✔ Bookkeeping Checklist When Engaging a New Bookkeeper (or When Switching Bookkeepers)
✔ Year End Accountant Checklist
✔ Who Can Prepare Notice To Reader Financial Statements?
✔ Bookkeeping Checklists eBook is now available to purchase for $5 CAD
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.
My bookkeeping checklists for daily, weekly, monthly, quarterly, annual and year-end are no longer available on the website.
The six lists are now available for purchase as an eBook. You can purchase it here for $5 CAD. As a bonus, you will find the two checklists on this page in the appendix.
… OR buy my month end procedures eManual AND my bookkeeping checklists eBook for $22.50, a 10% savings.
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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?".
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:
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.
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.
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 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.
This bookkeeping checklist is slightly different as your accountant or tax preparer requires a bit more to complete their task.
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.
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?
Prior to December 14, 2021, this was an easy question to answer. Since then, CPA Canada introduced new compilation engagement standards making it a bit more complicated. Only public practice CPAs can do perform compilation agreements ... non-public practice CPAs (CPAs in employed in industry) cannot perform these compilation engagements.
Here is a summary of the changes published in Bruce Ball FCPA, FCA, CFP's article titled, New standard on compilation engagements: What does it mean for tax work? found on CPA Canada's online March 2021 tax blog:
"The new standard’s application and scope
When performing work for small and medium-sized enterprises, there are three common services that are provided assuming an audit or review is not performed:
When looking at the new standard, the key is to determine both the services that your client needs and the potential requirements that could apply. For example, if you provide bookkeeping services and prepare the client’s T2, can you use data from the client’s accounting records to prepare the return without performing a compilation engagement?
The answer to this question is based on the scope exclusions that are contained in the new standard, and in particular, exclusions that are related to bookkeeping and tax work:
When you combine the two exclusions, if you do bookkeeping for your client (whether all of it or simply a few year-end adjusting journal entries) and use that data to prepare the client’s T2 and other tax forms, a compilation engagement is generally not required. The same is true when preparing T2s based on financial information that your client has provided to you. Of course, you can still undertake a compilation engagement if it would provide value for your client.
With these changes, it will be important to check in with your client regularly to discuss their needs and determine the nature of the bookkeeping, tax and other services they need. An engagement letter setting out the scope of services is also a good practice."
You can see now that you may no longer a compilation engagement report if certain conditions are met.
Prior to December 14, 2021 I would have said the following:
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 pre-December 14, 2021 NTR report that accompanies the financial statements stated:
The new 2021 compilation standards now require the following communications:
The above communication requirements are a different sort of bookkeeping checklist but important all the same.
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 purchase my month-end procedures to ensure you have a more accurate set of books.
I hope you found these two basic bookkeeping-checklists useful.
Bookkeeping Essentials › Small Business Accounting › Bookkeeping Checklist
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