5B: Documents are filed for auditing purposes and follow-up

action is taken as required

The final step in of invoices for debtors is to file the invoice and any associated
paperwork in the appropriate place. The paperwork must be complete, correctly
coded and correctly filed so that, in the event that the company needs to refer back
to it, it can be easily found.

In hard copy systems the invoices are typically placed into either a manila folder,
hanging file and then into a filing cabinet or they are placed into another style of file eg
arch file. The invoices can be filed in a number of ways, by:
customer name/ ID
date
invoice number

Electronic files need a unique file name or record identification (RiD) number that
allows it to be recorded in the computer's database. This file name/RiD can then be
linked with other supporting documentation so that all the files are associated.

The system that is used should be one that is appropriate for the business needs.
What works for one company will not work for another. It does not particularly
matter what the system involves, only that the company is able to keep a track of its
records. The payments clerk should fully understand the record system so that, not
only are they able to file documents into it, but that they can also retrieve
documents when required to do so.

Audits
Invoice documentation is also auditable(checked) by internal company auditors, external
auditors and government agencies including the Australian Taxation Office (ATO) and the
Australian Securities and Investments Commission (ASIC). Failure to produce required
documentation can result in penalties or other severe consequences.

The ATO periodically conducts audits of business finances as well as personal

finances. Audits are also referred to as tax enquiries. They are conducted so that the
ATO can assure itself that the business/person being audited has done what they are
required to do under the tax laws. This includes whether they have declared all the
assessable income received and are entitled to the deductions and tax offsets
claimed on a tax return.

Business and personal records used for taxation purposes must, by law, be kept for at
least seven years. The audits that the ATO conducts will vary in their complexity.
Sometimes they only involve a phone call or a letter asking a business to provide further
information or to verify claims. In some cases a tax officer may visit the business at
which time they might ask to see some or all of the business records.

From time to time the ATO will also investigate businesses of a particular type, for
example electrical retailers, cafes, or carpentry businesses. When doing this it is
likely that the ATO will request the records and paperwork used to complete any tax
returns within the last seven-year period.

Now complete the learning task below. (called task 16

in the activities tab)
1. Outline how you could help to ensure that financial documents can be easily
located in the event they are to be audited.

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