TOTALACCOUNTING

BUSINESS DOCUMENTATION REQUIRED FOR PREPARATION  OF FINANCIAL STATEMENTS  FOR AUDIT /  WITH AUDIT NOT REQUIRED

 

 

TotalAccounting do not offer an Audit Service, but do offer a service of preparing Financial Statements and preparing an Audit File for clients in readiness for an Audit by an independent Accountant.   TotalAccounting have offered an Audit Service in the past, so have knowledge of what the Auditor will require.

Below is a Checklist of Business Documentation Required for Preparation of Financial Statements Ready for Audit.

 It may be the case that your organisation does not require a full audit with an Audit Opinion, but that the preparation of Financial Statements which are signed off by a Chartered Accountant are sufficient for your purpose.  Either way , the Checklist below details information that should be compiled to carry out the service.  

 If an audit is required, the process of collection of documentation for the Preparer of the Financial Statements is an important process, and it is important that it be carried out in a thorough manner, other wise hold-ups in the entire Financial Statement  Preparation/ Audit process will eventuate, and you may not achieve an unqualified Audit Opinion.                           

The Checklist below  summarises documentation that you should get together, if these items are applicable to your organisation.  It is recommended that you thoroughly review these and prepare/ provide files of all documentation requested as ourselves and the Auditor will require these for the process.  It is recommended that you use the “Tick to Check” facility provided and tick off each item when you have prepared it to ensure this.  We will review the documentation you have on hand at our first consultation with yourselves to endeavour to establish shortfalls, and ask you for any further information required, as we will need all this same documentation to assist in the accurate preparation of Financial Statements, so it is recommended that and would be favourable to yourselves to avoid any hold-ups in your service that you review the attached documentation and ensure you have all items on hand as per the attached Checklist before you present it to ourselves. If you discover on this review that you are missing certain items it would be recommended that you pursue the obtaining of copies for these, and if you note that you have not finalised procedures as we have discussed in this documentation you should complete them , before presentation to ourselves of your financial documentation.                      

It is recommended that you prepare all your files in an organised and methodical manner, with sections for each type of documentation,  before presentation to ourselves and subsequently to the Auditor.  This will assist in quicker processing of the whole service.  

It should be remembered that an Audit Service, as well as verifying accuracy in Financial Statements for the period, incorporates a review of Internal Controls in financial systems to give the Auditor confidence, or recognise deficiencies, in Internal Controls present in your Financial Systems, in order to assist in the Opinion on the Financial Statements that the Auditor will consider and present.  To assist in a favourable conclusion it is important that you introduce strong internal controls into your financial systems.  Important measures you can take to illustrate the presence of adequate internal controls are and which the Auditor looks for are:  

·      That you have systems in place to ensure that more than one person in your organisation is  involved in  your financial transactions (Preparer and Approver),  and there is evidence of this on the documentation provided.

·      That all documentation applicable to your organisation as detailed in the attached Checklist is on hand and provided to the Auditor.  Any gaps in this documentation will influence the Opinion that the Auditor will conclude. Thus it is important that you collect and retain all the financial documentation as detailed on the Checklist attached, and that you review what you have before providing documentation to ourselves and the Auditor and get copies of any documentation you don’t have on hand before presentation to ourselves.

·     That regular and frequent Meetings are held at your organisation and a Financial Report is presented at these, and Payments made over the past period are detailed in this, to indicate transparency of financial matters and payments made to members and allow them the opportunity to query these.

·      A significant time in an Audit service is devoted to perusing the evidence of payments as this is an important part of audit verification.  For all Payments made, both by Cheque and other Payment methods the Auditor should be provided with evidence in the form of Suppliers Invoices totalling the amount of the Payment .  Statements only or Receipts that you paid an amount are insufficient as these do not indicate what has been purchased- the Auditor needs the Invoices to confirm what was being paid for and if it appropriate to your organisation.

·     That there are not payments made out for “Cash” or “Koha” or “Wages” and the like with no explanation of who they were paid to or what they were for.  Also if Cash Advances are made for whatever reason the Auditor will look for Invoices/ Explanations for the amount of the Cash Advances, and will look for explanations of the difference between the advanced amount and the amount actually spent.  Have they been rebanked? On what day they were rebanked?  etc.  You should provide explanations of the payments, and to whom the payments were made, and  any differences in amounts advanced and spent on the Payment Vouchers as commented on below.  

For your payments processes it is recommended that you should also prepare a Payment Voucher for every payment prior to making the payment, whether by cheque or other payment method. The Suppliers Invoice/s pertaining to the payment should be attached to this, two authorisations should be obtained prior to the payment being made, and this also offers the facility of giving an explanation for every payment (in the “Description of Goods/ Services” section) if for some reason Suppliers Invoices are not available.  

We would recommend you use a Payment Voucher as per the following format, and that you complete all fields in this, for every Payment made:

 

 

XXXX  (NAME OF YOUR ORGANISATION)

PAYMENT VOUCHER

Date

Cheque Number/ Reference

Amount

Suppliers Name

Description of the Goods/ Services Received

Prepared  by  (signature of Authorised Person) ……………………………….

Approved by  (signature of Authorised Person)……………………………….

 

We recommend that you print off this checklist and go through and use the "Tick To Check" facility to ensure that you have all the required documentation and information

 

BUSINESS DOCUMENTATION REQUIRED FOR PREPARATION  OF FINANCIAL STATEMENTS  FOR AUDIT /  WITH AUDIT NOT REQUIRED

Print off this document and check that you have all the financial documentation below   (if appropriate to your situation). Tick in the right hand column to satisfy yourself that you have obtained or prepared it.

 

TICK TO CHECK

The following information should be provided to TotalAccounting in relation to the year end preparation of your Financial Statements ready for Audit.

 

The previous and full set of Financial Statements / Fixed Asset and Depreciation Schedule/ Notes to the Accounts/ Audit Management Letter as at the previous balance date if TotalAccounting did not prepare these Financial Statements.

 

The Minute Book showing the Minutes of all Meetings during the financial year for which the Financial Statements and Audit is being prepared. Any separate Financial Reports prepared for the Meetings should also be included.

 

Your Data Recording Reports e.g.  Manual/ Spreadsheet  Cashbook , computerised General Ledger.  Ensure that all records for the whole of the financial year, for all Bank Accounts, have been processed to this. 

 

Manual/ Spreadsheet Cashbooks should have separate sections for Cash Payments and Cash Receipts items with columns analysing the different category types of Payments and Receipts. If you produce your Cashbook with a computerised Accounting Programme, print out the Trial Balance at the end of the year, plus a Detailed Transaction Ledger Report  for the total year  (which shows each Account in your Ledger and all the transactions for each Account in your Ledger with dates, cheque etc. payment references, narrations, amounts for each transaction). In this case ensure that the Bank/s balances are reconciled on your Cashbook at the each of the year with your Bank Statements, and you have a Bank Reconciliation indicating this for each Bank Account.

 

Bank Statements for all the Bank Accounts you have held during the financial year, including any that have closed during the year.   Ensure that you provide all the Statements for the whole of the financial year, from the year start date to the year end date.

 

If you have held Investments during the financial year documentation relating to any new investments, any re-investments you may have carried out throughout the year, and which indicates their balance at your balance date and interest or dividends received during the financial year.

 

Cheque Books for the whole of the financial year.

 

Banking Deposit Books for the whole of the financial year.

 

If you have any Loans from Financial Institutions , including any existing at start of year, new  and any that may have terminated, Statements showing all the transactions from the start date of the financial year to the end date of the financial year.  Ensure that these Statements show the interest charges during the year and the closing balance at the end of the year.

 

Your Invoice Book for the whole of the financial year if you prepare Invoices for your Charges to your customers, with these records for the whole of the financial year.

 

Remittance Advices received in relation to receipts from Payers during the financial year.

 

Cash Receipts Books for the financial year. 

 

The Invoices from your Suppliers for Payments made for the whole of the financial year by you.   It is important to have the Suppliers Invoices, as they indicate exactly what has been purchased, which is what the Auditor has to verify (Statements and Receipts indicating the amount paid do not).  Ensure that you have Payment Vouchers attached which are authorised by two persons of authority and Suppliers Invoice Support documentation for every Payment you have made during the financial year.  It is helpful if these are filed in month Payment order and in cheque sequential order (for Cheque Payments) and in date order of Payment (for items paid by non-cheque methods).

 

Wage Books, if you have had employees on Wages, that show the Wage Records for all employees during the year and monthly Wages Summaries and for the whole of the financial year. If you use Computer Software for your Wages all the printouts during the year from your system.

 

Copies of all the IRD Returns prepared by yourself for all of your tax types and filed with IRD.

 

All the Assessments and Statements of Account (the blue forms) as issued by IRD for all your tax types (e.g. GST. PAYE, FBT, KiwiSaver Employer Contributions, KiwiSaver Employee Contribution, Student Loan  etc). These are required for the whole of the year from the year start date to the year end date (as per the date of Date Issued stated by IRD on these documents)

 

Any other correspondence with IRD (to them or from them) during the year.

 

If you prepare GST Returns with a computerised accounting programme the GST Detail Reports (indicating the detail analysis of the figures on the GST Returns) for all GST Returns for the year

 

Information as to balances of Cash on Hand at balance date e.g. Till Change, Unbanked Takings, Petty Cash Float.

 

Your Petty Cash recording during the financial year e.g.  Petty Cash Book.

 

Review the Fixed Assets Schedule on the Financial Statements for the previous balance date.    Prepare a list of those items not on hand at the current balance date and indicate reason e.g. sold and sale price, written off etc. 

 

Remittance Advices received in relation to receipts from Payers during the financial year.

 

Cash Receipts Books for the financial year. 

 

The Invoices from your Suppliers for Payments made for the whole of the financial year by you.   It is important to have the Suppliers Invoices, as they indicate exactly what has been purchased, which is what the Auditor has to verify (Statements and Receipts indicating the amount paid do not).  Ensure that you have Payment Vouchers attached which are authorised by two persons of authority and Suppliers Invoice Support documentation for every Payment you have made during the financial year.  It is helpful if these are filed in month Payment order and in cheque sequential order (for Cheque Payments) and in date order of Payment (for items paid by non-cheque methods).

 

Wage Books, if you have had employees on Wages, that show the Wage Records for all employees during the year and monthly Wages Summaries and for the whole of the financial year. If you use Computer Software for your Wages all the printouts during the year from your system.

 

Copies of all the IRD Returns prepared by yourself for all of your tax types and filed with IRD.

 

All the Assessments and Statements of Account (the blue forms) as issued by IRD for all your tax types (e.g. GST. PAYE, FBT, KiwiSaver Employer Contributions, KiwiSaver Employee Contribution, Student Loan  etc). These are required for the whole of the year from the year start date to the year end date (as per the date of Date Issued stated by IRD on these documents)

 

Any other correspondence with IRD (to them or from them) during the year.

 

If you prepare GST Returns with a computerised accounting programme the GST Detail Reports (indicating the detail analysis of the figures on the GST Returns) for all GST Returns for the year

 

Information as to balances of Cash on Hand at balance date e.g. Till Change, Unbanked Takings, Petty Cash Float.

 

Your Petty Cash recording during the financial year e.g.  Petty Cash Book.

 

Review the Fixed Assets Schedule on the Financial Statements for the previous balance date.    Prepare a list of those items not on hand at the current balance date and indicate reason e.g. sold and sale price, written off etc. 

 

A list of your Accounts Payable as at the end of the financial year.   That is, amounts you owed as at the last day of the financial year but which were paid for by you after that date.   Please list these in the following headings- Date Paid, Cheque Number (or other Payment Reference), Paid To, What For, Amount including GST.

 

Relating to this Accounts Payable Listing provide copies of all the Supplies Invoices for each of the items you have included in this List.

 

A list of your Accounts Receivable as at the end of the financial year.   That is, amounts owed to you as at the last day of the financial year but which were paid to you after that date.   Please list these in the following headings- Date Received, Debtor (person/ entity who owes the money), Relates To (income type), Amount including GST

 

Relating to this Accounts Receivable Listing provide copies of all the Invoices you have created, or evidence of documentation relating to the amounts from the Debtor (e.g. Remittance Advices, Payment Summaries) , relating to each of the items you have included in this List.

 

If you have Stock on Hand for Resale you should undertake a count of Stock at balance date.  This should be valued at lower of cost or market value (excluding GST).   Your Stock Sheets and Calculation Detail should be provided.

 

Loan Agreement Documentation from the Financial Institution for all Loans entered into during the year. If an Accountant other than TotalAccounting prepared your Audit and Financial Statements to the previous year balance date  and you had Loan Agreements in place in that previous financial year and these are still in place in this current financial year provide the Loan Agreement relating to this/ these.

 

Hire Purchase Agreement Documentation for new Hire Purchase Agreements entered into during the financial year.   If an Accountant other than TotalAccounting prepared your Audit and Financial Statements to the previous year balance date and you had Hire Purchase Agreements in place in that previous financial year and these are still in place in this current financial year please provide the Hire Purchase Agreement relating to this/ these.

 

Your Insurance File showing all Insurance correspondences, documentation indicating items insured and insurable values, Invoices from your Insurance Companies (if they are not in your Suppliers Invoices File)

 

If there are any matters during the financial year for which you required, or have engaged , legal advice, or any legal matters that are pending at balance date, any documentation/ correspondence pertaining to these.

 

If there are any events subsequent to balance date which have relevance to the year of audit, any documentation/ correspondence pertaining to these.

 

Any other financial documentation not detailed above which is applicable to your organization.

 

 

                         

 

If we can assist further, please email TotalAccounting as follows:

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