FEATURE
Taking the stress out of Year End Getting the end of year financials to the accountant is a source of stress for many—but it need not be a drama. Having your accounts in order is a process that is ongoing, and using one of the good software packages available streamlines the process. By Pip Hume
Brian Eccles, Managing Director of CRS Software Ltd, developers of popular farm management software Cashmanager RURAL, advocates a disciplined approach to farm accountancy, and suggests updating financial transactions at least monthly. Most farm businesses now make payments electronically, and software such as Cashmanager RURAL allows for bank transactions to be electronically imported—an end to entering each transaction manually and making reconciliation to the bank statement much easier and quicker. Consistent coding of transactions throughout the year also makes year end much easier, for you and your accountant. “Using the CRS pre-coding
Aaron recommends monitoring outstanding deposits and cheques on reconciliation reports to see if they need to be written off prior to balance date. If a transaction is to be written off, don’t delete the original transaction—the correct procedure is to make an opposite entry in the current GST period. When checking cashbook coding, Aaron advises that if you use a “suspense” code for transactions you are unsure of, check that the balance of this code has been cleared out to Nil. It’s also important to keep accurate records of income and costs that occur prior to balance date where payment is due after balance date. Grain and seeds, and livestock, are two areas where mistakes occur. Enter quantities for sales and purchases and keep accurate records of livestock classes and numbers on hand, and of grain and seeds on hand. “Watch the cut-off of livestock and grain and seeds sales and purchases at balance date to ensure these are not either missed or included twice,” says Aaron, “and make sure that you have accounted for advance payments received for grain and seeds”. The budgeting process goes hand in hand with keeping transactions sorted. Today’s financiers demand a plan and require regular updates during the year to confirm progress. Doing this well reduces their costs and benefits everyone, and doing it early will impress your financier.
ABOVE: Bryan Beeston getting prepared for Year End
service or setting up your own auto coding is a great time-saver,” Brian comments. “Plan as you intend to code and code as you planned.” It’s also a good idea to talk to your accountant and financier ahead of year end, to prepare for the next financial year. Early discussion allows your accountant to plan ahead in such areas as tax planning. Aaron Edmond, Director of Gabites Ltd, Chartered Accountants and Business Advisers, also stresses the importance of regularly updating and reconciling the cashbook through the year and suggests some areas that need careful attention. “Don’t delete any transaction that has appeared in a GST return—and once a GST return has been finalized don’t make any adjustments to that GST period,” he stresses.
Brian Eccles says that today’s bank managers are less inclined to become involved in the budgeting process—they want farmers to own their budget. Farm consultants and advisers are great value, working with the farmer to achieve goals, and leading accountants are stepping up to the demand for planning and financial management advice. It is advisable to revise the budget every month, merging actuals to date into the budget—but keep an original budget for reference. Plan to update the budget forecast about three times a year –updating the existing budget is much easier than starting from scratch. “The great thing about having a plan is that you can make a change to the plan and measure the benefit of the decision! Budgets are never perfect—but any plan is better than no plan.”
Year End Check List Housekeeping:
Cashbook updated and reconciled Cashbook spring cleaned and backed up Accountants Report prepared and next year opened Opening livestock aged up / checked Signatures and authorisation:
Check bank authorities / signatories / mandates Check automatic payments and direct debit authorities Check ATS sub accounts / personal accounts. If staff have access to your ATS account consider whether a sub account may be more appropriate. Details for your accountant may include but not limited to:
Cashbook reconciled to bank statements— manual or electronic Copies of bank statements FBT, PAYE and GST returns Interest and dividend certificates and statements Legal and loan documentation, loan statements Details of: • Overseas shareholdings • Changes in shareholdings • Details of overseas income including interest and dividend certificates List current debtors and creditors Total effective farming hectares; livestock on hand, grains and seeds on hand; kg wool on hand Details of capital expenditure, include assets purchased/sold in the year Details of motor vehicles—business percentage as per log book Private use and value of goods taken at cost, list transactions not through the business List expenses paid in cash through personal funds Livestock reconciliation
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