01/06/2006
Bookkeeping in Australia - An information and introduction session
Based on content presented to audiences of conferences during May 2006
Introduction
The bookkeeping industry in Australia is developing.
The implementation of GST in 1999/2000 and the development of the Business Activity Statement since then has resulted in concerns by government, accountants, bookkeepers and businesses with the completion of the BAS.
Who is allowed to prepare the BAS?
What goes on the BAS?
What is the BAS used for?
These concerns have led to current initiatives by government to review the regulations around the BAS.
The extra work created by GST and the BAS preparation has raised issues with the quality of bookkeeping and information on the BAS.
Due to the developments of the industry, professional associations, including The Institute of Certified Bookkeepers are seeking to help resolve some of the issues.
The Institute of Certified Bookkeepers
ICB has been launched in Australia to bring Professionalism, Standards, Definition and Structure to the whole bookkeeping community.
ICB is not just about the BAS. ICB is a member based, not-for-profit, professional association of Australian Bookkeepers helping Australian bookkeepers. It is about bookkeeping information; it is about a professional approach to bookkeepers.
The launch of ICB in Australia in March 2006 has been strongly supported and sponsored by the ICB UK; bringing 10 years of successful work with their 140,000 members in the UK to assist Australian bookkeepers.
State of play
Who and what is a bookkeeper and what should we allow them to do?
On occasion an accountant meets with a new client and asks the business owner “do you have a bookkeeper?”
“Yes”
The accountant isn’t sure whether that is a good thing or a bad thing.
Unknown to the accountant is that the person the business owner now calls their “bookkeeper”, happens to be an 18 year old school leaver who started work yesterday.
On their first day they knew how to turn the computer on, knew how to launch a program and so they began entering cheques into the accounting package….hence they become the bookkeeper.
Personally I am comfortable with that person being referred to as a bookkeeper. Processing business transactions is one of the tasks that fit into the role of a bookkeeper. BUT what level of bookkeeper are they? What skills or competence do they have?
Who and what is a bookkeeper and what should we allow them to do?
Because the accountant is “Uncertain” of the skills and experience of a particular bookkeeper, because government is “uncertain” of the skills and the level of knowledge there is a lack of “Reliance” on the work that has been performed. Therefore there is a reluctance to work with bookkeepers.
When an accountant begins to work with a bookkeeper they are looking to understand:
1) What you do?
2) What you don’t do?
3) What you have or haven’t done on this occasion?
4) How good are you?
Based on these answers the accountant or business owner is able to then assess: How much do they have to check? How do I work/interact with this bookkeeper?
Unfortunately because there are bad bookkeepers and/or significant mistakes get made and due to a lack of structure or ability to compare one bookkeeper to another; all bookkeepers get labelled with the same bad name from the worst bookkeeping experience.
SOLUTION: MESSAGE OF CERTAINTY
The Institute of Certified Bookkeepers believes that very good, very competent bookkeepers exist and should be recognised for their professionalism and expertise.
The message to accountants, government and business is
“Certainty you can count on”
You can be certain of the work we perform because we know what we are doing and we know what we are competent and accredited to do. More to the point we are aware of what we don’t know and we don’t guess; we seek guidance or seek review of anything we do that is outside our skill set. You can be certain that you can count on the work we provide to you.
We provide an understanding of the work we have done and not done. We will communicate with the business owners and their accountants on the status of our work as appropriate so that our work can be built on for the better overall solution. We will provide an understanding of our level of competence. We will seek your guidance.
We bring to you our professional approach to both undertaking the work and being good and up-to-date with what we do.
As a member of a professional association we receive information relevant to our bookkeeping work.
We have been assessed on our bookkeeping competence based on experience, education and involvement with others.
“Accountants need confidence in the bookkeepers they work with. They need to know what a bookkeeper is and isn’t accredited to perform. (They need) Certainty you can count on”
SOLUTION: Definition and Structure
Who and what is a bookkeeper and what …do they do?
Bookkeeping includes processing “Do”, reviewing and reconciling “Check”, through troubleshooting, verifying and reporting “Inspect/Report” and possibly BAS preparation and lodgement.
Therefore bookkeepers do have different skills, different tasks, different expectations placed upon them.
The membership levels of ICB are designed to recognise the different skills requirements and competency of the different levels of bookkeeper.
Affiliate – data entry processing
Associate – experienced processor, reconciles
Member – reconcile, troubleshoot, assist and report
ICB brings a definition and structure to the term bookkeeper. When the accountant is introduced to the bookkeeper, the bookkeeper is now able to explain the level of their knowledge and competence with the benefit of external accreditation.
What is happening to bookkeepers? “BAS Preparer”
Since the implementation of GST and the requirement to lodge the BAS, the concern has been who is the “BAS Preparer”? Who is allowed to prepare the BAS?
Sn 251L is the legislation government has worked with and regulated.
Under this law there are 3 main types of people eligible to prepare the BAS
1) Employees of the taxpayer
2) Members of recognised professional association
3) Bookkeepers who “work under the direction of a registered tax agent”
It is the 3
rd option that ICB is able to work with to provide bookkeepers with a system to legally prepare the BAS.
Under this “guided by” system, ICB will provide an education program followed by an assessment; this qualifies with the ATO requirement that the tax agent knows what the bookkeeper knows. The next requirement is that the tax agent conduct a quality assurance review process therefore the ICB program requires the submission of the client’s records for bookkeeping and GST review in order to assure the quality of the BAS you are preparing. Based on an initial review the ICB panel of tax agents will assess how often that clients work is required to be reviewed.
What is happening to bookkeepers? “BAS Service Provider”
The 2006 budget released this month announced a “New Tax Practitioner Regime”
“The new regime will also provide for the registration of Business Activity Statement (BAS) service providers…..”
There is little other detail known at this time other than there is a legislative timetable that treasury and then the tax office will work to, that has the implementation of the new regime scheduled for February 2008.
ICB, among others, are involved in discussions with government about this development.
ATO announced on 1 June a Survey would be conducted in relation to the BAS Service Provider.
A model: Bookkeeping in a BAS world
It is our position that many
businesses rely on bookkeepers to implement the systems following the interpretation of the experts.
In the words of one accountant “business owners expect their bookkeeper to do the BAS”.
The system works best when the experts interpret the law and design the system for the business and their bookkeepers to then implement that system. Implementation includes processing of transactions to accounts, allocation of the GST coding which leads to the reporting on the BAS.
We believe that bookkeepers must be allowed to continue to implement and operate the accounting systems required under the proposed legislative framework. We believe that this framework must allow for bookkeepers who are not BAS preparers to continue to work under the guidance of tax agents or registered BAS service providers.
The BAS service provider
should become a level of tax agent able to interpret BAS reporting obligations and instruct business and their officers as to how to complete the BAS. The business then implements those instructions.
What is happening to bookkeepers? “Electronic Lodgement”
The ATO has trialled electronic lodgement of BAS’s by registered bookkeepers. This registration would appear to have nothing to do with the new regime.
The efficiency of electronic lodgement system is excellent, if you are legally allowed to be lodging the BAS.
What is happening to bookkeepers? “Education”
The Certificate 4 Financial Services is currently being reviewed with a view to establishing a Certificate 4 with more components relevant to bookkeeping. Proposals are in the public websites of the FSEAA & IBSA.
What is happening to bookkeepers? “ATO Resources”
The ATO have developed the www.ato.gov.au/bookkeepers index page into tax office resources, specifically designed to assist bookkeepers. Watch this site as it develops in assisting bookkeepers.
What is happening to bookkeepers? “Definition, Structure, Competence”
The world of bookkeeping is developing into an industry. ICB is about creating an understandable definition of bookkeeping, a structure within the definition and industry and to bring professional standards and competence into that structure.
The Institute’s objectives:
· Promote bookkeeping as a profession
· Help bookkeeping gain recognition as an integral part of the financial profession
· Promote training
· Provide relevant information.
ICB will not become a Registered Training Organisation. It is our aim to recognise, register and promote appropriate and quality training provided by training organisations. We will accredit training provided by those organisations including TAFE’s, RTO’s and where appropriate other training providers.
A large need within the bookkeeping community is to increase communication to and between bookkeepers aswell as provide bookkeeping information to bookkeepers. ICB is about bookkeepers helping bookkeepers.
What is happening to bookkeepers? The launch of ICB
Further segments of the presentation introduce other components, benefits and features of the ICB. These are available on the website
www.icb.org.au
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