At Bookit, we value accuracy, thoroughness and compliance, and this is why we ask our clients to provide us with access to their bank statements.
This could seem like overkill, especially in the age of automation and online bank feeds that come through directly to your bookkeeping software. But there are some very good reasons for it.
Here are five of them.
- To ensure an exact match with your accounts
When reconciling a bank account, the bank balance in your system might not be exactly the same as on the bank statement. This is often due to transactions that haven’t yet been processed by the bank – such as cheques that have been sent to suppliers.
Of course, these days, businesses are not issuing cheques as much, so it’s less of an issue. But it’s still just as important to double check the balance in your books against the actual balance shown on your statement, so that any outstanding transactions can be accounted for, and any problems picked up before they get out of hand.
Even if your bookkeeper feels your bank feeds and accounts are accurate, it is important to for them to verify these with the statements to make absolutely sure!
- It helps pick up human errors
When you are processing lots of data and making and receiving payments, mistakes can sometimes happen.
Accounting data can also be more error-prone when there are multiple users in an organisation with access and input, or when there are multiple bank accounts.
Providing your bank statements helps your bookkeeper to pick up any inaccuracies or mistakes in transactions that have gone through your bank accounts or credit cards.
- It helps pick up machine errors
Bank feeds are the best thing since sliced bread in how they have substantially reduced the hours needed each month to reconcile bank accounts.
But while bank feeds are generally highly accurate, nothing is ever perfect. There have for example been rare occasions when a feed gets broken and comes through with some transactions missing.
So while bank feeds are great, we reckon it’s always good to be on the safe side and check them against the statement!
- For compliance purposes
The ATO requires that business owners keep records (paper or electronic) of their financial activities for five years, and this includes bank and credit card statements.
Also, when it comes to business tax returns, your accountant needs to see your bank statements. This is known as ‘third party verification’ and is used to ensure your financial transactions are accurate.
- As a fraud check
A regular and thorough bank reconciliation is one of the best tools for picking up fraudulent activity in a business. If a dodgy transaction is not noticed until months after the event, it becomes much more difficult to trace and/or deal with it. So, checking the bank statement can be a great forensic tool for detecting criminal activity!
Get in touch for more information
So there you have it – bank statements are very important for both verification and compliance purposes. Keeping up with it all can be stressful and time consuming though!
Find out how partnering with a professional bookkeeping company can take a lot of the stress out of your accounting and help ensure better accuracy by contacting us.