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 we were 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 overpaid for the vehicle – our discovery triggered the client to request a refund of the $12,000.
2. If we had processed based on the client’s “word”, we would have overstated the value of GST credits that could be claimed by the client (more than $1,000).
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), this could have flagged the transaction. What might have been a simple audit could 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, it’s not to ruin your day. It’s because they understand how your accounting records should be compiled and have checks and balances in place to ensure your records are as accurate as possible – and that you’re never in a situation where someone owes you $12,000!

There are multiple ways we can get hold of your documents – from the old-fashioned shoebox or paper bag dropped at our office, to more sophisticated online methods.

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 just know someone has your back and is watching out for those overpayments (or sadly, underpayments), don’t hesitate to contact us to find out more.

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