We all know the importance of producing sound quality management accounts - measuring is the start of improving profitability. There they are - nice, neat numbers but how sure are you of the quality? Is it sound? Does the bank reconcile? Is the PAYE balance correct? What’s in the suspense account? Does it correctly incorporate opening balances from the previous year? What’s the quality of the purchase ledger balances and the sales ledger?
These questions are relevant to all reporting but it may be that your checking procedures are not good enough or maybe there aren’t any. This directly risks the integrity of the information. If you’re going to use the accounts to take action to improve your profitability, surely what it’s all about, then it’s essential that your data is sound, otherwise your profitability will be directly affected.
For example, when looking at your Balance Sheet you probably assume that the bank reconciles. We’ve lost count of the systems we’ve checked where the bank doesn’t reconcile. That is usually associated with major quality questions over the whole accounting. In turn that directly affects reporting of your profitability and performance. Your assumption is that the book-keeper knows what they are doing – but do they?
Usually the book-keeping is 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? It’s likely that no one in the business is really able to or is measuring the quality of the accounts. That is taking an unnecessary risk.
So how can this exposure be dealt with. Someone else in or outside the business, 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 quick exercise for a professional and it’s only a one-off task.
Contact us by clicking on the picture for the full size version.
The sample shows the sort of detail that is covered. The 30 traffic lights make it easy to focus on areas that need attention. It’s all on one page and is very easy to understand.
The Benefits of a Xero HealthCheck
- improves the quality of the management reports
- reduces the risk of wrong numbers
- easy to understand traffic light status
- saves unnecessary cost at the Year End
Extra benefits of Outsourcing the Xero HealthCheck
- access the required skill set of a professional
- discreet, confidential checking of a book-keeper's work
Good times for a HealthCheck
- before the first set of management accounts are produced
- when there is any sort of doubt about the book-keeper
- before issuing ‘special’ accounts e.g. an application for bank funding
A Xero HealthCheck is quick and easy, so no excuses!