Maintaining Business Records PDF

TVET PROGRAM TITLE: Accounts and Budget Support Level –III
MODULE TITLE Maintaining Business Records

LEARNING OUTCOMES:
At the end of this module the trainer will be able to
LO1: Collate business records
LO2 Update business or records system
LO3: Prepare reports from the business or records system
Maintaining Business Records Page 1

TABLE OF CONTENTS PAGE
LO1: Collate business records ..................................................................................................... 3
1.1 What customer data to collect ............................................................................................... 3
1.2 How to collect customer data ................................................................................................ 4
1.3 Collect information ............................................................................................................... 5
1.4 Organizational requirements relating to security and confidentiality ................................... 8
1.5 Organizational requirements ................................................................................................. 8
LO2 Update business or records system ..................................................................................... 9
2.1 Business record ..................................................................................................................... 9
2.2 Record ................................................................................................................................. 11
2.3 Daily Recording of Business Transactions ......................................................................... 12
2.4 Maintaining Sales and Cash Receipts Journals ................................................................... 13
2.5 Recording Cash Register Receipts ...................................................................................... 14
2.6 Business record keeping ...................................................................................................... 14
2.7 Create a Business Record Keeping System......................................................................... 20
2.8 Supporting Business Documents ......................................................................................... 21
2.9 5 Steps to a Business Record Keeping System that Works ................................................ 22
LO3: Prepare reports from the business or records system ................................................... 24
3.1 Business system................................................................................................................... 24
3.2 How to store customer data ................................................................................................. 25
3.3 Guidance and the law on storing customer data .................................................................. 25
3.4 Create a Business Record Keeping System......................................................................... 25
3.5 Maintaining Financial Records ........................................................................................... 26
3.6 How to Write a Business Report ......................................................................................... 27
3.7 HOW TO PREPARE TO WRITE BUSINESS REPORTS ................................................ 29
3.8 Determine the Purpose of the Business Report ................................................................... 30

LO1. Collate business records
o Identifying individual records or information which should be incorporated into business
or records system
o Sorting records in accordance with workplace requirements
o Adhering security and access requirements
1.1 What customer data to collect

You need to collect as much of the following as possible:
 Name and contact details:
o Allows you to market directly to them.
o Also lets you make communications personalized.
o You may also need to contact them if an order is running late.
 Transaction history:
o Indicates user preferences - which products they're most inclined to buy, when
and how often.
o Reveals how valuable a customer they are: how much they spend and how often.
 Communications from you to customers and any response they make:
o You need to keep records of this to make sure you space out your
communications correctly (i.e. not too often).
o It also lets you monitor how effective different types of communication are and
which the customer best respond best to. If you compare their transaction history
with the communications record, you may find one method of communication
encourage them to buy more than others.
 Profile: age, gender, profession, income, hobbies, and so on:
o This information is harder to obtain (see advice below), but can be useful for
more advanced marketing strategy.
o Once you have the info for a number of customers, you can build up clearer
picture of who exactly your target customer is.
o It allows you to better focus your advertising and marketing efforts, as well as
affiliate opportunities and sponsorships. If you know your target customer goes to
the gym three times a week, it opens up a new place to advertise, a new line of

gym-related products and an opportunity to do a deal with the local gym to offer
discounted membership if they shop with you X number of times.
o Knowing their age and profession (and so an idea of their income) helps with
pricing strategy.
o The better and more detailed picture you have of your target customer, the more
you can tailor and develop products to please them.
 Spending habits: how your customers shops - such as impulse buys, considered
purchases, comparing the prices from different businesses, always with you on a regular
basis, and so on:
o You can display goods and structure deals around consumers' spending habits -
think of how supermarkets put magazines and chocolate bars at the checkout:
impulse buys.
o Can be difficult to assess - you may need the help of a market research agency or
detailed surveys with trusted customers. Or you can try out different strategies
and see which work. You can also take an educated guess based on your
knowledge of the market.
 Birthdays:
o Sending out a birthday text or card can add a personal touch and make a customer
feel valued.
 Whether or not they pay on time:
o This is obviously important for cash flow reasons rather than marketing ones, but
it's worth adding to the list anyway if you're thinking about data collection.
1.2 How to collect customer data

 First and foremost, do not harass customers for data. Endless form filling is enough to put
a consumer off a purchase. Data collection has to be either un intrusive or incentivized.
Collect it bit by bit to build up a fuller picture of your customer gradually and in a non-
annoying way.
 From orders:
o Obtain contact details and name from orders and begin building a transaction
history, whether on or offline (although online makes things even easier as data
can automatically be entered into a database).
o You can add in a birth date as optional.
o If the transaction is happening online, you can add in an optional section

requesting more information. Phrase it in a way that appeals to the customer, such
as: "So that we can learn more about you and provide you with a service more

suited to your personal needs, please fill in...." You can also use this technique if a
customer has to register an account with you at any point.
 Surveys:
o If you run a survey on your business, you can obtain a fair amount of information
by asking details about their profile (gender, age, etc). While some respondents
may be reluctant to give their name, some will. For those that don't, you get a
clearer picture of your overall target customer anyway, which is the aim here.
 Competitions:
o Run a competition asking for email address and a couple of other details -
customers will be more inclined to share personal data when they have something
to gain from it.
 Online:
o Online can help you track spending habits and user preferences, though you may
only be able to get an overall picture of your target customer rather than profiles
of specific users - use Google Analytics.
 Research:
Statistics and research already out there can help you build a more detailed picture of your target
customer (though of course they won't provide information on individuals).
Look at demographic-related reports and spot trends. There's almost certainly other people
targeting the same demographic as you, which means you can simply look at the research they've
done and any statistics on the matter to find out more about your target audience.
A market research agency will be able to provide you with the most detailed picture of your
target customer and their habits, but this is quite expenditure. You probably only need to go into
this much depth when you're marketing techniques are very advanced - and you'll recognize your
need for an agency as and when that happens.
Noticing things when you see customers face-to-face can of course also give you a very general
idea about who the bulk of your customer are and what demographic and age group they're part
of.
1.3 Collect information

 Record: a written or electronic document to preserve information or keep a record of a
transaction,
 Records management: the practice of maintaining business records from their creation
and up to their eventual disposal, including classifying, storing, securing, archiving
and/or destruction.
What is information?

Each organization must have access to information and data if it is to function efficiently. This
information needs to be collected (or created), stored and cared for and be easily accessed or
retrieved. Records are sources of information (documents or other items) which the organisation
wants or needs to retain.
Types of information Examples
Correspondence faxes, letters, memos, email
computer databases customer records, library catalogue
computer files copies of letters, memos, other documents
sales records monthly forecasts, targets achieved
Forms membership forms, insurance forms
Invoices accounts from suppliers, accounts to debtors
personnel records personal details, salary rates
minutes of meetings staff meetings, board meetings
The overall objective of any records management system is to provide the right information at
the necessary time to the correct person(s) at an affordable cost. Information is stored so specific
information is available when it is needed and in such a way that security and confidentiality is
maintained.
Who may request information?
 supervisor
 colleague within your area/department
 colleague outside your area or department
 person outside of the organization (e.g. a client)
Points to consider when responding to requests for information:
 Document the request - it is important to record who requested the information, what
information was requested, the date and time of the request, when and how the
information was delivered and any problems encountered.

 Urgency of request - responding within an appropriate timeframe which may or may not
be specified.
 Prioritizing requests - deciding in what order to respond to requests, with the most urgent
request being answered first (to enable your time to be used efficiently and ensuring
everyone gets their information when needed).
 Information required - fully understanding the type of information which is required and
knowing where to access the most up-to-date and relevant information.
 Level of security of the information - knowing who is able to gain access to the
information being requested.
o confidential - generally restricted to a few people who have been given the
authority to access that information
o high security - not for general use, may have restrictions attached relating to
when, where, how or who may access the information
o General access - available to any person.
 Location of information - information may be available from a source within the business
(either in print or digital form); if not, you may need to seek information from outside
sources, archives or the Internet which could involve more time.
 Delivery of information - could be in print or digital form. It is important to keep a record

of when and how the information was delivered, E.g. personally, electronically, posted.
 Tracking of information - if paper files are removed from a centralized area, it is

important to keep a record of when the file was removed, who borrowed it and when it is
to be returned. If the file is passed on to someone else, this record must be updated. Any
person wishing to access a removed file will then know where it is.
What types of technology or business equipment can assist in the effective collection of
information?
 photocopier
 printer
 binder
 filing systems - manual, computerized or electronic
 answering machine

 fax machine
 telephone
 computer - including the following peripheral devices, software or applications:
o input devices including keyboards, mice, scanners, and cameras
o output devices including printer, speakers, dvd or cd rom
o internet - vast computer network linking smaller computer networks worldwide
o intranet - computer network with access restricted to within a particular

organization
o email - electronic system of sending messages
o electronic diary
o word processing and spreadsheet programs
All staff should know how to use this technology and equipment. If in doubt staff should ask for
training or help to become familiar with the manufacturer‟s instructions.
The organization should ensure that regular maintenance is carried out and any faults or hazards
are reported immediately; this will ensure the efficient collection of information continues.
1.4 Organizational requirements relating to security and confidentiality

All organizations must comply with this Commonwealth legislation, to protect individuals from
unwanted intrusion into their private lives and guarantee fair dealing with their personal
information.
Information Privacy Principles under the Privacy Act 1988 deal with the manner and purpose of
collection of personal information, solicitation of personal information, storage of this
information, access to records of personal information, alteration of records, the checking for
accuracy of records before use, relevant use of personal information, and limits on the use of
collected information.
National Privacy Principles under the Privacy Act 1988 deal with the collection, use and
disclosure of data, it's quality and security, access to and correction of data, anonymity, trans
border data flows and sensitive information.
1.5 Organizational requirements

Offices generally store large amounts of information and a percentage of this will be confidential
and should not be accessible by everyone. All classified or sensitive information should be stored
in secure areas with access restricted to authorized staff.

All organizations will have policies and procedures designed to maintain security and
confidentiality of information. Examples might include:
 transferring telephone calls to a private area so confidential discussions cannot be

overheard
 ensuring mail is not left unattended or open to general public view
 using passwords to restrict access to computer records; some staff have more access than
others
 restricting access to organizational email
 storing specific hard-copy files in a lockable cupboard, filing cabinet or vault
 using encryption of computer files
 requiring a written request for release of files; the request might require signed
authorization from a supervisor
 Regular updating of computer virus software and scanning of all computers for viruses to
protect information.
Enterprise policy will also specify how the retrieval and movement of files is monitored so that
files are not misplaced or misused.
LO2 Update business or records system
o Identifying and recording control information for describing new records to be

incorporated into business or records system
o Updating control information describing movement
o Recording and updating control information accurately in business or records system
o Identifying and removing records of completed business activities from current system
for disposal
2.1 Business record

A business record is a document that records business dealing. Business records include
meeting minutes, memoranda, employment contracts, and accounting source documents. It must
be retrievable at a later date so that the business dealings can be accurately reviewed as required.
A document that is used to store information from business operations, Types of operations
having business records include meetings and contracts, as well as transactions such as
purchases, bills of lading and invoices. Business records can be stored as reference material and
reviewed later.

Why you need to keep records
If you have to fill in and send us a tax return, the law says that you should keep all the records
and documents you need to enter the right figures. If we need to check your return, we may ask
to see the records you used to complete it.
Record keeping penalties
If you do not keep adequate records or you do not keep your records for the required period of
time, you may have to pay a penalty.
Penalties for an inaccurate return
If you send us an inaccurate return you may have to pay a penalty. Complete, readable and
accurate records will help you fill in your return correctly and so help you to avoid this penalty.
However, people do make mistakes. You will not have to pay a penalty if you can show us that
you took reasonable care to get your return right but still made a mistake. Some of the ways in
which you can show you‟ve taken reasonable care include:
• keeping full and accurate records which are regularly updated and saved securely
• Checking with HMRC or an agent or accountant if there is something that you don‟t
understand.
Keeping accurate records helps you

Having an accurate record keeping system which you keep up to date will help you:
• pay the right amount of tax
• avoid paying any extra tax or penalties
• keep track of your expenses
• see quickly what you are owed by others and how much you owe them
• ask for a bank loan or credit if you need to
• Save time and accountancy costs
• receive the right amount of benefits or credits.
How to keep your records
The law does not say how you must keep your records. You need to keep some original
documents which show that tax has been deducted.
Most records can be kept electronically (on a computer or any storage device such as disk, CD,
memory stick or microfilm) as long as the method you use:
• captures all the information on the document (front and back), and
• allows the information to be presented to us in a readable format, if we need to see it.

How long you need to keep your records
As a general rule, you should keep your records for a minimum of six years. However, if you
are:
• An employer, you need to keep Pay as You Earn (PAYE) records for three years (in addition to
your current year)
• A contractor in the Construction Industry Scheme (CIS), you need to keep your CIS records for
three years (in addition to your current year)
• keeping records to complete a personal (non-business) tax return, you only need to keep them
to which they relate.
If you need to keep records for other reasons, for example, the Companies‟ Act requires limited
companies to keep specific records and you also use those records for tax purposes, you need to
be aware that there may be different time limits for retaining them. Be careful not to destroy any
records you also use for tax purposes too soon.
Getting things right from the start
It is especially important if you are starting a new business that you get a proper record keeping
system in place from the beginning.
Simple record keeping applications for mobile devices
To help small businesses with record keeping on the go, the commercial software industry,
following consultation with HM Revenue & Customs (HMRC), have produced simple record
keeping mobile applications for businesses below the VAT threshold.
These applications may help you with maintaining good records and include links to
HMRC guidance related to record keeping that you may find useful.
The companies listed at our website below have commercial mobile applications for record
keeping that meet the HMRC specification.
2.2 Record
1.Document that memorializes and provides objective evidence of activities performed, events
occurred, results achieved, or statements made. Records are created/received by an organization
in routine transaction of its business or in pursuance of its legal obligations. A record may
consist of two or more documents.
2. All documented information, regardless of its characteristics, media, physical form, and the
manner it is recorded or stored. Records include accounts, agreements, books, drawings, letters,

magnetic/optical disks, memos, micrographics, etc. Generally speaking, records function as
evidence of activities, whereas documents function as evidence of intentions.
2.3 Daily Recording of Business Transactions
In order to take control of your financial recordkeeping, you must accurately record pertinent
transactions. Specifically, you need to record:
 sales and revenue transactions

 cash transactions
 accounts receivable, if you extend credit to your customers
 accounts payable, if you purchase from your suppliers on credit
 summaries of transactions in your general ledger
Considering Separate Accounting
Do you have more than one product line or department? If so, you may want to keep a separate
set of books for each. Many entrepreneurs find separate accounting provides more meaningful
information for their products. The practice may reveal that one product line or department is
profitable and another is not.
Unfortunately, it may be difficult to keep a separate set of books for each product line or
department. For example, some or all expenses may not apply to only one department, but must
be allocated among departments.
Selecting the Right Accounting Software
Shop around for the right accounting software, and be sure to ask for your accountant's opinion.
With so many options like QuickBooks, MYOB, Peachtree and online options, take the time to
consider the pros and cons of each.
While many accountants will do their best to accommodate their clients' already installed
software, their experience with companies of you size and (hopefully) your industry will provide
real insight. If your accountant knows the software you've chosen, he or she will probably help
you set it up.
If you have employees, look for accounting software that permits the use of passwords to control
access to all or some of your accounting transactions. In order to prevent irregularities by your
employees or others, it's wise to restrict access to your accounting records.
Whether your business is a sole proprietorship, partnership or corporation, always keep your
personal transactions separate from your business transactions in your accounting software. For

example, using business funds to pay for personal expenditures complicates your recordkeeping
and can lead to serious tax problems. It can also result in some hefty accounting fees as you pay
your accountant to sort it all out.
2.4 Maintaining Sales and Cash Receipts Journals
You record daily sales in a sales journal. To simplify your bookkeeping, we recommend a
combined sales and cash receipts journal. With a journal that combines sales and cash receipts,
you record all sales (cash and credit) and all cash receipts, including collection of accounts
receivable, in one journal, which your software should be able to accommodate.
Entries in your sales and cash receipts journal come from the source documents you use in your
business every day. These documents are sales invoices, daily cash register totals, daily cash
sheets and daily sales registers.
Keeping Tabs on Sales Invoices
If you use sales invoices, you will post the information from each invoice to an entry in the sales
journal. If you maintain customer charge accounts, you will also be posting entries to
the accounts receivable ledgers so that each customer account is up-to-date. Sales invoices
should be numbered.
While you can store paper copies in file cabinets, with triplicates saved here, there, and
everywhere, tracking invoices digitally makes much more sense. If you prefer a paper method,
though, prepare two copies: one copy for the customer, one for you.
Preferably, you should prepare the invoices in triplicate, with two copies retained by you. File
one by customer name, the other by invoice number. Include canceled or voided invoices when
filing by number so you can account for all of them. The invoice should show:
 the date of the sale

 quantity, if applicable
 price or rate
 an extension column, if applicable (quantity multiplied by price)
 a payment due date
Don't worry about creating a sales invoice template. Most office suites (such as Microsoft Office
or OpenOffice.org) contain a number of invoice templates that may be used as a starting point to
design your own sales invoice. And a quick "sales invoice” Google search will In addition, free
templates may be found on a number of websites.

2.5 Recording Cash Register Receipts
If you use cash registers, daily sales can be totaled on the register. Most relatively new cash
registers (those produced within the last 10 or 15 years) should be able to separately record cash
sales and charge sales, and keep track of sales tax.
Some should also be able to record cash received on account. At the end of the business day,
record your cash register totals in the sales journal.
Set up a record keeping system
A well organized filing cabinet is the best way to keep all your records filed. The recommended
way to file is by date to help with your tax return as it's logical and easily understood, but you
can choose whatever method works for you.
Write down the procedure you use for filing so if someone has to do it for you they know what to
do. As your business grows, this is a job you could give someone else to do. Use our financial
policies and procedures manual template if you don't have one already.
Financial record keeping
For any transaction that has a financial element keep:
 copies of invoices and receipts you provide for goods sold or services rendered
 invoices for goods or services you purchase or bills you pay such as rent, rates, insurance,
license fees etc
 payments to employees and to other organizations on behalf of employees e.g. super
funds, PAYG tax
 financial statements including profit and loss statement and balance sheet
 tax return information
 bank account and credit card statements
 End of year stock take records, assets register etc.
Good practice records management should include preparing and using both the profit and loss
budget and cash flow forecast.
2.6 Business record keeping
In addition to your ATO financial records requirements other government departments require
you to keep records relating to your business and employees.
When setting up your record keeping system, keep:

 contracts, insurance agreements and other legal documents
 your lease if you're renting
 licenses and permits
 employee records including time sheets, copies of pay slips etc
 safety records e.g. risk assessment for occupational health and safety
 Any other records which are 'business activity' specific and required by law for the
operation of your business e.g. for a café your food safety plan.
meeting minutes, memoranda, employment contracts, and accounting source documents. It must
be retrievable at a later date so that the business dealings can be accurately reviewed as required.
Business record
meeting minutes, memoranda, employment contracts, and accounting source documents.
It must be retrievable at a later date so that the business dealings can be accurately reviewed as
required. Since business is dependent upon confidence and trust, not only must the record be
accurate and easily retrieved, the processes surrounding its creation and retrieval must be
perceived by customers and the business community to consistently deliver a full and accurate
record with no gaps or additions.
Most business records have specified retention periods based on legal requirements or internal
company policies. This is important because in many countries (including the United States)
documents are required by law be disclosed to government regulatory agencies or to the general
public. Likewise, they may be discoverable if the business is sued. Under the business records
exception in the Federal Rules of Evidence, certain types of business records, particularly those
made and kept with regularity, may be considered admissible in court despite containing hearsay.
How should I record my business transactions?
A good recordkeeping system includes a summary of your business transactions. Business

transactions are ordinarily summarized in books called journals and ledgers. You can buy them
at your local stationery or office supply store.
A journal is a book where you record each business transaction shown on your supporting
documents. You may have to keep separate journals for transactions that occur frequently.

A ledger is a book that contains the totals from all of your journals. It is organized into different
accounts.
Electronic Records: All requirements that apply to hard copy books and records also apply to
business records which are maintained using electronic accounting software, point of sale
software, financial software or any other electronic records system. The electronic system must
provide a complete and accurate record of your data that is accessible to the IRS.
Whether you keep paper or electronic journals and ledgers and how you keep them depends on
the type of business you are in. For example, a recordkeeping system for a small business might
include the following items:
 Business checkbook
 Daily and monthly summary of cash receipts
 Check disbursements journal
 Depreciation worksheet
 Employee compensation records
Note: The system you use to record business transactions will be more effective if you follow
good recordkeeping practices. For example, record expenses when they occur, and identify the
sources of income. Generally, it is best to record transactions on a daily basis.
Starting a Small Business: Record Keeping
Creating and maintaining thorough business records is essential. These records will help you
analyze your business's profitability, stay out of trouble with tax authorities, maintain positive
relationships with clients and vendors protect your business from lawsuits and win lawsuits if
you are harmed. For the most part, you can choose any record keeping system that works for
you. However, laws and best practices require/suggest specific methods of record keeping and
lengths of time to keep different types of records. Which specific regulations and practices apply
to you will depend on your line of business. Certain records are key to all businesses
Client Files
You should have paper files and/or electronic files for every client and every project. It's
important to keep a record of the work you've done and the business agreements you've made in
case you or the other party has a question about it after the fact. Also, sometimes you can use
your past assignments and agreements to inform your future ones, saving you time. Client files
are also a good place to store notes about a client's preferences or anything else unique to that
client that you want to remember. Set aside some time once a day, once a week or once a month
to keep your files organized.
Contracts
If your business provides a service, you should sign a contract with your client every time you
begin doing business with a new person or company. If you provide a product, you may have
contracts with suppliers, distributors and the like. And if you have employees, you'll definitely
want to draw up employment contracts.
If you're working with an established business, it will often have an existing contract for you to
sign. Of course, it may be beneficial if you're the one who writes the contract, as it may give you
bargaining power over the terms of the business relationship that way.
As for smaller businesses and individuals, you'll usually need to bring your own contract to the
table. Before you open for business, you should create a standard contract that lays out the basic
areas you want to cover in every business agreement, such as time frame, pay, and what the job
entails. Your contract may also cover issues such as confidentiality, records, liability and
ownership of work product. You will want to tailor the contract to each business agreement you
create, but that process will be faster if you have a starting point. Working from a form contract
can also ensure that you don't leave anything important out.
Contracts serve the obvious purpose of making it easier for you to file a lawsuit if you don't get
paid or if your client commits any other harmful breach of contract. But contracts also serve a
few less obvious functions. They spell out the details of the work to be performed, providing
both you and your client with an opportunity to make changes or clarifications before the work
begins, when it is cheaper and easier to do so. Contracts also help weed out people who have no
intention of paying you and show your clients that even though your business may be small and
new, you are a professional and you take your work seriously. Both you and your client should
keep a copy of the signed contract for your records.
Accounting and Tax Records
If your business has complicated financial records or if you want to be able to prepare financial
statements with the click of a button, business accounting software like QuickBooks can be a big
help. Be warned, though, that to use business accounting software accurately and effectively
requires some accounting knowledge. If you don't know what debits, credits and journal entries
are, this software may just cause you headaches. You can always keep records by hand or by
spreadsheet. In many cases, spreadsheet software can serve all of your accounting needs - at least
while your business is small.
The types of records you need to keep for accounting and tax purposes include the following:
 Business expenses
 Credit card statements
 Bank statements
 Annual tax returns

 Quarterly tax filings
 Payroll
 Inventory
 Sales
 Income
 Petty cash
 Travel log
 Cash register tapes
 Credit card sales receipts
 Invoices
 Canceled checks
 Other Records
While this is not an exhaustive list and the types of records you will need to keep depend on your
line of work, other records you should hold onto generally include the following:
 Purchase orders
 Employment applications
 Emails and other business communications
 Inventory logs
 Personnel records
 Accident reports
 Articles of incorporation
 Permits
 Licenses
 Trademark registrations and patents
What books and records should my company keep?
In order to provide guidance to directors of small proprietary companies in answering this
question, ASIC has reviewed the requirements of the Corporations Act 2001 (Corporations Act)
and has sought input from a number of professional bodies and associations to compile a
schedule of appropriate books and records. If you are in doubt about the form and content of
financial statements or other records which should be prepared or maintained you should seek
professional advice.
The Corporations Act in s 286(1) states that a company must keep written financial records that:
correctly record and explain its transactions and financial position and performance, and would
enable true and fair financial statements to be prepared and audited.
Financial records are defined in s9 of the Corporations Act as including:
 invoices, receipts orders for the payment of money, bills of exchange, cheques,
promissory notes and vouchers

 documents of prime entry, and
 working papers and other documents needed to explain:
 the methods by which financial statements are made up, and
 Adjustments to be made in preparing financial statements.
Financial records may be kept electronically and there are numerous accounting software
packages available for this purpose. Hard copy must be made available within a reasonable time
to a person who is entitled to inspect the records. If financial records are kept on a computer
which is owned and operated by a third party (e.g. your company's accountant), you still have the
responsibility to provide a hard copy.
Schedule of suggested books and records to be kept
Here are some of the basic financial records that accountants might expect a company to keep:
 Financial Statements
 Profit & Loss accounts (see Note 1)
 Balance Sheets
 Depreciation Schedules
Taxation Returns e.g. Income tax, group tax, superannuation, fringe benefits tax, business
activity statements and all supporting documents
 General Ledger
 General Journal
 Asset Register
 Computer Back-up Discs
 Frequency - suggest at least monthly
 Cash Records
 Cash Receipts Journal
 Bank Deposit Books
 Cash Payments Journal
 Petty Cash Books
 Bank Account Statements, Bank Reconciliations and Bank Loan Documents
 Sales/Debtor Records
 Sales Journal
 Debtors Ledger
 List of Debtors
 Invoices & Statements issued
 Delivery Dockets
 Work in Progress Records

 Job/Customer Files
 Stock Listings
 Creditors Records
 Invoices & Statements Received & Paid
 Creditors Ledger
 Unpaid Invoices
 All Correspondence, Annual Returns and ASIC forms
 Wages Records and Superannuation Records
 Registers
 Members
 Options
 Debenture Holders
 Prescribed Interests
 Charges
 Unclaimed Property
 Minutes of Meetings of Directors and/or Members
 Deeds (where applicable)
 Trust
 Debentures
 Contracts & Agreements
 Inter-company transactions, including guarantees.
2.7 Create a Business Record Keeping System

Creating a business record keeping system means capturing all the information about income,
expenses, and assets, and then using that information to generate business reports, This section
shows you how to set up a simple records system for your business.
What kind of records should I keep?
You may choose any recordkeeping system suited to your business that clearly shows your
income and expenses. The business you are in affects the type of records you need to keep for
federal tax purposes. Your recordkeeping system should include a summary of your business
transactions. This summary is ordinarily made in your business books (for example, accounting
journals and ledgers). Your books must show your gross income, as well as your deductions and
credits. For most small businesses, the business checking account is the main source for entries
in the business books.
Some businesses choose to use electronic accounting software programs or some other type of
electronic system to capture and organize their records. The electronic accounting software
program or electronic system you choose should meet the same basic recordkeeping principles

mentioned above. All requirements that apply to hard copy books and records also apply to
electronic records. For more detailed information refer to Publication 583, Starting a Business
and Keeping Records.
2.8 Supporting Business Documents
Purchases, sales, payroll, and other transactions you have in your business will generate
supporting documents. Supporting documents include sales slips, paid bills, invoices, receipts,
deposit slips, and canceled checks. These documents contain the information you need to record
in your books. It is important to keep these documents because they support the entries in your
books and on your tax return. You should keep them in an orderly fashion and in a safe place.
For instance, organize them by year and type of income or expense.
The following are some of the types of records you should keep:
 Gross receipts are the income you receive from your business. You should keep
supporting documents that show the amounts and sources of your gross receipts.
Documents for gross receipts include the following:
o Cash register tapes
o Deposit information (cash and credit sales)
o Receipt books
o Invoices
o Forms 1099-MISC
 Purchases are the items you buy and resell to customers. If you are a manufacturer or
producer, this includes the cost of all raw materials or parts purchased for manufacture
into finished products. Your supporting documents should show the amount paid and that
the amount was for purchases. Documents for purchases include the following:
o Canceled checks or other documents that identify payee, amount, and proof of
payment/electronic funds transferred
o Cash register tape receipts
o Credit card receipts and statements
o Invoices
 Expenses are the costs you incur (other than purchases) to carry on your business. Your
supporting documents should show the amount paid and a description that shows the
amount was for a business expense. Documents for expenses include the following:
o Cash register tapes
o Account statements
o Credit card receipts and statements
o Invoices

o Petty cash slips for small cash payments
 Travel, Transportation, Entertainment, and Gift Expenses
If you deduct travel, entertainment, gift or transportation expenses, you must be able to
prove (substantiate) certain elements of expenses.
 Assets are the property, such as machinery and furniture, that you own and use in your
business. You must keep records to verify certain information about your business assets.
You need records to compute the annual depreciation and the gain or loss when you sell
the assets. Documents for assets should show the following information:
o When and how you acquired the assets
o Purchase price
o Cost of any improvements
o Section 179 deduction taken
o Deductions taken for depreciation
o Deductions taken for casualty losses, such as losses resulting from fires or storms
o How you used the asset
o When and how you disposed of the asset
o Selling price
o Expenses of sale
The following documents may show this information.
o Purchase and sales invoices
o Real estate closing statements
Employment taxes
there are specific employment tax records you must keep. Keep all records of employment for at
least four years.
2.9 5 Steps to a Business Record Keeping System that Works
Here are five easy steps in creating a simple financial record keeping system: Capture, Check,
Record, Review, and Act
First, CAPTURE the information. If it isn‟t there, it doesn‟t exist. As you start your business,
get in the habit of capturing everything, so it becomes automatic. “Capture” is the most difficult,
and the most important part of the process; it‟s a matter of forming the habit of collecting
information. Keep track of every amount you spend for your business and every amount you take
in as sales. Don‟t worry at this point about doing anything with the information. Just be sure
everything you capture includes (a) a description of the item, (b) the amount, and (c) the date.
Second, CHECK. Every two weeks, spend an hour going through everything and checking it.
Check to see that all the information you have is ready for recording. Be sure you have included

the date and amount, and enough detail on what the expense was for that you can record it
accurately. For example, a note for “paper, $3.55, 7/12” may not be enough information.
What was the paper for? Was this a newspaper you bought for the office? Or did you buy a ream
of paper for the computer?
Set up a specific time for an appointment with yourself at the end of alternate weeks (every other
Friday, for example) to check everything. Don‟t wait too long; the longer you wait to do this, the
more difficult it will be to remember and collect information.
Third, RECORD. Recording means putting your financial information into useable form. After
everything is checked, turn it over to your bookkeeper to record, or record it yourself. Do this
monthly. Input the information into a spreadsheet or accounting software. You might also find
that online software works for you, so you and your bookkeeper can both see the information and
discuss it. Just be sure you get everything recorded each month, so you can review it.
Fourth, REVIEW. After your financial information has been recorded each month, print out four
reports:
 balance sheet
 income statement
 accounts receivable aging report, and
 Accounts payable report.
For each report, include a comparison with the same report information from last month. Pay
special attention to specific information within these reports.
Finally, ACT. In most cases, “ACT” can mean doing nothing, if everything looks all right. In
other cases, it might mean making a change. Create “trigger points” where the information
compels you to act. Here are some suggested trigger points:
1. Balance Sheet. If you see liabilities are increasing each month for three months (which
probably means assets and/or expenses are also increasing), cut back spending.
2. Income Statement. If you see that a particular expense is increasing as a percentage of
sales, ask yourself why it‟s increasing. If the increase is necessary, you might want to cut
spending on other expenses, to maintain your profit level.
3. Accounts Receivable Aging. Be assertive in going after slow payers. The longer you let
the debt go unpaid, the less likely it is that you will receive the money. Set up a
collections system, as I discussed above, to make sure you‟re paid promptly and that slow
payers are not left to assume you don‟t want your money.

4. Accounts Payable. Pay what you can as quickly as possible. Try to pay early to get
discounts. If you can‟t pay all your bills, pay those which will cause you to incur
penalties, or which will affect your credit rating. Even if someone else is responsible for
paying bills, you are the person who is ultimately responsible for making sure your
business debts are paid.
Even if you‟re not familiar with financial systems, you should be able to set this one in motion
and keep it running. The most difficult part is collecting the information. Once you have formed
the “collection habit,” you‟ll find the rest will come along with it.
Remember, CCRRA- Capture financial information for your business, Check it every other
week, Record and Review the information monthly, then Act as necessary to keep your
financial situation moving smoothly. If you follow this simple five-step system, you‟ll minimize
the “garbage” and the problems that come with it and you will maximize your financial situation.
A well-organized financial system will keep your business financially viable for many years to
come.
LO3: Prepare reports from the business or records system
o Interpreting requests for reports and clarifying the content and frequency sought
o Preparing reports from business or records system
o Preparing business reports
3.1 Business system

Definition
A methodical procedure or process that is used as a delivery mechanism for providing specific
goods or services to customers.
Record to report
Record to report or R2R is the management process for providing strategic, financial and
operational feedback to understand how a business is performing. It covers the steps involved in
preparing and reporting the overall accounts which are typically stored in a general or nominal
ledger and managed by a Controller. The detailed steps involved are:
 data extraction
 data collection
 data validation
 data transformation (generation of voucher)
 voucher posting (to general ledger)
 storing vouchers in de-normalized and compressed format
 generating analysis account trial balance or consolidated analysis account trial balance
 generating user-defined financial and management reports
In general the Record to Report function is not engaged in processing transactions, but rather the
aggregation of existing data in computer systems to enable meaningful performance reporting to

be prepared for management. However, the R2R function may be a part of a broader accounting
department.
In accounting terms an ideal IT platform (or ERM system) would be one which presents the data
management need at the press of a button, however, various factors such as legacy systems,
complexity, changing information needs and so on usually mean a team is needed on an ongoing
basis to ensure the correct format reports are prepared.
What to expect in such a report:
- Financial performance and position - key performance indicators/metrics - business
commentary on the performance - reconciliation of actual results to budget, forecast and prior
year results
3.2 How to store customer data
 Initially, you can store things on Excel or similar spreadsheet software.
 But as your data becomes more detailed, you'll need specific database software to manage
your customer data.
 Ask a software and computer shop or supplier to recommend you some software,
explaining your needs both present and future to make sure they provide you with the
right level of complexity. You don't want to end up with something either far too
complicated or far too basic for your needs.
 Make sure your data collection spans all different departments and members of staff.
Everyone should be contributing to the same document. Use CRM software to manage
this.
3.3 Guidance and the law on storing customer data

 There are complex laws surrounding business' collection of data.
 See our guide on the data protection act to find out more and to make sure you don't
accidentally break the law.
 Make sure you ask customers' preferences when you take their contact details. Allow
them to opt out of receiving marketing material - you don't want to get on the wrong side
of them, after all.
3.4 Create a Business Record Keeping System

Creating a business record keeping system means capturing all the information about income,
expenses, and assets, and then using that information to generate business reports, This section
shows you how to set up a simple records system for your business.
Financial records and audit requirements
Every „large‟ company must prepare financial statements annually under, with the exception of:
 a company that has opted out of compliance; and
 A subsidiary of a company incorporated
„Large‟ overseas companies and „large‟ companies with significant overseas ownership must
appoint an auditor and are required to register financial statements

A company, that does not meet the „large‟ criteria, with 10 or more shareholders must prepare
and audit financial statements each year unless the company has opted not to
A company, that does not meet the „large‟ criteria, with fewer than 10 shareholders must prepare
and audit financial statements each year the company has opted to do so
If an auditor is to be appointed, the appointment is made at each annual meeting.
The board of a company must ensure that the company keeps accounting records. These records
must:
 correctly record and explain the company‟s transactions;
 at any time enable the company to ensure that the financial statements comply with
generally accepted accounting practice (if required under the Companies Act 1993 or any
other enactment); and
 Enable the company‟s financial statements to be readily and properly audited (if required
to be audited).
Related information
Security interests over personal property (for example, secured loans, leases or hire purchases)
can be registered and searched on the Personal Property Securities Register (PPSR) online at
www.ppsr.govt.nz. You must be a registered user of the PPSR website to search the PPSR.
A search of the PPSR for any registered security interests in respect of a specific company can
also be conducted via the Companies Register at www.companies.govt.nz
How long are you required to keep company financial records?
We have prepared a Records checklist to provide more guidance on which records companies
should keep (including time frames).
3.5 Maintaining Financial Records

Maintaining financial records is very important for the effective planning and management of
your micro-business, as well as making sound business decisions. You may also be required to
present financial and performance records to banks, financial institutions and other potential
investors, in order to provide a snapshot of the business. There are also legal requirements that
relate to record keeping. Therefore, keeping and maintaining up-to-date records in an orderly
manner is very essential to managing your micro-business.
The records that you are required to keep include:

 Sales and expense invoices
 Sales and expense receipts
 Cash register tapes
 Credit card statements
 Bank account statements
 Employee records such as copies of tax file number declarations, wages books, time
sheets and superannuation records

You may also need to keep the following specific income tax records for each financial year:
 Motor vehicle expenses, including logbooks
 Debtors and creditors lists
 Records of depreciating assets
 Stock take records
 Records of any use of any business purchases or assets for private purposes
 Records of assets for capital gains tax purposes
3.6 How to Write a Business Report

Business reports are one of the most effective ways to communicate in today‟s business world.
Although business reports' objectives are broad in scope, businesses or individuals can use them
to help make important decisions. To write an effective business report, you first need to
understand what it is and how it can be used.
Deciding What Type of Report to Write
1. Present an idea. A report that presents an idea is called a justification/recommendation

report. You can use these reports to make suggestions to management or other important
decision makers. This report typically contains a summary and body. The summary
highlights your request. The report‟s body delves into the benefits, costs, risks, etc.,
associated with your request.
o For example, you want a 3D printer for your division. To convince your manager
to requisition one, you would write a justification/recommendation report to
formally ask the management team for the printer.
2. Present risks involved with a specific opportunity. An investigative report helps
determine the risks involved with a specific course of action. This type of report is great
for helping a company anticipate repercussions. The report will contain an introduction,
body and conclusion. The introduction highlights the problem under investigation. The
body is used to discuss the facts and results of the investigation. The conclusion is used to
summarize.
For instance, say pharmaceutical company X wants to partner with pharmaceutical

company Y but has some concerns. Company X doesn‟t want to partner with a company
that has current financial problems or has had financial problems in the past. Company X
conducts an investigation and uses an investigative report to discuss in-depth financial
information on company Y and its directors.
3. Present compliance information to a governing body. This report, known as a

compliance report, helps companies show accountability. A company will use a
compliance report to show proof to a governing body (city, state, federal government,
etc.) that it is following all applicable laws/rules and that it is spending money properly.
The report contains an introduction, body and conclusion. The introduction typically

includes an overview of the report‟s major sections. The body contains the specific data,
facts, etc., that the regulatory entity needs to know. The conclusion is used to summarize.
For instance, CALPERS (California Public Employees Retirement System) needed to

show its board of administration that it followed all applicable laws and rules in 2010. It
put together an annual compliance report to show their activities for the year.
4. Present the feasibility of an idea or proposed project. An exploratory report to

determine whether an idea will work is called a feasibility report. The report should
contain a summary and body. The summary presents the idea. The body covers the
benefits, potential problems, associated costs, etc., of the proposed idea. A company
might use a feasibility report to explore questions such as these:
Can this project be completed within its budget?
Will the project be profitable?
Can this project be completed within the allotted time frame?
5. Present research found in a study. A research studies report presents research on an
issue or problem. It‟s an in-depth look at a very specific issue. The report should contain
an abstract (summary), introduction, methods, results, conclusion and recommendation. It
should also cite the study or studies involved.
For example, a business might conduct a company-wide study on whether to ban

smoking in its employee lounge. The person who writes up the study would produce a
research studies report.
6. Help a company improve its policies, products or processes via consistent

monitoring. This report, called a periodic report, is written at fixed intervals, such as
weekly, monthly, quarterly, etc. It may examine efficiency, profit and loss, or any other
metric over the chosen interval. For instance, a pharmaceutical sales representative might
provide a monthly summary of his or her sales calls.
7. Report on a specific situation. A specific situation — as opposed to a fixed interval —
calls for a situational report. The situation can be as simple as the information provided
at a conference or as complex as a report on the response to a natural disaster. These
reports contain an introduction, body and conclusion. Use the introduction to identify the
event and briefly preview what you cover in the body of the report. The conclusion
discusses the undertaken or necessary actions for the situation.
As an example, a state‟s governing body would like a situational report after a hurricane.
8. Present several solutions for a problem or situation. A yardstick report weighs several
potential solutions for a given situation. Based on the results, the writer would
recommend a particular course of action. A yardstick report should contain an
introduction, body and conclusion. The introduction states the report‟s purpose. The body

presents the situation or problem followed by potential solutions/alternatives. The
conclusion reveals the best solution or alternative.
For instance, ABC Auto Manufacturing, Inc., wants to open a plant in Asia. The report
might narrow down three country options based on the company‟s needs. The report
would then conclude which of the three countries is the best location for the new plant.
3.7 HOW TO PREPARE TO WRITE BUSINESS REPORTS

Understanding Report Basics
Reports are used very often in today‟s business world. When we are seeking support for a
project, for instance. Business reports always solve problems and answer questions. In the
following paragraph we will explain what are the different functions, patterns, formats, and
writing styles that can be used when writing a report.
First of all, you need to know what the function of your report is.
Your report can be informational or analytical.
An informational report only aims to inform the reader about the subject matters. You simply
need to collect and present the data without analysis, interpretations, or recommendations. An
example of informational report is the financial statement of a company. Whereas an analytical
report is generally made to persuade, convince someone. In an analytical report the writer
provides data, analyses, conclusion and, if needed, recommendations.
There are also two possibilities of patterns. You have to know if you are going to organize your
report directly or indirectly.
The Direct pattern is, as its name suggest, direct; this means that the report starts with the
introduction, show the facts and finishes with a summary. When a direct pattern is used the
conclusion and recommendations are placed near the beginning of the report. Informational
reports generally use direct pattern. But direct patterns are also used for analytical reports, when
the reader do not want to waste time reading the facts, finding, discussion, and analysis, in other
words, when only the conclusion and recommendations matters for the reader. But if the reader
is not familiar with the problem, the report can easily become confusing. Using an indirect
pattern means explaining, justifying, and analyzing before giving the conclusion
recommendations at the end. This type of pattern is useful when the reader is not familiar with
the topic, or when you need to persuade people that may not appreciate the conclusion.
You will also need to choose among four types of possible format. The format chosen depends
on the length, topic, audience, and purpose.
The Letter format is used when writing a short informal report addressed outside an organization.
This kind of report is presented almost the same way as a letter with the date, inside address,
salutation, and complimentary close. But letter reports are longer, it contains more information,
and are better organized than any random letter. The memo format is approximately the same as
the letter format, in a sense that it is useful when writing a short informal report. Only, memo
reports stays within the organization. They are longer, include headings, and are better organized

than regular memo. Memo reports begin with “Date”, “To”, “From” and “Subject”.
If you are writing a long formal report an adapted format is manuscript format. These reports
begin with a title and use headings and subheadings. Most of the time they are printed on plain
paper as opposed to the memo format and letter format reports; finally, for reports made on a
regular basis such as sales report or financial report, the corresponding format is printed form
(prepared or preprinted forms). These reports are useful because they help saving time, and
remembering all the information needed.
Finally you the writing style depends on the purpose and audience, they can be formal or
informal. The Figure below shows and compares the characteristics of each of the two possible
writing styles.
3.8 Determine the Purpose of the Business Report

A Business report has to be developed methodically in order to be consistent, interesting, and to
meet the expectations. Thus, writing process is adaptable and useful when writing a report.
In order to write a good business message, the easiest way is to make have systematic plan to
follow.
When writing a business report it is smart to adapt technique. Obviously, since you are writing a
business report some steps will be more important than others and you will have to spend more
time on them. Thus we can divide the writing process into seven steps:
1-Analyze the problem and purpose
2-Anticipate the audience and issues
3-Prepare a work plan
4-Implement your research strategy
5-Organize, analyze, interpret, and illustrate the data
6-Compose the final draft
7-Revise proofread, and evaluate.
The 3 first steps are the most important, and the ones we will discuss here.
Before beginning the report you need to “analyze the problem and purpose” this means that you
have to identify and understand perfectly why you are writing this report and what for. The best
way to do this is to prepare a written problem statement, i.e., to write the exact question that you
should try to answer in your report, this question will define the focus of your report so that you
keep the project on target. In order to do this, you also need to know what your boss exactly
wants (analyze, choose, investigate, compare, justify, evaluate, recommend and so on). You will
also have to consider three other factors:
1-The scope that tells you what issue or element will be investigated (usually told by you boss).
2-The significance of the project, which simply tells you why you are doing what you are doing
and may actually help you realize that the topic doesn‟t worth investigating.
3-The limitations, which can be time, geography, culture etc now you can write a relevant
statement of purpose
The next step is “Anticipate the audience and issues”. In this step you have to take into account

every people that might read your report, and ask yourself some key questions about them. For
instance, “What do my readers need to know about this topic”, “what is their education level”,
“how will they react to this information”. Thanks to these questions you will know who your
report is addressed to, but they also help the writer determine what to talk about in the report,
how much detail to add, the kind of language, what presentation to use and so on. Once you have
answered all these questions, you can start breaking the major problem into sub problems, which
will mainly be the different alternatives that you found to the problem, and develop these
subparts of your report.
The last major part of the writing process is “Preparing a work plan” the work plan should give
an overview of the project: resources, priorities, course of action, and schedule.
Now that we understand the function of a report and how to apply writing process, the most
fundamental aspect of the report writing process begins: Research and the collection of data. It is
the most important aspect of the preparation process since the report will be measured primarily
on how good the data is. Below are five forms of data that can be used to stimulate the right
questions to get the most accurate and pertinent information for the report.

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TVET PROGRAM TITLE: Accounts and Budget Support Level –III

MODULE TITLE Maintaining Business Records

Maintaining Business Records Page 1

Maintaining Business Records Page 2

1.1 What customer data to collect

 Name and contact details:

o Allows you to market directly to them.

o Also lets you make communications personalized.

o You may also need to contact them if an order is running late.

 Communications from you to customers and any response they make:

 Profile: age, gender, profession, income, hobbies, and so on:

Maintaining Business Records Page 3

1.2 How to collect customer data

o If the transaction is happening online, you can add in an optional section

Maintaining Business Records Page 4

1.3 Collect information

Maintaining Business Records Page 5

Types of information Examples

Correspondence faxes, letters, memos, email

computer databases customer records, library catalogue

computer files copies of letters, memos, other documents

sales records monthly forecasts, targets achieved

Forms membership forms, insurance forms

Invoices accounts from suppliers, accounts to debtors

personnel records personal details, salary rates

minutes of meetings staff meetings, board meetings

 colleague outside your area or department

 person outside of the organization (e.g. a client)

Points to consider when responding to requests for information:

Maintaining Business Records Page 6

o General access - available to any person.

 Delivery of information - could be in print or digital form. It is important to keep a record

 Tracking of information - if paper files are removed from a centralized area, it is

 filing systems - manual, computerized or electronic

Maintaining Business Records Page 7

 computer - including the following peripheral devices, software or applications:

o input devices including keyboards, mice, scanners, and cameras

o output devices including printer, speakers, dvd or cd rom

o internet - vast computer network linking smaller computer networks worldwide

o intranet - computer network with access restricted to within a particular

o email - electronic system of sending messages

o word processing and spreadsheet programs

1.4 Organizational requirements relating to security and confidentiality

1.5 Organizational requirements

Maintaining Business Records Page 8

 transferring telephone calls to a private area so confidential discussions cannot be

 ensuring mail is not left unattended or open to general public view

 restricting access to organizational email

 storing specific hard-copy files in a lockable cupboard, filing cabinet or vault

 using encryption of computer files

LO2 Update business or records system

o Identifying and recording control information for describing new records to be

2.1 Business record

Maintaining Business Records Page 9

Record keeping penalties

Penalties for an inaccurate return

Keeping accurate records helps you

How to keep your records

• allows the information to be presented to us in a readable format, if we need to see it.

Maintaining Business Records Page 10

Getting things right from the start

Simple record keeping applications for mobile devices

Maintaining Business Records Page 11