Accounting and Bookkeeping Checklists

by L. Kenway BComm CPB

What Information Should I Give My Bookkeeper?

A bookkeeping checklist when switching bookkeepers or preparing your tax information for your accountant is really handy. I am going to present both of these lists for you. You will notice they are similar ... but there are a few differences.



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Bookkeeping checklist for when you switch bookkeepers.

Bookkeeping Checklist
For When You Switch Bookkeepers

You have decided to switch bookkeepers and wonder if there is a bookkeeping checklist you could use to gather the information for your new bookkeeper. My answer is yes!

Your new bookkeeper will need the same small business bookkeeping information you were giving to your old bookkeeper ... plus a trial balance up to the last date your old bookkeeper did the books as well as a year-to-date general ledger. Pdf copies placed in DropBox (or similar service), delivered by encrypted mail such as eCourier, or on a CD are preferred over paper ... but paper still works.

Pssst ... if you are a new bookkeeper, this list will help you too if you are wondering, "What details do I need from a new client?".


GOOD TO KNOW

How to organize your bookkeeping paperwork for your bookkeeper.

Your bookkeeper wants to see ALL your source documents pertaining to your business ... unlike your accountant. They need it to ensure they have recorded your business revenue and expenses properly.

The only thing bookkeepers really don't need are your personal receipts. Personal expenses should not be going through your business accounts.

If your bookkeeper (is that you?) doesn't have the knowledge to categorize your transactions properly ... you may be in big, Big, BIG trouble if you are ever audited.


Your bookkeeper will likely give you a client start-up bookkeeping checklist. It will probably look something like this:

  • expense receipts including internet receipts - sorted by source of payment: bank, credit card, business cash, and personal funds
  • documents pertaining to the purchase, major repair, and sale of capital assets
  • documents pertaining to lease agreements, financial loans, insurance or any contracts you have entered into.
  • investment statements, bank statements including deposit slips and returned cheques, credit card statements including card payment slips, vendor statements
  • a cheque register would be helpful
  • a listing of all pre-authorized direct deposits and withdrawals on your bank and credit card statements
  • vendor / supplier invoices both paid and unpaid
  • listing of accounts payable would be helpful - even if it is just your best guess
  • customer invoices and sales receipts issued including outstanding customer invoices
  • an accounts receivable listing would be helpful - even your best guess helps marking any doubtful accounts
  • listing of all customer deposits and / or prepayments received
  • inventory listing
  • all government correspondence and tax forms including GST/HST reports filed with CRA this year, notice of assessments, tax instalments, WCB and PST reports
  • payroll information and reports including new employee information, payroll reports, PD7As, T4s and T4 summary

Check out this bookkeeping tip that can reduce your overall small business bookkeeping fees. The more organized your records, the less it costs to process them. Further up on the same page is a box with links to more tips on how to reduce your bookkeeping fees.

If you have all the above small business bookkeeping information completed and with you on your first visit, your new bookkeeper should be up and running quickly.



Bookkeeping checklist for  to help you prepare your records to give your accountant for your yearend.

Year end Accountant Package Checklist

A question I am often asked is "I have done my own small business bookkeeping throughout the year. I am now preparing my paperwork for year end. What information does my accountant need?"

Your accountant will need the following small business bookkeeping information packaged in an organized fashion. Some like to keep it all in a year end binder, others in a series of file folders.


GOOD TO KNOW

How to organize your yearend bookkeeping paperwork for your accountant.

From the list below, you will see your accountant doesn't want to look at all of your receipts and invoices like your bookkeeper does. Why?

It is most likely that you have a notice to reader engagement, not a review or audit engagement. This means the accountant has not been engaged to review your paperwork.

You or your bookkeeper have processed all the paperwork and put it in a format your accountant can use. Your accountant will go through your small business bookkeeping reports, third party statements and government information reports submitted to CRA (or IRS). S/he will request additional backup from you when necessary.

You can see where this could lead to a problem if your bookkeeping or your bookkeeper's bookkeeping is poor quality ... it leads to problems during a tax audit.



Whatever your recordkeeping system, just make it organized so your accountant can easily find any information s/he is looking for. Whenever possible, it is preferable these days that the information and reports be placed in DropBox (or a similar service), delivered by encrypted mail such as eCourier, or on a CD in pdf format as opposed to paper copies.

So here is my accounting checklist:

  • if you are using computer software, a backup copy with password
  • trial balance dated for the last day of your previous fiscal year
  • trial balance dated for the last day of your current fiscal year
  • financial statements for the fiscal year (balance sheet dated last day of fiscal year, income statement for the fiscal period and a cash flow statement if you have it)
  • general ledger for the twelve month fiscal period
  • general journals for the twelve month fiscal period
  • source documents pertaining to the purchase, major repair, and sale of capital assets
  • include the original cost and net book value of capital assets sold along with the proceeds receivied upon dispostion of the asset.
  • source documents pertaining to lease agreements, financial loans, insurance or any contracts you have entered into ... include payments dates and amounts so your accountant can determine if any adjusting entries need to be done
  • investment statements and credit card statements
  • bank statements for the year including returned cheques as well as the bank statement and cheque stubs for the first month of the following year
  • a cheque register would be helpful
  • a listing of all pre-authorized direct deposits and withdrawals on your bank and credit card statements
  • reconciliations for the bank, credit card and investment statements
  • aged listing of all accounts payable identifying any amounts in dispute
  • vendor rebates / gift certificates received and/or used from vendors, usually issued as bonuses due to high volume purchases
  • aged accounts receivable listing marking any doubtful accounts
  • listing of all customer deposits and / or prepayments outstanding
  • listing of any accrued liabilities
  • inventory listing
  • all government correspondence and tax forms filed with CRA (or IRS) this year including GST/HST reports, tax instalments, WCB and PST reports, prior year notice of assessment
  • all government grants correspondence or other financial assistance documents
  • payroll information and reports including PD7As, T4s and T4 summary (W-2, W-3, W-4 for my American visitors)

If your accountant is also doing your taxes, s/he will also need your home office expense information and your auto log if you use your personal vehicle for business, along with a listing of all your auto receipts.


GOOD TO KNOW

Before you close your books at yearend, make sure you enter your adjusting entries from your accountant.

When the work is complete, your accountant should provide you with an adjusted trial balance, adjusting and closing entries.

You or your bookkeeper will need to post the adjusting and closing entries into your accounting software program before you close your year-end books ... so add this task to your year-end bookkeeping checklist.

Who Can Prepare Notice To Reader Statements?

Can your bookkeeper prepare your notice to reader statements?

Once you have used the bookkeeping checklist above, your bookkeeper/accountant will use that information to prepare a financial reports.

This begs the question ... can a non-CA / CGA (chartered accountant / certified general accountant) prepare a Notice to Reader set of financial statements?

Yes. Notice to Reader (NTR) statements do not require an audit review or audit opinion ... so an uncertified accountant / professional bookkeeper can be engaged for a compilation engagement.

Always remember that it is management's responsibility to prepare ... or arrange to have prepared ... financial statements.The bookkeeping checklists above should help you get yourself organized.

A compilation engagement is limited in scope as it involves compiling data from management into a set of financial statements that may or may not conform to generally accepted accounting principles (GAAP) ... sometimes you only need your financial statement presentation to conform to the Income Tax Act.

The NTR report that accompanies the financial statements states:

  • The nature of the assignment - to compile date received from the sole proprietor or management into a set of financial statements.
  • The scope and limitations - clearly states that a review or audit was not performed nor accuracy of data verified.
  • A caution to readers - that the statements may not be appropriate for their use.
  • Who prepared the report - lets the reader know the competence / professional status of the person / firm preparing the report.

This leads to the next question ... do you need to have GAAP and/or ASPE financial statements prepared annually for your business? Click here to find out.



Remember, you can access more of my bookkeeping checklists by subscribing to The Bookkeeper's Notes.



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