Date published: 21 March 2018

It's on the bank statement - why do you want the paperwork?

Or... how we can save you time, grief and money!

We often have clients ask us why we are particular about source documentation when undertaking work on their behalf, rather than just "taking their word for it", or "it's on the bank statement".

Recently working with a new client who had a $12,000 withdrawal from the bank account. It was a deposit on a new motor vehicle, and they were expecting us to "record it and claim the GST".

We insisted on seeing all the documentation relating to the purchase of the vehicle, including the loan documents.

This enabled us to record the vehicle purchase transaction, and the loan transaction correctly, and to then reconcile any bank transactions that had occurred (mainly loan repayments).

In stepping through this process, we identified that the $12,000 that was paid as a deposit, had not been offset against the value of the vehicle purchase price, and the full purchase price was subsequently financed.

Why does this all matter?

1. The client had essentially over paid for the vehicle - our discovery has triggered the client to request a refund of the $12,000.

2. If we had processed based on the clients "word", we would have been overstating the value of GST credits that could be claimed by the client (>$1000).

3. If the file was reviewed by another bookkeeper or accountant, there would have been no justification for the expense that was made.

4. If the client had been audited by the ATO (and it's not uncommon for that to occur), this is likely to have been a transaction that would have flagged. What may have been a simple audit, may then have triggered a full audit, due to poor record keeping.

So, the moral of the story is..... if your bookkeeper is asking you for source documentation, its not so they can ruin your day. It is because they understand how your accounting records should be compiled and have checks and balances in place to ensure that your records are as accurate as possible, and that you are never in a situation where somebody owes you $12,000!

There are multiple ways we can get hold of your documents - from the old fashioned shoe box or paper bag dropped at our office, or the more sophisticated transmission using online services.

If you want to find out how we can help you streamline your bookkeeping, take care of your paper mountain (yes... you can get rid of it!), or know that somebody has your back, and is looking for that over payment (or sadly, sometimes under payment...), don't hesitate to contact us to find out more.

We can recommend a solution that is the best fit for YOUR business.