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Source Documents & Our Obligations as BAS Agents

This is part 3 in our blog series about source documents. In parts 1 and 2 we explained what source documents are, why they’re important and also how our clients deal with them. Today we will look at how the legislation which guides us as BAS Agents impacts on the way we work with source documents.

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The Code of Professional Conduct

If you’re a BAS Agent, you will be well aware of the Code of Professional Conduct by which we are all directed to behave when working with our clients. The Code of Conduct for the uninitiated is a set of guidelines for registered Tax and BAS Agents within the legislation known as “Tax Agent Services Act 2009”. The code covers 14 principles under 5 main areas:

  • honesty and integrity
  • independence
  • confidentiality
  • competence
  • other responsibilities

I am certainly not going to explain all 14 principles here (if you’re interested go here: Code of Professional Conduct), but I am going to look specifically at 2 of them and how they relate to our working with our clients’ source documents.

Source Documents & the Code of Professional Conduct

Here at e-BAS Accounts, we take the Code of Professional Conduct very seriously and apply it to our everyday circumstances when dealing with our clients. While all areas of the Code are equally important, 2 areas are especially important to us: “honesty and integrity” and “competence”.

Honesty and Integrity

Under the Code, the principles within the category of “honesty and integrity” are:

  • You must act honestly and with integrity
  • and 2 other principles

Competence

Under the Code the principles within the category of “competence” are:

  • You must ensure that a tax agent service that you provide, or that is provided on your behalf, is provided competently;
  • You must maintain knowledge and skills relevant to the tax agent services that you provide;
  • You must take reasonable care in ascertaining a client’s state of affairs, to the extent that ascertaining the state of those affairs is relevant to a statement you are making or a thing you are doing on behalf of a client;
  • You must take reasonable care to ensure that taxation laws are correctly applied to the circumstances in relation to which you are providing advice to a client.


So how does all of this relate to source documents?

The Code areas of “competence” and “honesty and integrity” are not only very important to us at e-BAS Accounts as good business practice, but we are bound to abide them at all times because we are registered BAS Agents. Therefore, when we work with clients’ source documents we do so in a fashion that ensures the Code is never compromised. Our BAS Agents use a set of rules to assist them in this endeavour. Our rules consist of “dos” and “don’ts”:

DO

  • Ask clients to provide bank statements even if their software has a bank feed facility.
  • Ask clients for loan statements and credit card statements.
  • Ask clients for any other documents related to their bookkeeping assignment.
  • Ask clients to provide all receipts and invoices for the given accounting period.
  • Request that clients annotate transactions on bank statements for which they cannot provide actual invoices/receipts.
  • Ask clients’ accountants to provide details of expense apportionment (if applicable).
  • Ask clients to provide evidence of travel diaries and related expenses.
  • Ask clients to provide information about meal expenses i.e. who, what, when, where etc.
  • Request to see Tax File Number Declarations and Super Choice forms when new staff are recruited.
  • Communicate to clients who process their own data entry that their work will not be audited as source documents were not provided.

DON’T

  • Assume anything – if you are unsure about any transaction you are entering, allocate it to a suspense (query) account and ask the client to clarify it.
  • Guess anything ever! Again, if you are unsure, allocate to a suspense account and ask the client to provide more information.
  • Enter data from a document that you suspect isn’t business-related. If you suspect something is askew, then it probably is! In this situation it is best to discuss this with the client. If you are still not satisfied, allocate the data to a special account and alert the client’s accountant at end of financial year (and definitely do not apply GST!).
  • Enter a transaction without first sighting the receipt/invoice. If this isn’t possible, obtain information about the transaction from the client. (Keep a record of the client’s explanation about the transaction in their file).
  • Enter a transaction that you do not know how to enter correctly. Always ask for help from other BAS Agents or the client’s accountant. Also obtain further training to assist you with your bookkeeping skills.
  • Enter data relating to a BAS Provision that you do not understand. Get further information and ensure you obtain training to improve your knowledge.
  • Attempt to work with data that is not within your jurisdiction i.e. BAS Agents must not work with any data related to tax agent services.

Conclusion

At its core, bookkeeping involves taking source documents and entering the details from them into a company’s general ledger. Once entered, this data is used by us and by accountants to ascertain clients’ taxation liabilities which are then reported to the Australian Taxation Office (ATO). Source documents are therefore extremely important – they provide the information that ultimately determines how much tax clients will pay. Therefore, it is imperative that BAS Agents abide by the Code of Professional Conduct, especially in the areas of competence, honesty and integrity, when dealing with clients’ source documents. This ensures that the information received by the ATO is accurate and a true representation of any one client’s business affairs.

PS: In short, we as BAS Agents are not in the business of being dishonest or dodgy (for want of better word). When dealing with our clients’ source documents we will always choose to do the right thing, even if this means losing a client or two. Our integrity and that of our clients is far too important to us.