Let’s Talk About Bookkeeping Risks

…and why your accounts process needs internal controls.

In the world of small businesses, finding a reliable bookkeeper is akin to striking gold. Long-term relationships with bookkeepers build trust, familiarity, and a sense of security. However, not all that glitters is gold, and unfortunately, some entrepreneurs discover this the hard way. In this month’s blog we shed light on the risks associated with trusting a long-term bookkeeper who isn't a registered BAS agent and the potential pitfalls that can emerge from years of unchecked financial management.

1. Never-Ending Workdays and Not Using Accrued Leave:

While dedication to one's work is commendable, workers not taking holidays can be a red flag. Not only is their annual leave building up, creating a liability for a business owner to pay out all at once should the employee leave, but it might be a sign that all is not right with your accounts.

2. No Holiday Cover:

Conversely, if your bookkeeper does take time off, the absence of a backup plan during vacation times can leave your business vulnerable. Without proper coverage, financial oversights and errors may go unnoticed, leading to potentially severe consequences.

3. Incomplete Bank Reconciliations:

A cornerstone of effective bookkeeping is ensuring that bank accounts are meticulously reconciled. Unfortunately, in some cases, the long-term bookkeeper may have neglected this crucial task. Incomplete reconciliations not only compromise the accuracy of financial reports but also create a breeding ground for errors, making it challenging to identify discrepancies and potential fraud.

4. Unreconciled GST and PAYG Payments:

In the realm of tax compliance, the devil is in the details. Failure to reconcile GST and PAYG payments in your accounting software result in inaccuracies that may trigger audits and penalties. An in-house bookkeeper's role extends beyond data entry; it involves reconciliation of the balance sheet items and verification to ensure compliance with the ATO.

5. Double Payments and Personal Repayments:

The discovery of accidental double payments can be shocking for any business owner. Worse yet, when a bookkeeper requests the supplier to repay the overpayment to a bank account, that unbeknownst to them, it belongs to the bookkeeper. Such practices are difficult to uncover if there is a lack of good internal controls. This not only jeopardises the financial integrity of your business but also erodes trust within your supplier relationships.

Conclusion:

In the tale of the trusted, long-term bookkeeper, cautionary lessons emerge. It is crucial for business owners to regularly assess the performance of their financial professionals and to ensure that they possess the necessary qualifications and certifications. Trust is earned, but it should be backed by a commitment to professional standards and ongoing education.

To safeguard your business, consider engaging a “part-time Finance Manager or CFO” who is a registered BAS agent who adheres to ethical practices and stays abreast of industry updates. Transparent communication, periodic reviews of financial processes, and a proactive approach to compliance will empower your business for long-term success, ensuring that the golden glow of trust is grounded in a foundation of professionalism and competence.

At Neo Numerist, I offer part-time CFO / Finance Manager expertise - if this sounds like what you need, drop me a line and let’s chat!

Thanks for reading,

Holly

Author Holly Salmons is the founder of Neo Numerist. She holds a Master of Business (Bus. Law), University of Sydney and a Graduate Diploma in Producing & Screen Business, AFTRS.

Neo Numerist helps creatives make smarter accounting choices.

Founded and headed by me, Holly Salmons (M Bus.Law, Grad. Dip Screen) Neo Numerist provides cost-effective accounting to digital media creators and small businesses in the creative industries.

We specialise in accounting for film, television, and video production, along with other creative and digital industries.

We provide film and TV accounting services in Melbourne and Brisbane including pre pre-production finance consulting and last-minute cost reports. We can look after your bookkeeping and payroll for any production within Australia, and handle your BAS, budget and finance reviews, cashflow forecasting, and accounts payable. We even help launch start-ups and side hustles with the business essentials they need to start trading.

We can help you create a project budget and stick to it, identify cost-saving opportunities within your current projects, ensure you’re complying with regulations, facilitate positive relationships with investors and creditors, and offer valuable insights for informed decision-making.

We offer a range of Monthly Packages, from our Sole trader Starter Package to us working with you in-house or remotely in our Finance Manager Package. Alternatively, select your own suite of services to suit your needs.

Got questions? We’ve got answers.

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We offer free consultations, so please contact us to book.

holly@neonumerist.com.au
+61 404 251 350