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A survey conducted by the IPA in conjunction with MYOB has revealed the most common mistakes SME clients make around the end of financial year (EOFY).
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Top EOFY mistakes revealed
12 June 2014
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8 minute read
The two most common EOFY mistakes, according to the survey, are miscoding bank transactions and not keeping accounts and records up to date throughout the year.
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The survey also revealed a growing proportion of business operators are not making contact with their accountant over the financial year and are not making the most of their accounting software functionality.
IPA chief executive officer Andrew Conway said it’s important small businesses draw on the expertise of their accountant beyond compliance reporting and income tax returns.
“Engagement with their accountant during the course of the year can be very beneficial, as they can access strategic business and planning advice to help them become more profitable,” he said.
"They can also be provided with a more holistic service, including assistance with sales and growth forecasts, cash-flow management, accessing funds and succession planning,” added Mr Conway.
MYOB general manager, accountants division Adam Ferguson said lack of preparation is often the reason why June 30 fills business owners and their loved ones with dread.
“It makes life much easier if operators regularly update their accountant, record all transactions as they occur throughout the year, and make the most of time-saving technology,” he said.
“For example, using online accounting features such as bank feeds which are automatically imported and coded into the software, means keeping up to date with your accounts now takes a lot less time than in days gone by.”
“This eases the workload for a client and their accountant and frees up their time to focus on their role as a business adviser too,” Mr Ferguson said.
The top five EOFY mistakes made by SMEs as shown by the survey are:
1. Miscoding bank transactions (65 per cent) - equal with previous year's results
2. Not keeping accounts and records up to date throughout the year (58 per cent) - down from 62 per cent last year
3. No contact with their accountant over the financial year (58 per cent) - up from 42 per cent last year
4. Does not provide enough detailed or supporting information (49 per cent) - down from 64 per cent last year
5. Not fully trained up on accounting software functionality (46 per cent) - up from 39 per cent last year
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