Bookkeeping

Accessorial Liability: when to stay and when to run…


An accessory to a crime is a person who participates knowingly and voluntarily in the commission of a crime. An accessory can be categorised as before or after the fact (the commission of the crime).   They need not be actually present at the scene of the crime in order to be held liable. 

Legalmatch.com

In the bookkeeping world there is much chatter about “accessorial liability” especially in relation to those providing payroll services for clients. So what is this about and what does it mean? Basically, as per the above quote, if you are involved in contravening the Fair Work Act 2009 and are knowingly doing so, then, if investigated by the Fair Work Ombudsman (FWO), you could be classified as an accessory to the contravention and be prosecuted accordingly. In simple speak, if you are involved in performing payroll tasks for a client (or your employer) and you know that something is being done illegally or incorrectly in relation to the payroll and you do not do anything to rectify it, you have just made yourself an accessory. The FWO are clear about this and there are no if, buts or maybes. No excuses accepted. So there are 3 aspects to accessorial liability – being involved, knowing it’s happening and doing nothing to stop it. Is this scary for bookkeepers? You bet your life it is!


Should I stay or should I go now?

So if you’re a bookkeeper reading this and you’re not already scared about your involvement in your clients’ payroll, then you should be! In general you do your best and bring your expertise and knowledge to the task and hope that all will be well. But is that enough? Perhaps not it seems. The FWO will have us believe we need to do more in order to avoid becoming an accessory to payroll contraventions. So what can you do if you suspect something is out of kilter with a client’s payroll? Athena Koelmeyer from Workplace Law makes the following suggestions:

  • Arrange for a payroll audit to be performed by a professional HR service. This will uncover any anomalies and errors being made and assistance will be provided to rectify them.
  • Make sure that appropriate processes are in place and are being followed correctly. These processes should include:
    • ensuring employers (your clients) are across their obligations under the Fair Work Act 2009, modern awards and any record-keeping obligations
    • ensuring employees are properly classified under their relevant award
    • ensuring employees pays are correctly in terms of minimum rates of pay, allowances, penalties and loadings
    • ensuring all payroll records are compliant and correct
    • keeping up to date with changes to modern awards, especially pay rates, allowances, loadings, penalty rates etc.
    • conducting regular audits of your payroll set up, especially when using generic software
  • If you discover any anomalies with your client’s payroll, communicate this immediately with the client and ensure that they rectify the situation. Keep written records of the steps that were taken to repair the issue/s. If neither you or your client can rectify the issues, seek professional advice and assistance. Do not ignore the situation.

The above is great advice is should be followed if you are going to provide a best-practice service to your client. As bookkeepers, however, we all know that in reality, making clients cross the t’s and dot the i’s is not as easy as it sounds. Some clients take your advice on board and some don’t for whatever reason. So what is Athena’s advice if you find yourself working with a client who is openly flaunting Fair Work laws and who refuses to make any improvements? Basically her advice is to

RUN FORREST, RUN!

Athena says you always have to come back to the accessorial liability provisions under section 550 of the Fair Work Act when making your decision about whether to persist or leave. She says that where you are involved (processing payroll) AND you know that payroll processes as above are not sufficient, AND you don’t do anything about it (even if you tried to), you will be seen as as accessory in the event of prosecution. While this is not the forum to go into possible charges and legal consequences of said prosecution, I’m sure you’ll agree that you do not want to go there! Athena recommends that you should terminate your engagement with these types of clients immediately, no questions asked and just walk away. Before walking away, always put your concerns and any steps taken to rectify the situation in writing to the client and retain this as your record in the event that you are pursued by the FWO. She also advises that you should report non-compliant clients to the FWO as an extra means of protecting yourself. Athena says, and I quote:

If a payroll provider makes a client aware that their systems are not compliant, refuses to participate in the contravening conduct and terminates the relationship with them, then the payroll provider has done all that they can do to make the client aware of their non-compliance and not participate in any contraventions.

Payroll HQ

In my opinion, there isn’t any job worth doing where you are putting yourself at risk of litigation and possible jail-time. If you are reading this and you think you may be at risk, then get some advice from a trusted advisor and/or your bookkeeping association. If you are sure you are at risk, then take Athena’s advice and run, run, run and don’t look back!

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BAS & Bookkeeping Services – Aren’t They the Same Thing?

If you want to be a bookkeeper in today’s environment and abide by the Tax Agent Services Act 2009, you will need to ask yourself a question: What sorts of services do I want to provide to my clients?

If the answer includes:

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Common GST Mistakes

GST Mistakes

When you’re completing your activity statements, it’s easy to make mistakes. It happens a lot and we see them first hand here at e-BAS Accounts. The main mistakes users make are in relation to tax codes. Users often use the wrong tax code when entering various transactions into their software. Here are some common transactions that are often coded incorrectly. We show the correct tax code application:

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Meal entertainment: when does GST apply?

The area of “meal entertainment” is an absolute minefield for accounting professionals like us. It can be very difficult to know when an expense incurred by a client relating to food or drink should be recorded with GST or not. Luckily there is a resource out there via the ATO that brings some clarity to the situation.

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Netflix Tax – A Bookkeeper’s View (from the Trenches)

My last blog was all about the new “Netflix Tax” and was really just an informational blog outlining what, how and when etc. In this blog, I want to look at the tax from a bookkeeper’s perspective and provide a real “from the trenches” viewpoint. All is not what it seems with the Netflix Tax!

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Registered for GST? What you need to know about the Netflix Tax.

netflix, tv, home-5336006.jpg

For some time now, larger IT companies have been charging GST to their Australian consumers. Examples of these are Google, Adobe and Linkedin. They are doing this because of a new law which began formally on 1 July 2017. This new law known colloquially as the “Netflix Tax”, requires all international companies with an annual GST turnover of $75K or more and selling services and digital products to Australian consumers, to enter the Australian GST system. While most of us aren’t too impressed with the 10% price hike on these products, GST registered business owners understand that they can claim the GST back in their BAS which alleviates the sting a little……or so they thought! Sadly, this is not the case with this new law . The “Netflix Tax” tells us something different and if you’re not paying attention, you or your BAS Agent are likely to get things wrong when processing your next BAS. Read on.

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12 Best Bookkeeping Tips (you’re welcome)

At this time of year we’re all thinking about Christmas and one of the best songs for the festive season is “The 12 Days of Christmas”. In keeping with this theme, this week we’re bringing you our 12 very best bookkeeping tips – it’s our gift to you! These tips will suit business owners at every stage, from start ups to old hands. Enjoy!

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Has bookkeeping become over-automated?

Automation Text With Gears On Top

This week’s blog is another in our IMHO series and is about an issue I believe has the potential to become a big problem in the bookkeeping world.

YOU: So what is this issue?

Well, lately I’ve started to think that perhaps all of this automation currently occurring within our client’s online bookkeeping files is not such a great thing.

YOU: What? Are you kidding?

Yeah, I hear you – I kind of can’t believe I’m writing this myself!

For the uninitiated, by “automation” I’m talking about cloud-based bookkeeping software that is enhanced by “addons”. So basically, you have the original accounting program and a bunch of other programs integrated with that accounting file. The idea is that these “addons” will make the accounting file perform better but more than that, remove the need for users to have to do many tasks manually, thereby saving them time (and sanity).

YOU: Well, that’s a good thing right?

Yep, bloody fantastic…………. WHEN THE WHOLE SYSTEM IS WORKING CORRECTLY! (yes, I’m shouting ?)

YOU: Doesn’t it save users time?

Absolutely.

YOU: Doesn’t it help us to remember to do tasks and thereby stop things from falling through the cracks?

Oh yeah, you bet it does!

YOU: So what’s the problem?

Glad you asked. ? ?

This is going in caps because yes, I am shouting…….again!

AUTOMATION THAT IS NOT REGULARLY CHECKED BY AN ACTUAL HUMAN BEING WILL LEAD TO A BOOKKEEPING DISASTER!

YOU: But isn’t automation set and forget?

No, I hope not! (The work still needs to be checked on a regular basis)

YOU: So, are you saying that automation can cause errors to occur?

Exactly. Why? Because users think automation = perfection i.e. what could possibly go wrong?

THIS IS NOT THE CASE!

The work still needs to be checked and reviewed regularly by a human being, preferably by your bookkeeper (or other accounting professional).

I’m not against automation, far from it! It does reduce the workload and makes the accounting process a real pleasure……..if it is set up correctly and is monitored regularly.

For medium to large operators, it’s a god-send – 100’s of transactions being created daily without having to touch a computer. Imagine what they can do with the time instead? Go on a holiday, go to the movies, go out for tea or even just get on with running the business itself! Heaven!

You get the picture – automation removes the need to spend hours doing manual bookkeeping.

I LIKE IT!

However, what I don’t like is a fully automated accounting file that:

  • Is not checked by a human being on a regular basis
  • Has not been set up by an experienced, “accredited” user of the addons being utilised
  • Is transacted upon by users who do not understand the addon software or the effect/s it has on the general ledger

All of these things = one thing ⇒ an accounting file that is progressively being destroyed by backend software on an hourly or daily basis.

YOU: What does this mean for users of the file?

For bookkeepers , it means hours of repair work. For business owners it means a nervous breakdown followed by a very large bookkeeping bill!

YAY!

NOT!

Honestly, as a bookkeeper of nearly 17 years, I would rather do the hard yards and do the manual data entry than have to spend hours fixing accounts that have been mutilated by addons which haven’t been regularly monitored.

YOU: What a waste of time! Manual data entry? Are you crazy? She’s obviously one of those old fashioned bookkeepers!

You called it – it’s true, I am! But at least the accounts would be done correctly, first time, every time.

Do you think things will come full circle and we will return to the “good old days” of manual data entry?

Well that last comment was tongue-in-cheek of course………….

I don’t think anyone wants to return to those days……EVER!

But you know what? Given the choice between doing manual data entry or repairing an accounting file that is full of erroneous data due to over-automation, I know which one I’d choose any day!

YOU: So has bookkeeping become over-automated?

Perhaps.

YOU: Do you dislike automation?

Yes, if it causes more problems than it solves! But no, if it’s set up correctly and is regularly transacted on by experienced and trained users.

So it’s your turn now. What do you reckon?

  • Is automation going to end up causing major bookkeeping headaches in the future?
  • Are we headed for a bookkeeping Armageddon?
  • Is it a mistake to completely turn our backs on manual data entry?
  • Are we complicating the accounting process by automating everything?

Off you go, leave your comments below.

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Want your bookkeeper to prepare & lodge your BAS? Better ask these 3 questions first!

So you have an awesome bookkeeper who keeps your business accounts super organised. S/he keeps on top of slow paying customers, reminds you to pay your bills, provides some pretty slick-looking reports and has those boring conversations with your accountant that you always avoid. Sounds like you’re onto a winner – good for you! Now you’ve decided to go one step further and you’re going to ask your bookkeeper to prepare and lodge your BAS on your behalf. Okay, well before you do, you’d better ask him/her these 3 key questions:

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