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e-ccounting
April 2009

in this issue

Business Scenario
- Taxes for the Self-Employed

Answer

Accounting Tip

Did You Know ?

Definition

Sandy's Recommendations

Next Issue - Business (account) number


 

about e-ccounting

e-ccounting is a monthly newsletter focusing on accounting tips and solutions. Our mission is to educate our clients, students and readers by offering these resources in response to your ongoing questions.

It is our objective to gather information and provide easy access for your current and future needs.
Back-issues are available on the accountrain website.

These tips are not complete answers to complex questions. We therefore recommend, when in doubt, contact the professionals or government agency.

about accountrain

accountrain simplifies the client / accountant relationship.

accountrain offers a unique combination of knowledge and people-skills to solve all your accounting needs.

accountrain specializes in the how's and why's of accounting.

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Pass It On !

Please forward this to anyone you feel may benefit from some free accounting tips. They'll be glad you did.



Sandy's Question Corner

Do you have an accounting question? Send it to us at accountrain



Workshops:

accountrain is now offering a series of three workshops. Take one, two or all three and save as you learn. The informative and interactive format guarantees a comfortable and fun learning environment.

Details on the accountrain.com website.

The Topics:

1. Understanding How to Read Financial Statements
  • Who's interested in your reports and why
  • Why there's more to the Income Statement than just the "bottom line"
  • What's so important about the Balance Sheet, and
  • Key accounts, definitions, ratios and samples to review.

    Next Session:Fall 2009 or as requested.


2. Accounting 101 - for new and small business
  • Review of common questions, including GST, incorporating and many more
  • Choices for maintaining bookkeeping
  • Understanding government requirements
  • Shortcuts, tips and organizing all that paper!

    Next Session: May 13th - 6 pm


3. Year-end Prep & New Year Planning
  • It's never too late to get organized
  • Understand what's different including: depreciation, accruals, deferred revenue and prepaids
  • How to choose accounting help
  • Preparing for an audit, and how about avoiding an audit!
  • Learn to streamline your bookkeeping methods to save time and money.

    Next Session: Fall 2009, or as requested.


For more information or to register, email accountrain

If you would like to see your ad here contact accountrain for more information about advertising in e-ccounting.


  • Business Scenario
    - Preventing Fraud (through banking)

  • How can you use your bank information to help prevent fraud?

  • Answer

  • The owner / manager should get into the habit of opening the bank statement(s) as soon as they arrive. Have the receptionist (or whoever is responsible for opening the mail) ensure the statements are not opened and deliver them directly to you every month. A review would consist of:

    • Sorting through each cheque and looking at the signature line,
    • Reviewing each line item on the bank statement, looking for any items that may "jump out", and
    • Checking the ending balance. Is it close to what you think it should be?


    Case: I have a client who thought he had $15,000 in his chequing account. When he called the bank to do a transfer, they said, "I'm sorry Mr X, but you only have $14 in your account.

    This was Mr X's first inkling that something was not right. It took him awhile to get to the bottom of it. It was an actual case of fraud within the company that had been going on for over 6 months.

    Could he have known sooner? Absolutely! As all it was, was one of the employees was issuing themselves an extra cheque each month and forging his signature.

    If he would have merely done any of the three tips mentioned above, this would have been caught after just one cheque was issued. Actually it probably would have never happened because the employee would have known he opened and reviewed his bank statement every month and therefore may have not bothered.
  • Accounting Tip
  • If the company is large enough separate the accounting tasks, ie Accounts Payable versus Accounts Receivable.

    As well as within the Accounts Payable, ie. bill entry versus issuing payments. And for Accounts Receivable, if applicable, separate invoicing clients from receiving, depositing and entering the payments.

    Other hints for small to large companies, as busy as the owner(s) and / or managers are, make the time to do random checking of bills, invoices, deposits, etc.

    It would help if you also understood the filing system: where things are kept at certain stages of the cycle and once entered and paid, where things are filed?

  • Did You Know ?

  • You may have noticed the odd cheque may clear the bank without a signature or it may have cleared even if it has been post-dated.

    The reason for this is the bank is not responsible to review any information on a cheque under $5,000 - $10,000 (depending on the institution). Go ahead ask your bank manager!

    Here are some interesting statistics about intercompany fraud:

    10% of employees would NEVER steal, etc.

    10% of employees would have no problem committing an illegal transaction.

    While the remaining 80% of employees, although it is doubtful, in desperate times, they would consider it.

    "Desperate times lead to desperate measures" - worth noting in this recession.

    For more Did You Knows?
  • Definition
  • Forgery

    There are several definitions of forgery, here is a simply definition for business purposes, " altering documents, ie. a cheque with the intent to deceive".


    For more definitions ...
  • Sandy's Recommendations
  • Hire an accounting professional to review systems, roles and procedures.

    Depending on the size of your firm it could take a 1/2 day to several days. (the last one I did was 2 1/2 days, and although it was out of town, the owner said the fee and related travel expenses were well worth his comfort level when it was complete.)

    Upon completion you should expect a report focusing on problem areas and how to correct them.

    Many companies who suffer from (some type of) fraud state they wish they would have known a simple review of procedures was an option in preventing it from happening.

  • Next Issue - Business (account) number

  • Learn:

    • The most common Federal & Provincial business accounts.
    • Who should have consent to your CRA file and how do you get it.
    • How to stay in good standing with the CRA, especially if you are behind in payments and / or your reporting.
    • Where to file the government paperwork.
    613-789-2623



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