Why do some accountants lodge Business Activity Statements, Fringe Benefits Tax returns, and prepare annual financial statements, yet fail to enter the accountants closing adjustments into your accounting software?
Many business owners never ask this question because they do not realise the adjustments were never entered into their accounting software in the first place.
What We Expect When Anything Is Filed With the ATO
Our expectation is simple.
Every time an accountant files anything with the Australian Taxation Office on your behalf, your accounting software should be updated to reflect exactly what was lodged.
That includes:
Business Activity Statements
Fringe Benefits Tax returns
income tax adjustments
any other reports or calculations submitted to the Australian Taxation Office
If figures are adjusted for reporting purposes, those adjustments should be processed into your data file. Your accounting software should not tell a different story to what has been lodged.
Your Accounting File Should Match What Was Filed
Your accounting software is not just a data entry tool. It is meant to be a live, accurate representation of your business at any point in time.
If closing adjustments are not processed:
balance sheets inside the software do not agree to lodged financial statements
profit and loss reports are misleading during the year
business owners are left reviewing numbers that are not accurate
If adjustments have been made, you should be able to see them.
Why Working Papers Matter
Whenever figures are lodged with the Australian Taxation Office, working papers should exist to support those figures.
Those working papers are evidence.
If something has been filed incorrectly, are you realistically going to complain to the Tax Practitioners Board? Probably not. In most cases, the business owner is the one ultimately held responsible unless they can prove the work was prepared incorrectly.
That is why it is critical that:
closing adjustments are processed into your accounting software
working papers supporting those figures are provided to you
When you sign documents, you should be signing off on the evidence, not just a summary number.
What Good Practice Looks Like
Good practice means:
processing closing adjustments into the accounting file,
ensuring the balance sheet agrees to lodged reports
understanding how Goods and Services Tax reconciliation works
leaving the client with an accounting file they can trust
Only a small percentage of accounting professionals consistently do this well. These are the professionals you want to work with. If your accountant isn’t making the adjustments your bookkeeper needs to be ontop of this, and either ask the accountant to do it for you, or ensure they do it for you.
Signing Without Evidence Is a Risk
When you sign a Business Activity Statement or any document lodged with the Australian Taxation Office, you are signing off on the figures.
You should be able to:
review the reports
see how the figures were calculated
understand what adjustments were made
retain the working papers as evidence
Without this, you are relying on blind trust.
Why This Matters
If closing adjustments are processed correctly and working papers are provided:
your accounting software reflects reality
your balance sheet balances
your reports can be relied on at any time
you know exactly what you are signing
That is not asking too much.
That is simply good practice.
We Make Your Figures Make Sense
If you want confidence that your accounting software reflects exactly what has been lodged with the ATO, speak with a qualified bookkeeper who processes closing adjustments and provides full working papers every time.