Understanding the Accounting profession

Understanding profit and the accounting process
May 26, 2021
Understanding profit and the accounting process
May 26, 2021
When you take your vehicle for a service the first thing that happens is that a service mechanic receives your vehicle together with a list of service items that need attending to.

This information is written onto a job card with a sequenced control number and is formatted to make certain standard information is obtained, recording errors are kept to a minimum and responsibility for its initiation can be isolated.

It is possible that the process began earlier with the expected due date being flagged and communicated by the service agent or simply a customer calling in to make an appointment I’m recording this in some kind of appointment book.

The delivery of professional services such as accounting may not be as well-defined as what is described above but there are certain preconditions that take place in some form or another.

Writing them here provides insight into that type of work accountants do and how this work is executed.

Work for the month is then documented via an engagement letter, a quote call or an email request (or a telephone call referenced by an email).

This is referenced to a job card.

 

Typical requests would be for:

  • A CIPC annual return (with or without the financial statements – companies have six months after the financial year to do this)
  • Provisional tax payments (2 compulsory returns and a third optional to postpone further interest)
  • Annual income tax return submission
  • Monthly payroll tax declaration and bi-annual reconciliation (for IRP5’s)
  • The declaration to pay the tax associated with a dividend
  • Documents required by SARS in response to a submission
  • Objections and appeals (objections can be lodged against assessments and penalties)
  • Compromise offers and payment plans
  • Tax planning, for example,
    • using the small business or micro enterprise tax rates,
    • or even trading as a sole proprietor and when to register/deregister for VAT,
    • the circumstances were a trust may be useful,
    • managing capital gains and wealth tax events,
    • fringe benefit opportunities including whether to use an allowance,
    • prohibitions against certain deductions and how to plan to prevent this including very importantly PAYE indicators (the penalties for not withholding/paying over PAYE are severe),
    • retirement planning (postponing the tax on up to 27.5% of your income has future benefits),
    • tax saving incentives (invest up to R33,000) every tax year (R2,750 per month) in a tax-free investment, limited to R500,000 over your lifetime.
      Government may adjust these limits from time to time
  • Estate duty payments (registering estates with detail updates, annual income tax declarations, executorship requests, liquidation and distribution accounts)
    (We work in conjunction with Stephen Maritz to effect all our estate duty/estate planning work)
  • Donations tax events
  • Tax clearance requests (good standing or tenders)
  • Monthly UI-19 filings and requests to provide information for staff members dismissed/ resigning/ retiring
  • Requests for workmen compensation compliance
  • Utilization of discretionary and capital allowances to move money abroad
    (Fred Akal from Akal Consulting does all this work for us)
  • Summarizing financial information by classifying and recording transactions to determine the unadjusted financial position
  • Journal entries to adjustment balances and reclassify transactions
  • Monthly management accounts, financial statements, production reports (manufacturing statement, marginal or absorption costing statement, break-even analysis) and includes advice on the correct financial reporting framework to adopt
  • Cash flow projections
  • Valuation and due diligence services
  • Strategic planning and implementation (we do this work in conjunction with Anil from Synergistic Outcomes)
  • Marketing plans and branding (these are done with our dear friends at Weaverbird Marketing who we highly recommend)
  • Finance requests to banks or government providers or investors (we always require our fee in advance)
  • Shareholder and sale agreements
  • Business automation (this is done in conjunction with our friends at the Financial Room)
  • Internal control reviews and forensic investigations (done in conjunction with Dr Ian Dey van-Heerden)
  • Requests for training and administration support (we assist with locums and capacity building in your business)
  • Reviews and audits (this is done in conjunction with Scott and Company taking into account the independence requirements of the Companies Act of 1984 as amended and the IRBA/SAICA/IFAC Code of Professional Conduct.

Our work and time including that for direct supervision & review, are recorded on job cards that are retained for our records.

Analysis and interpretation is an essential part of the accounting process. How this is communicated and in what depth is largely by agreement and the appetite of the directors for financial information.

As a matter of course we often comment on the quality of investment decisions undertaken.

 

Getting the most from your accounting services.

  • Shared values are important
  • Upskill yourself in finance
  • Pay attention to your business and your personal administration needs and ask us for help if necessary
  • Provide us with what is needed timeously (accounting fees can in fact reduce with streamlining of the your accounting processes)
  • Expect your financial information (our best clients are those who know how to use accounting services and understand the value they are receiving)
  • Pay your bill on time or at least discuss this this with your practitioner and stick to our payment plan

 

How we drive business performance.

Strategic Business Tax Planning Infographic

 

Thank you for reading this resource. Feel free to get in touch with us to discuss further.

Rob Scott
Rob Scott
Rob leads Scott Stephenson Business Advisory (SSBA) with his passion for sharing his knowledge and experience. His experience (he is a Chartered Accountant and Registered Auditor) in banking, business start-ups, education (Financial Accounting, Auditing, Financial Management & Tax) & others equips him well to connect with you and help you grow your business profile.