BOOKKEEPING

The bookkeeper prepares the books and trial balance and is involved in the day to day running of the business. They do things like processing banking transactions, payroll, debtors, creditors, petty cash etc.

ACCOUNTING

There are two different streams of accounting:

Financial - Accountants get the information provided by the bookkeeper and adjust them for month/quarter/year end reporting purposes. These adjustments include prepayments and accruals for cash payments/receipts that don’t match to the actual business usage such as insurance contracts, rent, utilities etc. 

Management  - Accountants prepare management reports on a continual basis such as income statement, balance sheet, cash flow projections etc. for management, shareholders and directors.

AUDITING

Auditors then check the work of the accountant at balance date to ensure the year end accounts provide a true and fair view of the financial statements in accordance with generally accepted accounting principals (GAAP). This is done on a test basis through use of materiality which means that if the auditor signs a “non-qualified” opinion (an opinion which means the accounts are fine) then the numbers in the financial statement are no more than 10% different based on the testing performed.

TAX

Tax accountants take the accounts and prepare the necessary forms to be lodged with the ATO. They take the company’s trial balance and make adjustments that change GAAP to what the ATO have specified is reasonable. Examples include taking prepayments and accruals out, changing depreciation rates for fixed assets and buildings, doing proper calculations on work use of assets, calculating your tax obligations such as FBT, CGT and much much more.