkeepers = happy businesses. Feeling a bit overwhelmed? Contact Carbon Bookkeeping if you need assistance, on (08) 9446 8588.