Accounting and Admin controls Tips by Wessels Accounting in Pretoria

What is internal control? 

It is the system of checks and balances to ensure the company’s financial records are accurate and reliable being the result of transactions that are carried out and recorded timeously, accurately and efficiently.

The effectiveness of internal controls is dependent on management’s attitude towards controls.

Indications of a strong internal control environment

• Employees possess the necessary skills and competence required
• Recruitment agencies or HR checks and verify the details in CVs properly.
• Proper inhouse training to staff
• Clear roles and responsibilities
• Separation of duties are in place between functions of initiation, authorization, recording and reviewing.
• Monitoring of staff performance

Strong document controls include:

• Easy to understand designed forms
• Sequentially pre-numbered documents to be able to track, record and reconcile documents.
• Orders and Invoices approved by management
• Payments approved by management
• Physical verification and inspections are performed
• Supporting documents accompany orders and deliveries
• Information on documents comply with VAT requirements
• Documents are filed regularly and in a logical manner

Strong Accounting and Admin controls include:

• Reconciliations between accounting records and source documents – bank accounts, supplier statements, customer statements.
• Overall review done by management.
• Statutory requirements such as VAT returns, Payroll returns, Tax returns reviewed by management.
• Filing are done in a logical manner i.e. monthly file for expenses and income.

EMP Payroll returns – PAYE, UIF, SDL, IRP5s

Tax Compliance Status

SARS’s system makes it easier for taxpayers to obtain a Tax Clearance Certificate (TCC) and the system allows taxpayers to obtain a Tax Compliance Status PIN which can be used by third parties to verify your compliance status online via SARS eFiling.

To be tax compliant you need to:

• Have all outstanding returns submittedie. VAT returns, PAYE returns, Income Tax Returns
• All moneys owed to SARS must be up to date.
• Be registered for the tax products that you are liable for.

The taxpayer can view their status before requesting a certificate and identify non-compliance.

A Tax Practitioner can view your status on your behalf and assist to remedy any non-compliance.

A Tax Practitioner can request your Tax Compliance Status online via eFiling.

Benefits of using a tax practitioner.

1. It enables the business owner to focus on his core activities while all administrative burdens are dealt with by qualified professionals.
2. Tax Practitioners have a dedicated Call Center for specific taxpayer related queries.
3. Tax Practitioners have dedicated offices for taxpayer related queries and can book appointments with SARS.
4. They provide advice about the application of a tax Act.
5. Complete or assists with the completion of a tax returns.
6. A tax practitioner belongs to a regulatory body.
7. Has to comply with SARS requirements for qualifications and experience.
8. Participate in continuous professional development programmes to ensure their knowledge stays ups to date.

The Tax Administration Act (2011) has been amended requiring tax practitioners to register with a recognized controlling body, and with SARS.

The list of currently recognized controlling bodies:

• Chartered Institute of Management Accountants (CIMA)
• Chartered Secretaries Southern Africa (CSSA)
• Financial Planning Institute (FPI)
• Institute of Accounting and Commerce (IAC)
• SA Institute of Chartered Accountants (SAICA)
• SA Institute of Professional Accountants (SAIPA)
• SA Institute of Tax Practitioners (SAIT)
• The Association of Chartered Certified Accountants (ACCA)
• Association of Accounting Technicians Southern Africa (AAT(SA))
• Law Society of South Africa
• General Council of the Bar of South Africa, Bar Councils and Societies of Advocates referred to in Section 7 of the Admission of Advocates Act, 1964
• Independent Regulatory Board for Auditors (IRBA)

What are the requirements in order to register as a tax practitioner?

A tax practitioner, must meet the following requirements:

• Belong to or fall under the jurisdiction of a Recognised Controlling Body as referred to in 240A of the Tax Administration Act.
• Have the minimum qualifications and experience set by your Recognised Controlling Body.
• Have no criminal convictions for the offences described in s 240(3) of the Tax Administration Act.
• Participate in continuous professional development programmes set by your Recognised Controlling Body.

Wessels & Associates is a SARS Registered Tax Practitioner.We can submit the following statutory returns via e-filing or other portals on your behalf:

• EMP Payroll returns – PAYE, UIF, SDL, IRP5s
• VAT returns VAT201
• TAX returns – IT12 or IT14 – Individual taxation and Corporate Taxation
• Provisional Tax returns IRP6
• Unemployment Insurance Funds UIF returns
• Compensation Commission returns
• Tax Clearance Certificates
• Tax Compliance Status requests

When you process payments into your accounting software

Back to Basics: Accounting for Assets

Assets versus Expenses

When you process payments into your accounting software the decision must be made there and then whether the payment should be categorized as an asset or an expense.

It is therefore important for the processor to understand what the difference is at the input stage to avoid corrections to be made later or to avoid losing track of assets that was purchased.

How to identify an asset

Assets are resources controlled by a business as a result of past events and from which future economic benefits or service potential are expected to flow to the business.

The most obvious difference between an asset and an expense is that that an asset gives you a long-term benefit whereas an expense gives you only a short-term benefit. Assets are usually used over more than 12 months whereas expenses are used up immediately or over a shorter period.

How to identify if it is an expense

If it is not an asset, then it can be classified as an expense.

In Summary: How to identify an Assets

It is a resource

• Something you can use
• You have control over it
• You have access to it
• Has a value

There was a past events

• It was bought or donated or built

There will be future benefits or service potential

• Services to the company or rentedout of income.

Examples of assets:

• Office equipment
• Furniture and fittings
• Motor vehicles
• Plant and equipment

The Cost of an Asset

What should be included in the cost of an asset

Initial Costs is the costs directly attributable to bringing the asset in its location and condition as intended such as:

• Purchase costs
• Import duties
• Non-refundable taxes
• Less any discount or rebates
• Site preparation and development
• Initial delivery and handling costs
• Installation and assembly costs

Later costs incurred

To capitalise the cost incurred later on an existing asset depends on what it the cost will do for the asset:

Cost will be capitalised if :

 It extends the useful life of the fixed asset
 It increases the economic value of asset
 It Increase capacity/production of asset
 If it is an upgrade or refurbishment

Expense the later cost if:

 It is incurred to restore asset to a working condition for example fixing or maintaining it.

Asset Register

Asset Register is a record of information on each asset that supports the effective financial and technical management of the assets.

The asset register should also facilitate proper financial reporting.

Wessels & Associates – Chartered Accountants and Auditors, can assist you with setting up and maintaining an Asset Register and assist with calculating depreciation, impairments and book values.

Please contact us on info@wessels-accounting.co.za to request a free consultation.

The word “Tax Invoice” must be clearly indicated.

Tax Invoices

What information needs to be on a Tax Invoice

1. The word “Tax Invoice” must be clearly indicated.
2. The supplier name, Address and VAT no
3. Tax Invoice Number
4. Date of Invoice
5. Recipient name, address and VAT number of recipient (if it is a registered vendor)
6. Description of goods
7. Price per unit and quantity
8. Total Sale value (Indicate the currency)
9. VAT Charged (indicate the VAT percentage)
10. Total value including VAT

For tax invoices below R5000

1. The recipient details need not appear on the invoice
2. There are no requirements to show the units or volume
3. The description need not be full.

Value Added Tax (VAT)

Who should register for VAT?

Any person that carries on a business may register for VAT.

It is mandatory for a person to register for VAT if the taxable supplies made or to be made is, in excess of R1 million in any consecutive twelve-month period.

A person may also choose to register voluntarily if the taxable supplies made, in the past period of twelve months, exceeded R50 000.

VAT increased from 14% to 15% from 1 April 2018.

How to register for VAT?

The VAT 101 application for registration must be submitted in person at the SARS branch nearest to the place where your business is situated or carried on.

A registered tax practitioner can register your business for VAT on your behalf.

Registering For Employees’ Tax  [Pay-As-You-Earn (PAYE)]

Who should register as an Employer?

An employer must register with the SARS within 21 business days after becoming an employer, unless none of the employees are liable for normal tax.

What is Employees Tax?

Employees’ Tax refers to the tax required to be deducted by an employer from an employee’s remuneration paid or payable. The process of deducting from remuneration as it is earned by an employee is commonly referred to as PAYE.

Monthly submissions to SARS by Employer

The amounts deducted or withheld must be paid by the employer to SARS on a monthly basis, by completing the Monthly Employer Declaration (EMP201). The EMP201 is a payment declaration in which the employer declares the total payment.

Employer Annual Reconciliations

Employers are required to submit their Employer Annual Reconciliations by 31 May to SARS, confirming or correcting payroll tax amounts which were declared in respect of the tax period.

Who should register for Unemployment Insurance Fund (UIF)

An employer who is registered or required to register with SARS for PAYE and/or Skills Development Levy (SDL) purposes, is also required to register with SARS for the payment of Unemployment Insurance Fund (UIF) contributions to SARS.

Accounting Training and workshops on GRAP related to assets

The objectives of an asset management policy are to ensure that assets are managed and accounted for by:

• Compliance with legislation and accounting standards;
• Compliance with accounting policies;
• Physical control over fixed assets;
• Accurate recording of fixed assets and related transactions;
• Providing management information on fixed assets.
• Prescribe Processes and procedures to implement

The goal of asset management is to achieve the required level of service in the most cost-effective manner, which is achieved through management of the asset’s life cycle.

Asset Management Policy’s purpose is to prescribe procedures for the financial and logistical management of assets, and to:

• provide a formal set of financial procedures that can be implemented to ensure that asset policies are achieved;
• ensure that effective controls are communicated to management and staff through clear and comprehensive written documentation;
• ensure that the safeguards and controls the assets;
• optimize asset usage; and
• emphasize a culture of accountability over assets.

Asset Registers

The asset register shall be a complete and accurate database of the assets

and that is regularly updated and validated.

All assets owned and controlled by an entity must be recorded in an asset register.

The asset register should contain following information:

• a brief but meaningful description of each asset
• the date on which the asset was acquired or brought into use
• the location of the asset
• identification number or barcode
• the original cost or the fair value if no costs are available
• accumulated depreciation to date
• the depreciation charge for the current financial year
• the carrying value of the asset
• the method and rate of depreciation
• impairment losses incurred during the financial year
• the date on which the asset is disposed of
• the disposal details
• the date on which the asset is retired from use, if not disposed of.

Assets remain in the asset register for as long as they are in existence or until being written off.

Wessels & Associates is an Audit and accounting practice based in Pretoria, Montana area.

We specialize in the following:

• Fixed Asset Registers
• Quality control and testing of Fixed Asset Registers
• Asset Management Policies
• Assessing useful lives and impairment of assets
• Technical support on GRAP (General Recognized Accounting Practice)
• Training and workshops on GRAP related to assets
• Streamline your internal processes to be more efficient
• Help build your own capacity within your business.
• Audit Support
• Accounting
• Consulting

Accounting is one of the most important functions of a modern business enterprise

Running your own business is daunting.  Whether it’s financial management, financial reporting, Auditing, business analysis and strategy, taxation or anything in-between.

A business owner needs quality, reliable and useful financial support services in accounting, tax, auditing.

Accounting is one of the most important functions of a modern business enterprise. Accounting has become an integral part without which, no commercial activity can be run profitably and successfully.

An experienced accountant has taken front seat in present day business activities.

The CA(SA) is more than just a professional accountant. CAs(SA) participate in rigorous ongoing learning to stay current with trends and developments in the profession.  A Chartered Accountant have the ability to give effective advice on financial planning, growth, optimal resource management or any other business area in-between.

A Chartered Accountant can help you to:

• Improve the quality of your financial information
• Control costs and improve your resource management
• Streamline your internal processes to be more efficient
• Help build your own capacity within your business.
• Help you stay compliant with statutory requirements

When you want to take your business to the next level, you need to partner with a responsible professional who has a holistic business approach and knowledge that enables them to approach things differently.

A CA(SA) has the strategic and analytical background to help you formulate a winning strategy and avoid costly mistakes.

Tax practitioner

As a SARS Registered Tax Practitioner we have a healthy professional relationship between SARS. This is key in providing a service to our clients the taxpayers.

This enables you, the business owner or manager to focus on your core business activities while all administrative burdens are dealt with by a qualified professional.

Only a registered tax practitioner is allowed by SARS to do the following on your behalf.

Income Tax returns

• Individual annual taxes
• Company annual taxes
• Registration of income tax for individuals and companies
• Registration of VAT for Companies
• Tax Clearance Certificates for Goods Standing and Tenders

Payroll returns

• Monthly EMP201 declarations to SARS
• Interim PAYE reconciliations EMP501 – First 6 months of the year
• Annual PAYE Reconciliations EMP501 – Full year
• Annual IRP5 Preparation and submissions

Difference between an Audit and an Independent Review

An audit gives a positive assurance (the highest level of assurance) indicating that the financial statements are a fair representation of the operations and financial condition of the business.

An independent review in contrast gives limited or negative assurance of the fair presentation of the financial statements and their alignment to the appropriate financial reporting standards of the company.

Public Interest Score

For private companies the decision to audit or to do an independent review is determined in part by the Public Interest Score of a company.

Based on the Public Interest Score calculation private businesses scoring 350 points or more must be audited.

Between 100 and 349 points means non-owner companies will be reviewed if their statements are independently compiled, and they will be audited if internally compiled.

Owner managed companies with 100 points or less will be exempt completely from audit or review if they so choose but must still prepare financial statements.

The Companies Act, 2008 (Act No 71 of 2008) together with Regulation 26(2), defines the method for the calculation of a PIS and requires that a PIS is calculated for all companies. As set out in Regulations 26(2), 27-30, 43, 127 and 128 of the Companies Act, the PIS determines:

• Which financial reporting standards apply to a company;
• Whether a company should be audited or independently reviewed in the public interest;
• Whether a company must file a copy of its annual financial statements with the CIPC;
• Whether a company requires a Social and Ethics Committee; and
• The size of the company for purposes of appointing a Business Rescue Practitioner.

Other Accounting Services

Capacity building is the process by which individual and organizations obtain, improve, and retain the skills and knowledge needed to do their jobs competently.

Accountants can assist with:

• Developing and up-skill your staff
• Accounting Standards training
• Design and implement internal controls
• Fixed Assets –  Registers and Asset Management Policies
• Sage Pastel support and training

Wessels & Associates

We provide quality, reliable and useful financial support services in accounting, tax, auditing and consulting to individuals and small to medium size businesses.

Our services are offered either in house or at your premises and include:

• Monthly Company Bookkeeping.
• Management Reports:   Income Statement, Cash flows, Budgets, and more.
• Preparing Annual Financial Statements
• Preparation of Tax Returns, VAT, Payroll, SARS objections and appeal.
• Tax directives and tax clearance certificates.
• Assistance with design of accounting and internal processes.
• Internal audits.

Professional Memberships

• Independent Regulatory Board for Auditors (IRBA)
• South African Institute of Chartered Accountants (SAICA)

Our Fees

We provide initial free consultation to determine your business accounting and financial reporting needs.

Our fees are based on a combination of the required hours and level of skills needed which is driven by the size of your business and an estimated number of transactions.

We will be happy to provide you with a detailed quotation of our package for your business.