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Entrust Accounting & Advisory Services

FINANCIAL ACCOUNTING

Financial Accounting is focused on recording and summarizing and reporting business transactions for your business in the form of financial statements which include the income statement, balance sheet, and cash flow statements for management and other external parties.

Financial Accounting focuses on three areas:​

  1. The actual recording of the transactions is performed through bookkeeping,

  2. The classification of the transactions to ensure they conform to accounting standards,

  3. The presentation of the results which are the compiled statements:  income statement, balance sheet, and cash flow statement.

Bookkeepers record the financial transactions in the bookkeeping or accounting system. Best practices for bookkeeping are to enter the transactions as they occur. Record a sale, issue an invoice, and record customer payments. On the expense side, bills received, cash disbursements, expense reimbursements, purchase of equipment, and payments of obligations as they occur. At a minimum, this should be conducted weekly.

For tax and audit purposes, it is important to record transactions based on source documentation such as purchase orders, item receipts, bills, invoices, sales orders, sales receipts, and contracts such as insurance policies

Bookkeeping for small business owners who are accounting clients

Bookkeeping Services include:

  • Review and classifying of all financial source documents received and based upon this:

    • Recording of cash and credit sales

    • Invoicing services or goods sold to customers

    • Registering customer payments for outstanding invoices

    • Recording bills or invoices received and owed to suppliers, contractors, etc.

    • Reconciling bank financial statements

    • Reconciling credit card expenses statementsTracking activities and preparing system generated financial reports

•    Supplying information to the accountant or CPA


Bookkeeping Services requiring CPA and Management support include:

  • Manual or automated data entry such as depreciation, bad debt write-off, etc.

  • Reconciling credit card sales statements

  • Issuing payments to suppliers, contractors, etc.
     

Optional Services include:

  • Payroll

    • Tracking and recording employee payroll activity

    • Paying employees and recording payroll taxes

  • Taxes: filing and payment of

    • Income Tax, EI, and CPP payroll taxes (employee and employer)

    • HST

    • Employer Health Taxes

    • WSIB premiums

Bookkeeping is only performed for clients who have engaged us for compilation engagements.

We support QuickBooks Online, QuickBooks Desktop, and Sage Online.  If you are using another accounting package, we will need to assess if we are able to support the package.

BOOKKEEPING 

COMPILATIONS

A Chartered Professional Accountant engaged in a compilation engagement may be referred to as a practitioner. Compilation engagements are useful to provide financial statements where owners, management, and other users do not require the level of disclosure or assurance provided by a Review or Audit.

Audits and Reviews are assurance exercises that provide an opinion or conclusion that the financial statements are free from material misstatements due to fraud or error. Audits and Reviews are conducted within accounting frameworks such as International Financial Reporting Standards (IFRS), Accounting Standards for Private Enterprise (ASPE), or Accounting Standards for Not-For-Profit Organizations (ASNFPO).

Compilation engagements are more flexible in that the financial statements can be compiled in accordance with other accounting frameworks selected by management. The frameworks can be ASPE-like, cash basis, or a basis of accounting prescribed by a contract or other form of agreement established by a creditor, or a regulator. Many small businesses tend to adopt the ASPE framework and management may choose to rely on compilation engagements since the cost of reviews and audits can high. In other cases, financial institutions may insist on a Review, or Audit is large value transactions are being considered.

COMPILATION FOR TAXES

In most cases (exceptions include farmers & fishers) the CRA requires business owners to report their income and expenses based on an accrual method of accounting.

Preparing T2 corporate tax returns start with translating the company's accounting system income statements and balance sheets to Schedule 125 and Schedule 100 known as the GIFI or General Index of Financial Information. The GIFI is a standard list of codes that is used to prepare the financial statements for tax purposes. Each item is assigned its own unique code.

Ensuring that the business general ledger accounts map to the appropriate GIFI codes is important to ensure efficient and accurate (compliance) processing of a company's tax return. Errors can lead to delays, requests for additional information, or event audits.

Entrust Accounting and Advisory Services will map your accounting systems general ledger accounts to the GIFI Codes used by the CRA. The compilation will result in an income statement and balance sheet that uses GIFI Codes as a replacement to the general ledger account numbers.

COMPILATIONS FOR SPECIFIC PURPOSE

The Auditing and Assurance Standards Board has issued a new Canadian Standard on Related Services (CSRS) 4200, Compilation Engagements. (these engagements were informally referred to as "Notice to Reader") The new standards will become effective for compiled financial information for periods ending on or after December 14, 2021. As the option exists to adopt the standards earlier, Compilations for Specific Purposes will follow the CSRS4200 standards.

The new standards require a higher degree of due diligence in terms of understanding client intended use of compiled financial information along with changes in required format and content of the final report. A requirement for discussions regarding your company operations, accounting systems, and accounting records allows the practitioner to better understand the company and provide a better service. The responsibility of the practitioner is to assist management in the preparation of the financial information.

It is also important to understand that a Compilation Engagement is not an Assurance Engagement such as an Audit or Review. There are no verification procedures to confirm accuracy and completeness of information and as such management is responsible for the financial information presented. Accordingly, with a Compilation Engagement, no audit opinion or review conclusion, or any form of assurance can be provided.

CONTROLLER SERVICES 

Controllers are generally responsible for all the financial management and accounting responsibilities in a company. Depending on your business's size, there are multiple choices on how to organize the company's financial operations. Also, depending upon the company's skillsets, many roles can be performed internally without incurring the expense of a professional accountant; bookkeeping is one such activity. In this scenario, employing a full-time bookkeeper and contracting a part-time controller monthly is more prudent

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People hire professionals to ensure mistakes are minimized. The higher the cost of making a mistake is, the greater the need for a professional. Reporting your financial results to your bank, compliance items such as tax filings, or business planning will necessitate the need for a professional accountant versus a bookkeeper. Bookkeeping involves tracking all income and expenses, paying bills, invoicing, tracking payroll, etc.

There are five main areas that a controller can address:

Managing the Accounting Function

This can include day-to-day managing of staff and setting policy and procedures.

Transaction Processing

Supplier invoices, customer billing, collections, issuing payments, managing cash receipts and disbursements,

Reporting

Monthly closing and statement preparation for management and special reporting and analysis requested by management.

Planning & Budgeting

Annual sales, expenses, inventory, investing, and borrowings required.

Compliance

Tax reporting and filings, government remittances, debt covenants, and adherence to accounting standards.

Controller Services for small business