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Accounting For Good’s 2023 EOFY guide
Last month, we had a look at the steps to take to prepare before the end of the financial year.
But with EOFY just one month away, let’s now review what to do during your EOFY processes with our 2023 EOFY guide.
Balance sheet reconciliation
Tackle your balance sheet reconciliations. The easiest way to go about this is to section it out into different areas. Let’s go through each section and see what’s required at each step.
Bank accounts and petty cash
Bank reconciliation is crucial to identify discrepancies or missing documents. Reconcile your accounts regularly, comparing your accounting system balances with bank-issued statements.
Do you still have petty cash? If you haven’t made the transition to a debit card or virtual card, you are going to need to make sure that tin is reconciled.
Your Petty Cash account should be accurately represented on the balance sheet and ideally held as a ‘bank account’ within your accounting system for ease of reconciliation. Capture the relevant paperwork as digital receipts.
Debtors
Now it’s time to review your debtors, paying attention to overdue accounts. Chase them! Evaluate the likelihood of receiving payment and consider making provisions for bad debts if necessary.
Accounting tools can help with debt chasing with automated reminder functions, like those available in Xero, to prompt overdue customers. However, getting in touch personally, especially for larger amounts or older debtors, can be equally important – nobody likes making those calls, but nobody likes receiving them either, so they can be very effective.
Asset register and depreciation
Utilise the fixed asset register in your accounting system to manage assets and calculate depreciation efficiently.
Remember to update the register for any disposals or new asset acquisitions.
Payroll-related liabilities
You must accurately account for provisions for employee entitlements, including on-costs like superannuation and workers’ compensation insurance.
Check staff anniversary dates for long service leave, review clearing accounts and ensure balances are clearing to nil for items like PAYG, superannuation, wages payable and salary sacrifice. If you have a perpetual balance, now is the time to investigate and clear it.
If you account on an accrual basis, you should also accrue the June portion of any payroll that is paid in July.
Take a look at your income in advance to ensure you have drawn down what you are entitled to – you don’t want to have to return any, but at the same time need to ensure the funds are used in line with the agreed purpose. If the funding period ends at 30 June, now is the time to make sure you have met the funding obligations and applied the funds against the relevant costs.
If the funding period extends into the new financial year, this is a good opportunity to ensure you are in line with expectations and you have sufficient funds available to fulfil the next phase of the project.
Leases and other liabilities
Take the time to review other liabilities, including accrued expenses.
Make sure any paid expenses are reversed so there are no duplicates in your accounting system.
Check that your lease calculations are in line with AASB 16 and are prepared the way your auditor likes it.
Reconcile your Goods and Services Tax (GST) account and check your ATO integrated account, making adjustments during the June Business Activity Statement (BAS) period if necessary.
Profit and loss analysis
After you’ve handled your balance sheet reconciliation, you can focus on analysing your P&L statement. This allows you to compare the current statement with previous periods and recognise any changes or issues that need further review.
It is a common misconception that transactions must be processed by 30 June to fall into the financial year – this is not so if you account on an accrual basis. For example, an invoice dated June but paid in July is still a June expense, so don’t panic about the 30th being an absolute cut-off.
You will almost certainly receive invoices for June in July and can confidently enter them at the invoice date, rather than the received or paid date, if you account on an accrual basis.
That said, you do need to get June finalised and ready for audit, so be aware of the regular invoices that you expect for June as well as any special project-related charges – chase the suppliers if not received on time and make an accrual for the expense if you need to close the accounts to meet your reporting or audit deadlines.
Do you know your EOFY requirements?
For NFP organisations, EOFY can be challenging – particularly if you’re not someone with an accounting background.
Luckily, our team of experts specialises in NFP accounting, and as such, we’ve got a bank of helpful resources that can guide you through the EOFY process.
For more tips and guidance to get you through, check out these latest resources:
How to have an easy audit season in 2023
Our top tips to planning your budget for the upcoming financial year
Preparing for EOFY? Here are five steps to do before June
Or take a look at our EOFY video series:
EOFY Tips : Payroll cut offs
EOFY Tips : Requirements check list
EOFY Tips : Annual General Meeting
EOFY Tips : June 30th deadline
