What is Bookkeeping?
Bookkeeping is a growing profession - it is demanding, exciting, challenging and above all, rewarding. It is about understanding how a business works and then providing accurate figures that enable the business to know exactly how well it is doing. For men and women of all ages and from all backgrounds it provides outstanding career opportunities.
The basic system of double entry bookkeeping was invented more than five hundred years ago by a Cistercian monk called Luca Pacioli. His system still endures today and is used throughout the world, making bookkeeping a truly international profession. The ICB website will give an understanding of how to train to become a bookkeeper and how to become a member of the Institute. It will also help those who already have a qualification or have been working as a bookkeeper for many years but now want the support of a professional association to enhance career prospects.
In 2015; Bookkeeping today is far more than entering data and reconciling the bank. Bookkeeping is thinking about the needs of the client, thinking about the processes to get a result.
Firstly, what is expected for standard bookkeeping?
- Processing purchases, sales, receipts, payments
- Processing payroll and maintaining entitlements and employee records
- Bank reconciliation
- Providing reporting for preparation of a BAS
- Producing reports for both client and accountant
- Record keeping
Good bookkeeping now includes above and beyond this standard process to ‘think’ more about each stage and ask the questions ‘can we do this better’ and ‘is bookkeeping part of the natural business system?’ Have I captured all the relevant information required to produce an accurate result?
Also note that a required standard should be that any other person being a bookkeeper or accountant should be able to step in and work on the file for the business without needing to reinvent or research too significantly.
What is a Bookkeeper?
A bookkeeper is a 'keeper of the books'. Bookkeeping isn’t just historical processing. Bookkeeping is “integrated business system management”.
What is a Certified Bookkeeper?
ICB Members (Certified Bookkeeper) have proven that they have performed bookkeeping services at a significant level for a period exceeding 2 years and have a proven level of bookkeeping knowledge.
A Certified Bookkeeper (or “MICB” or “Member”) of the ICB attains that certification having proven that the bookkeeper has performed bookkeeping services at a significant level for a period exceeding 2 years and has a proven level of bookkeeping knowledge.
Increasingly, Members will have achieved the Certificate IV in Bookkeeping.
This qualification is a relatively recent development in the ability for bookkeepers to have their skills and competence formally, but more importantly “relevantly” recognised within the education system.
Clients of ICB Certified Bookkeepers benefit in engaging with a bookkeeper who strives to maintain and enhance their professionalism:
- ICB provide current guidance on matters affecting the clients business. Be that GST or BAS related, be that payroll or general matters related to running a small business.
- ICB provide, require and monitor that their members undertake relevant training and update their knowledge.
- ICB source and refer up-to-date information on software solutions and banking techniques to assist the bookkeeper in not only being professional but also using current technology to be as efficient as possible.
- By networking with other ICB members your bookkeeper has access to their own personal development and troubleshooting of any problems that arise.
- Technical support provided by ICB registered BAS Agents, Registered Tax Agents, qualified and experienced bookkeepers and accountants provide the next level of assistance to your bookkeeper.
- Periodic re-assessment of skills and knowledge combined with the related resources ensure your bookkeeper remains competent to perform professional bookkeeping services.
- The ICB professional Code of Conduct requires and regulates that your bookkeeper meets the standards expected of a real professional service provider
You should expect an ICB Certified Bookkeeper to:
- Communicate regularly and effectively with you. Problems and different expectations arise between the client and the bookkeeper when each goes about their duties without required communication. By reporting to you after each visit, each of you understand where the job is at, the time being taken to process, the expansion of areas requiring attention and what can be expected for the next appointment.
- Provide the output of the bookkeeping work: be that operational reports or simply proof that the Bank reconciles (the type of reports should be agreed between you). This ensures that you see value for the time being spent with you and paid for by you.
- A Member in Practice with ICB must be insured. The ICB has stipulated minimum Professional Indemnity Requirements and enabled its members to source respectable PII cover. PII means that clients have a level of security that should the Member err in some respect, which has financial consequence for you the client, the PII policy will assist in meeting those consequences.
Bookkeeping duties include:
- Recognising what the business does and making sure the customer gets billed
- Issuing and then recording that invoice
- Then making sure the customer pays
Alternatively, how did they record the sale/take that cash for what (Point of sale systems. Registers, the till). Receiving, banking and recording that money.
What is the business process for making money and how should it be recorded?
Bookkeepers are responsible for:
- Tracking down all the ways the business spends money
- Cash payments – trying to get the documents, working out what it is for, recording it
- Is there an ordering system? Does there need to be one? How to record and reconcile the systems
- Supplier invoices to be received, checked for validity, scheduled/noted for payment
- Paying suppliers and recording the payment
- Paying employees and recording the payment and the payroll obligations
- Paying employees and recording the payment and the payroll obligations
- What is the business process for spending money and how should it be recorded?
Bookkeeping isn’t just historical processing. Bookkeeping is “integrated business system management”. Noting that bookkeeping remains subject to what the business requires.
What is a BAS Agent?
The term “BAS Agent” typically applies to a business that contract to a client to provide services to that client to do with their BAS obligations.
The legislation was implemented with a view to providing business with protection and security. It is about the qualifications, experience, competence, professionalism of us as an external person being relied on to assist you with the obligations of GST, PAYG Withholding (payroll), PAYG Instalment Payments, FBT Payments, WET, Fuel Tax and LCT.
Registration of a BAS Agent can be checked here.
Only registered BAS Agents (and Tax Agents) are permitted to advise or help you “ascertain” (determine, establish, discover, make certain) your liabilities, obligations or entitlements of the areas of the BAS. Only registered Agents (other than the business owner or their employees) are permitted to represent the business in dealing with the ATO.
By being a BAS Agent you must:
- Be fit and proper
- Have minimum formal qualifications (eg Certificate IV in Bookkeeping)
- Continue to have sufficient, ongoing, continual relevant experience
- Have an appropriate level of Professional Indemnity Insurance
- Undergo continuing professional education
- Maintain professionalism in accordance with at least the statutory code of conduct
Adherence with the code of conduct reinforces the concepts of:
- Honesty and Integrity
A BAS Agent provides service competently using knowledge and skills to take “reasonable care” to ensure that tax law is applied correctly for the business.
A BAS Agent does not advise nor liaise with the tax office on Income Tax Matters. This is the role of a Registered Tax Agent. Such things as; reportable Fringe Benefits Tax Amounts or Reportable Superannuation Contributions on your end of year Payroll Payment Summaries. Such things as; the Tax deductibility of entertainment or other items, where your ability to claim back GST depends on the tax agents treatment of those items for your tax return.
A BAS Agent is committed to providing expert service and expert advice.
How to Compare and Evaluate Bookkeeping Services
When comparing and evaluating bookkeeping services, we believe that it’s important to consider more than just the hourly rate or fixed fee that you’re paying. I believe that there are at least two considerations. One is the total cost of the service(s) that you’re receiving and the other is the quality of the service that you’re receiving. I’m going to look at each of these aspects. Many people make decisions about their bookkeeping quite blindly, not really knowing what they’re getting and whether it’s good value. Near the end of this article we’ve included a free download of twelve questions that you can ask your prospective bookkeeper and why these questions are important, in case you really want to investigate your options thoroughly.
For more information, click here.