We all know the importance of producing management accounts and experience a wide variety of challenges in settling down to a regular reporting pattern. There they are, nice neat numbers, perhaps in colour with graphs but how sure are we of the quality? Is it sound? Does it reconcile? What’s in the Suspense account? Does it correctly incorporate opening balances from the previous year?
These questions are relevant to all reporting from the very outset yet it may be that the checking procedures are not as strong as they should be, maybe they don’t even exist. This risks the integrity of the reporting and could lead to some sort of embarrassment.
For example when looking at a Balance Sheet it would be assumed that the bank reconciles. Short of checking there is no proof of this yet it’s the most fundamental of all the reconciliations. We have lost count of the systems we have seen, with turnovers above £1M, where the bank does not reconcile. In all such cases there have also been major quality question marks over the whole accounts. We always find in such situations that the owner has assumed that all was well as it was left to the book-keeper and of course they know what they are doing – or do they?
In businesses up to 20 or 30 or even more employees the book-keeping is normally in the hands of just one person. That book-keeper may be friendly, punctual, efficient, even professionally qualified however that proves nothing about the quality and state of reconciliation of the accounts. Everyone in the business will assume that all is well unless there is a fire but is that safe? Indeed the chances are that no one in the business is really able to measure the quality of the accounts. Yet that is taking an unnecessary risk.
So how can this risk be dealt with. Someone else in or outside the business, whoever it is someone who knows what they are doing should check the quality. In our opinion it's safest to use a qualified accountant - that need not cost much as it's a pretty quick exercise for a professional and it’s normally only a one off task.
The sample shows the sort of detail that can be covered. It’s not dealing with the health of the business but with the quality of the accounting information and related security considerations. The traffic lights make it easy to focus on areas that need attention. It’s short and easy to understand.
The Benefits of a Sage HeathCheck
- Improves the quality of the management reports
- Reduces risk of embarrassment
- Easy to understand traffic light status
- Reduces the risk of data loss
- Saves unnecessary cost at the Year End
Extra benefits of Outsourcing the Sage HeathCheck
- Access the required skill set of a professional
- Discreet confidential checking of a book-keeper's work
Good Times for a HeathCheck
- When the first set of management accounts are produced or soonest thereafter
- When there is any sort of doubt about the book-keeper
- Upon a change of book-keeper
- Before issuing ‘special’ accounts e.g. an application for bank funding
- Annually as a routine quality check
- Before selling the business
A Sage HealthCheck is quick and easy so no excuses!