• Key reasons to review your systems

    Effective accounting and business systems play an integral role within a business. Conducting a 'health check' on your business systems will bring many benefits to your business. By getting your system right the first time, your business can be more effective.

    Avoid costly mistakes

    Businesses can report incorrect amounts of GST (often without realising) when their systems for capturing and recording GST information fail. Taking time out to review your business systems to make sure they are working effectively and are up-to-date can help you avoid potentially costly mistakes

    Check that your systems and controls:

    • correctly classify all your sales and purchases
    • only allow you to claim GST credits with a valid tax invoice
    • do not leave information out of your activity statements
    • correctly transfer GST information between associates

    Healthy systems offer certainty

    We have found that businesses going through change, including those experiencing rapid growth, restructures and mergers, are most at risk of incorrectly reporting GST.

    Check that:

    • new branches are identified and reported
    • systems are correctly integrated
    • sales are correctly treated as non-taxable when supplied to another member of the same GST group
    • when transferring to a new system, it does not override important settings you had in place in your old system - keep a record of your old system settings
    • your system controls and internal processes are adequately documented and your staff are trained to use them correctly.

    Help manage your cash flow

    We understand that cash flow is the lifeblood of business. Unfortunately businesses often report GST transactions incorrectly because their systems let them down. These errors can adversely impact your cash flow.

    Good record keeping systems let you focus on growing your business by helping you better manage your cash flow.

    Check that your systems and controls:

    • accurately track the GST paid and charged for both electronic and paper-based transactions
    • track the flow of your invoices to ensure you claim your GST credits on time
    • identify areas of GST impact in your systems to ensure they receive the correct GST treatment
    • adjust prices to include GST.

    Get the credit you deserve

    When your systems correctly classify your transactions (sales, mixed sales and purchases) you can have confidence that you are paying the correct amount of GST to us and that you are not missing out on any GST credits.

    Check that your systems and controls:

    • correctly classify and record all of your sales or purchases
    • for mixed supplies, allow you to claim GST credits on the part of the tax invoice that is subject to GST
    • have safeguards for processing one-off transactions or rebates.

    Ensure your one-off transactions are managed effectively

    You need to be particularly careful when making one-off transactions. Often they can be significant for the business but if your system is not set up to deal with them correctly, an error could mean penalties or interest.

    Check that your systems and controls:

    • can identify one-off transactions
    • properly document and process one-off transactions
    • have a built in point for manual checking.

    Activity statements correct and lodged on time

    Knowing your activity statement is correct and on time can help improve the productivity of your business, save you time, administration costs and help you manage your cash flow. When your systems are set up correctly to record and account for your transactions, your activity statement lodgment can be a much smoother process.

    Check that your systems and controls:

    • allow for figures to be correctly copied when completing the activity statement
    • include invoices produced outside a normal accounting system
    • manage your cash flow and reflect your correct financial position
    • complete reconciliations.
      Last modified: 16 May 2014QC 23370