Should your accountant be doing your bookkeeping?
Bookkeeping is continually evolving, from the introduction of GST law in 2000, to the Certificate IV in Bookkeeping in 2007, and the BAS Agent legislation that passed in March 2010. These changes have made it much harder to get into the bookkeeping industry. Back in 1999 when I start bookkeeping, while talking to accountants I found they were not interested in doing bookkeeping as they didn’t see enough money in it. However things are beginning to change, as bookkeeping prices and respect for bookkeepers has grown over the last nine years.
Business owners have come to understand the benefits of using a registered BAS Agent for their business. A few examples of these benefits are: Up to date and timely information, software support and advice, onsite help, BAS extensions, integrated systems and having regular and accurate management reports. Historically, through their accountant, a business would get accurate reporting once a year as part of the tax return.
In the last few years accounting firms have shown more interest in running a bookkeeping arm within their practice. They see bookkeeping services as a way to keep their clients close to them, and internal bookkeeping services may help to plug the leak of clients who are unappreciative of paying large accounting fees at end of year to report their figures to the ATO.
BUT do accountants know how to do bookkeeping?
When you think about it, an accountant that has come straight from university studies into an accounting firm will not have a good picture of what bookkeeping looks like. Accountants deal only with high level numbers and the general ledger (or totals), they generally work from their accounting firm and spend little or no time with business owners or onsite with business.
To give you a picture of what I have seen so far with accounting firms dabbling in bookkeeping, accountants seem to be undercutting bookkeepers in price, but how? I could only imagine that an accountant undercutting a bookkeeper’s price had underestimated the work load and the intricacies of the job. On more than one occasion I have seen an accounting firm take over the bookkeeping and then not touch the file for six months. I have also had business owners complain to me about the accountant not keeping their books up to date and not being able to make forward decisions for their business. Just beware that accountants are used to getting extensions for lodgements from the ATO which then flows onto your business books being behind if they are doing the bookkeeping.
There is also the culture of “leave it till end of year”, in accounting firms, if the bookkeeper made a mistake. Instead of taking valuable time out to retrain the bookkeeper the item would be flagged for correction when the tax return was completed at end of year, leaving the books inaccurate until the end of year arrives.
Personally, I would prefer that the number of bookkeeping practices grow and we continue to keep the accounting firms honest by asking questions and communicating any missed items, a second set of eyes per say. There are some very clever bookkeepers out there with large bookkeeping practices, keeping 100s of business owners very happy during the year and then handing over summary figures to the accountant at the end of each year. I’d like to see more of these in our industry, they keep the accountants honest and help business owners decipher the accounting lingo
Bookkeepers deal with business transactions every day, they deal with the detail and have to understand and dissect the business flow and the systems used, a bookkeeper also needs to deal with and reconcile to the “totals” once a year at end of financial year. A BAS Agent would work on your books regularly culminating in all figures being accurate each quarter after BAS lodgement.
The skill sets and expertise belonging to Accountants, BAS Agents and qualified bookkeepers are quite diverse and specialised. Having individuals who really understand your business, communicate regularly, all working together with you to correct any issues promptly is to my mind the very best outcome any business owner could wish for.
Until next month,