Hi and welcome to our post on Accounting And The Importance Of Written Advice! You might think that this is something that is a given or something that you would do anyway but if this was the case I wouldn't be writing this article. So, what is the article actually about? It's about protecting yourself and your business from surprises when the Australian Tax Office (ATO) or the Australian Securities And Investments Commission (ASIC) performs an audit for businesses operating in Australia.
So, in case you are not aware, the business owner, director and / or CEO is responsible for the integrity of your businesses financial reporting. When this burden shifts is when seeking clarification from an accountant regarding what you can and cannot do, but only if they operate as a third party and not part of your business. Accounting firms insure themselves for very large sums of money as incorrect advice deemed negligent opens them up to litigation by clients to recover costs incurred as a result. We often take the advice provided by accountants as reliable but the fact is that if you are audited and found to be non-compliant then your business or company is who foots the bill first.
It is important that if you are provided with advice or financial strategies by an accountant that you seek to independently understand and verify this information. You might be thinking "But why? I pay the accountant to tell me." It goes back to due diligence and you need to demonstrate that you as a business owner, director or CEO / CFO can defend your position during an audit by the ATO or ASIC. Ignorance is no defence as it is your obligation to inform yourself. It is much easier to prevent a tax bill from being issued than it is to have one rescinded and the last thing you need is to be setting aside money you have earned to defend a tax bill or sue an accountant for compensation as without a doubt, this is going to require a fair amount of capital.
So why write down everything your account tells you if you are going to independently verify what advice they give you? It's simple, laws change, memory fades and quite honestly sometimes you find yourself having discussions you've had before. Honestly, it makes your appointments go smoother if you keep a diary of what was discussed, what clarifications you received from the ATO, ASIC or other accountants /sources. Imagine how much easier it would be to change accountants if you go in knowing what you have and haven't talked about before. It is also admissible in court allowing you to pinpoint where advice came from, what the advice was and what clarification you obtained. It is not our suggestion that you need to record every little thing but it is most definitely prudent if it is something questionable, potentially considered to be "financial advice", is associated with something that is not clearly explained on an ATO / ASIC website or is associated with deductions that are substantial or many small ones but as a whole substantial.
A good accountant is one you trust, who helps you maximise profit and who gets you through audits. An excellent accountant is one who can back up advice with information provided by the ATO and / or ASIC. Let's be honest, we all prefer to pay the least amount of tax but I prefer to do it without worrying that I won't get through an audit as I prefer to sleep at night. If you find yourself questioning whether you know your finances or questioning your accountant's guidance then maybe it is time for a change...ActsIntuitively would be happy to help you with related services and can refer you to a suitable accountant should you require. If you are interested in finding out more about what we can do for you then please feel free to visit our main website or contact us. Thank you for your time, for reading our blog post and it would be great if you feel the need to share or like our articles via one of our social media platforms with the @ActsIntuitively tag as applies.
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