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If you are asking this question, then you should know that you have a chosen a good bookkeeper/accountant. There are multiple reasons they are asking you for your statements:
- Human Error
- Bank to Xero transmission errors
- ATO regulations
Let’s examine every reason separately.
Bank feeds into your accounting system are a great time saver, however, when multiple users have access to your file, a proper bank statement is one of the methods we use to check that bank feed data has not been tampered with or changed.
Here are few examples of human error that could cause problems:
- A user has manually entered a payment or deposit against a bill or invoice in Xero and allocated it to the incorrect bank account (this happens frequently)
- A user has manually imported transactions prior to bank feeds kicking in and this has led to a double up of transactions
- A user has deleted transactions or whole statements by mistake.
- Online banking login details have been changed and the transactions have not been imported into Xero
We recently rescued a file in which 3 months of transaction account data had been incorrectly imported into the credit card account and then manually reconciled. The result being that the income and expenses for that period were double entered and the bank accounts and other balance sheet accounts were grossly out of balance. The only way this was picked up was by comparing the bank balance in Xero to the actual bank statement balance
Bank to Xero
In addition to human error, machines can malfunction as well believe it or not. This happens rarely, but as bookkeepers we see it frequently enough that it is something we need to be across.
Many users believe that when the accounting file displays that bank accounts are reconciled, that this is all there is to it. In actual fact ‘reconciled’ on your bank account on your dashboard does not mean that the balance is reconciled to your actual bank statement balance, but just that all the imported transactions have been ‘matched’ in your file. The balances can in fact be vastly different.
Allowing us access to your actual bank statements will enable us to verify your balances in Xero are correct and make amendments where this is not the case.
And finally, among other things the Australian Taxation Office specifies clearly: “for tax purposes, you must keep your records in an accessible form (either printed or electronic) for five years…” that includes “banking records (for example, bank statements, deposit books, cheque books, bank reconciliation)”
Keeping all your records in one place is one of the key advantages of Xero. We as Certified Bookkeepers and registered BAS agents, need to make sure that we collect this information from you and not just rely on the “I have it somewhere” response.