Can you rely on your accounting software to get it right?
We are bombarded daily with claims how accounting software can ensure compliance and accuracy but what is forgotten is that accounting software is only as good as the people who enter the information.
Recently we had a couple of interesting new jobs where the GST returns filed were wrong highlighting how placing your reliance solely on the reports your accounting software has presented without checking is not always a good policy.
In the first example, the bookkeeper had processed the same bank transactions twice, both by coding the actual bank transactions feeding through Xero and then also processing a journal for the same transactions.
It is incompetence really but then they just accepted whatever the Xero GST return report spat out and paid the GST accordingly.
The result, in this case, being significant overpayment of the GST.
Another example was where the client had coded items incorrectly and claimed GST on 100% of an invoice rather than just the GST portion. In this case, they had underpaid their GST significantly.
We do see time and again that just accepting whatever the accounting software publishes as the GST return is not always the right option.
It is quite scary really that the way accounting software is being promoted as getting the GST correct without the need for someone to check it to the P&L and balance sheet and just auto filing the return straight through the software etc.
IRD must have factored this into their calculation of what they want to collect for GST and accepted that there will be a certain percentage of inaccuracy up and down.
The moral of the story CHECK before you file your return!
For example, if filing your GST return...
1. Check that you have included all items that relate to the GST period you are filing.
2. Check that you have coded each line item correctly.
3. Check the GST return against your P&L and Balance Sheet.
If you have a problem with your accounting systems contact us and let's see how we can help...