Are You Getting Organized Financials from Your Accounting Department?
When you hire an accounting professional, it can sometimes be hard to know if your books are being done correctly and whether you are getting accurate information.
Here are some things you can do to stay on top of your finances without becoming a micromanager.
Review Your Chart of Accounts at Least Once a Year
Look for duplicates and question them. Ask about the chart of accounts setup. Does it enhance your reporting? The chart of accounts should be set up as a source to pull reporting from. Don’t worry if it doesn’t show the details you want—think of it as buckets of information that can be poured into other buckets for closer examination.
For example, a great report is profit and loss by the top 10 customers. You don’t need your customers listed in the chart of accounts to get this information.
Reconcile All Bank and Credit Card Accounts Through the Current Date
This is a good way to know if all transactions came through properly and which ones are missing. You should also receive a report of what transactions haven’t cleared yet. If those transactions are within a few days of the closing date on the statement, it will probably clear by the next month end. Anything outside of that timeline should be investigated.
Ask for Payroll Reporting
You will want to see payroll reports that capture all items: salary, benefits, taxes paid by employer and reimbursements. All payroll paid to employees should be recorded as gross wages, not net (gross minus employee taxes)—unexpectedly, ask for a detailed payroll report with each person’s wages listed, as well as reimbursements and year-to-date wages paid.
In our experience, fraud occurs more often in payroll than in other areas. Asking for this information will help you stay on top of payouts.
Ask for a List of Vendors Paid to Date and if W9s Have Been Collected
This will be helpful at year-end when it is time to create 1099s to send to these vendors. W9s should be given to anyone you are paying, regardless of the reporting threshold ($600)—it is much easier to get a W9 from someone before you pay them than after.
Make Time to Review Your Reporting Monthly
Your accounting department should be sending financials for your review on a regular basis. Make sure you review them for accuracy and to make decisions. Reports like profit and loss by month will show trends, but it will also show if something is miscategorized. For example, you can compare months to see if rent expenses are consistent or if a month is missing.
If you have any questions about what you see in the reporting, always ask for clarification or for a meeting to go over it.
Once you have the confidence you are getting quality financials, you will feel more comfortable making decisions based on those financials.
Have questions about your financials? Wondering if you are getting all you can from your books? Give us a call and we can review your books and answer your questions!