Maintaining your code of ethics as a bookkeeper

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The role of the bookkeeper is changing, thanks to advances in technology and business accounting software.

Where once a bookkeeper might be focussed purely on maintaining accounts, the evolving nature of the role means that they are now an integral part of a business, and can make the difference between the organisation thriving or failing to survive.

“Whenever we do research, we find that the accountant or bookkeeper is the number one trusted person in a business,” says Damon Anderson, director of partner and product, UK & EMEA, at Xero, which provides small business accounting software.

His team works with thousands of accounting and bookkeeping partners to make sure they have everything they need to make the most of digital transformation. He says that trust, and the ethics of a bookkeeper, are regarded as fundamentally important in a business.

Technology is driving change

“The role of the bookkeeper, or accountant, is changing rapidly,” he says. “Technology enables bookkeepers to be more efficient and better at what they do.”

The management of accounts is not just looking in the rear view mirror anymore – how the business has performed in the previous financial year. Technology now gives bookkeepers the opportunity and the tools to start planning for the future.

“The role is evolving into more of an advisory service, pushed forward by the requirements involved in the roll-out of Making Tax Digital (MTD) by HMRC,” he says.

One of the ways an accountant or bookkeeper can make a difference to a business is by bringing the analytical skills that many business owners lack.

“Typically, business owners are entrepreneurial and creative and don’t set up a business because they want to deal with checks and balances on the books,” he says. “They are driven by a passion and a vision. The role of an accountant and bookkeeper is to give a counter balance. It can work out to be a match made in heaven.”

New technology enables financial specialists to add cash flow forecasts and look to help look to get access to capital in order to help the business grow.

“This is one of the most exciting industries to be in right now,” he says. “It is transforming so quickly.”

A trusted advisor

Steph Rickaby runs Sunflower Accounts Limited in Wiltshire. Sunflower Accounts is a firm of Chartered Certified Accountants based in Calne near Chippenham.

“The role of the accountant and bookkeeper is very much becoming one of a trusted advisor,” she says. “It is really important to have robust systems and processes in place around the bookkeeping function. Automation, for example using the likes of Xero and Receipt Bank, can help with accurately recording receipts and reconciling the bank. However there must always be a mechanism in place to regularly check the bank reconciliation i.e. the statement balance agrees to actual bank account to ensure that all transactions are included as well as checking for example the VAT element on the invoice through receipt bank is accurate.”

One of the key roles of a bookkeeper is to maintain accurate records and reduce the chance of fraud occurring.

“Systems are really important for preventing fraud: don’t reply on one method of authorisation when giving instructions to set up and pay a new supplier for example. We have seen the increase of fraud in this area, particularly where the bookkeeping function is outsourced.”

She says it is really important to pick up the telephone and question all new suppliers and large payments, however convincing or demanding the emails are from the fraudster pretending to be the director.

Create the right policies

“Ensure that there is a policy in place to question all new suppliers or large payments, but don’t use the same method as the request, i.e. if emailed the request, then maybe text or phone the person who made the request.”

When a business is growing, it is really important to manage not only costs and anticipated / expected sales through preparing a budget, but to forecast the anticipated profit and loss and be able to monitor this to ensure that the project and growth is on track.

Simon Renshaw, Senior Insolvency Practitioner, at, says the bookkeeper can provide checks and balances and help companies to stay on the right side of legislation. Taking an ethical approach in these matters is very important.

“Since there is no licence required or entry exam needed to become the director of a limited company, many people find themselves woefully underinformed when it comes to the financial technicalities,” he says. “This isn’t necessarily a shortfall because when individuals are experts in their field, there’s no reason they should have to know about tax returns, VAT legislation, payroll and National Insurance in addition.”

This is where the services of a competent accountant or bookkeeper are invaluable. Not only do they handle that side of the business, they bring experience and expertise in cash-flow management, risk management, directorial responsibilities and cost-cutting.

The importance of integrity

Simon Renshaw says that as insolvency practitioners, his team regularly help directors who are facing serious creditor threats such as winding up petitions. In some cases, these have been completely ignored by directors, sometimes on the advice of an accountant or bookkeeper.

“These are classic examples of cases where a director’s poor choice of advisor ends up costing them their entire business.”

Pursuing the most tax efficient strategy is a key element of any successful businesses story, he says.

In most small businesses, without an inhouse financial expert, the accountant or bookkeeper fills a vital role.

“As well as driving growth, the right financial decisions (such as putting money aside for the inevitable rainy day) are essential habits.”

The consequences of not handling finances properly can be serious.

“As we see every day, the consequences are insolvency and worse. Where directors are not accurately informed, they may find themselves liable for wrongful or even fraudulent trading, facing civil or criminal charges. Signing personal guarantees may also result in the loss of a family house in addition to insolvency, which is really the worst kind of double whammy.”

Marianne Curphey is an award-winning financial writer and columnist, and author of the book How Money Works. She worked as City Editor at The Guardian, deputy editor of Guardian online, and has worked for The Times, Telegraph and BBC.

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