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run then walk, if you can’t walk then
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February 10, 2020 | Latest News

The Process Of Completing A Set Of Financial Statements

We thought we would give you an in-sight in to the process of preparing a set of Annual Accounts or Financial Statements. Of course there is always a variance in each job we complete, however this overview should give you most of the answers to any questions you may have. Technology has rapidly increased the way we all work. In the accounting profession Xero has been revolutionary in enabling a one-stop shop approach for business owners to producing financial information.

As part of this bank transactions can be coded and reconciled in Xero. But what happens to that information to translate it into a completed set of financial statements? Here at Walsh & Associates our team work to the following process;

  • Electronic questionnaires are released to the majority of clients
  • Once you have submitted the questionnaire, we review the checklist generated from your answers and any electronic or hard copy documents you have provided to us before contacting you to obtain any further basic information we think is missing
  • Setting up current year accounting files with all the necessary information
  • Setting an internal time and cost budget
  • Accountant produces a set of financial statements and internal workpapers
  • Partner or Manager review process and queries are noted
  • Accountant resolves queries, obtains further information and drafts the financial statement and prepares income tax returns.
  • Partner or Manager final approval
  • Accountant emails draft financial statements and tax returns to the client
  • Comments and adjustments obtained from client review of the draft financial statements are assessed and required changes made
  • Accountant finalises financial statements and tax returns for sign-off.
  • Accountant organises a sign-off meeting with the client or emails the signing documents to the client
  • Sign-off meeting with the Accountant, Manager and/or Partner and the client
  • Accountant updates financial statements and tax returns as a result of any issues from the sign-off meeting
  • Accountant files the tax returns and signing documentation
  • Invoicing and cost analysis
  • Corresponding with the IRD if there are any issues to follow-up.

There are several factors which impact on the time it will take to complete a set of financial statements or a tax return for a client. Some of these are dependent on the work itself such as;

  • The complexity of the transactions
  • The nature of the type of work
  • The number of transactions
  • The accuracy of the records provided by the client

Or others are more internal within Walsh & Associates such as;

  • IRD enforced deadlines –such as GST, provisional tax dates
  • Urgent jobs
  • The amount of other client work in the process of being completed
  • Staff on leave
  • Public holidays

So we are reaching out to all our clients to help us to help you and here are a few points that will help us all;

  1. Don’t presume we don’t need information just because the transactions are in Xero-we need third party confirmation of all balance sheet items.
  2. Read the Questionnaire and any information we request carefully-clarify this with our staff if you don’t understand.
  3. Request a list of records based on the work in the previous year.
  4. If necessary organise a meeting to go through your records when you drop them in to determine what is missing based on the previous year.
  5. Tells us if you require your work for a particular deadline outside of the IRD such as for a lending review, to cease business, to purchase a business, for student loans, Government subsidies or the purchase of a property.
  6. Prompt replies to our requests for information and queries.
  7. Document a note of major events, transactions or unusual transactions which have happened during the financial year.
  8. Resolving problems during the year rather than leaving them to end of year.
  9. Ensuring Xero is reconciled to the hard copy bank statements at the end of the year.
  10. Put descriptive narrations when coding transactions to explain what transactions are for. The only information that comes into Xero are the details you enter on internet banking.
  11. Attaching documents to transactions such as invoices for fixed asset purchases.