This analysis seeks to identify some of the challenges of maintaining adequate accounting

records in retail store business especially among Bumiputera business.

Through the study of EFM activities, we intend to derive a set of best practices to assist
small-scale aid organizations operating in similar environments.

Maintaining adequate accounting records is an imperative for any business organization that
aims to be profitable, accountable, transparent, and legitimate. For most project managers,
having solid and dependable information is the key to profitability. Good accounting
practices ensure that the managers are provided with current records about the state of
operations so that the correct business decisions can be made. Because of the diverse
portfolio of Enright Flight Ministries (EFM) investments, each business venture is
responsible for maintaining complete accounting records under the supervision of a project
manager. On a recurring basis, EFM conducts internal audits of the records to ensure that
good accounting practices are in effect and are reported to the corporation administrators.
EFM also has a moral responsibility to the private donors who support the organization to
ensure that accounting procedures throughout the organization are strong and accurate.
Recent years have seen increased media attention to non-profit organizations that maintain
obscene overhead costs or cannot account for funds received. As donors become savvier,
non-profits have begun to provide more information to donors in an effort to increase levels
of accountability and transparency. To this end, EFM ensures that complete information
regarding any donation can be provided to an individual upon request. Finally, the strongest
reason to devote scarce resources to the preparation of sound financial statements derives
from the legal and regulatory obligations of the corporation to government. In the case of
EFM, the fact that the organization is incorporated in Florida and is funded through private
individuals across the U.S. necessitates that EFM file an annual US Tax Return with the
Internal Revenue Service. Because EFM conducts business activities internationally, there are
also regulatory requirements that must be met in Zambia. The Zambian institution charged
with collecting taxes and auditing the financial statements of individuals and corporations is
the Zambian Revenue Authority (ZRA). The basic requirements imposed by the ZRA are as
follows. A corporation is subject to a turnover tax that is divided into two levels. For a
"small" corporation with less than $40,000 in turnover the tax rate is 3% of net revenue. For a
"large" corporation with more than $40,000 in turnover the tax rate is 15% in the agricultural
sector and 35% for everything else. The only caveat is that large corporations are permitted to
deduct VAT (value added tax) where small corporations are not. Reporting requirements also
differ on the size of the corporation. For a small cor
Who to entrust with the company’s accounting is a decision taken by every
entrepreneur. In practice there are two choices: using an internal accounts
department or outsourcing. In either case, it must be remembered that the
responsibility for keeping the accounts is borne by the statutory body of the
accounting unit.
And what are the results of poorly managed or ambiguous accounting? Act
No. 563/1991, on Accounting, as amended, lists administrative offences in
Section 37, Section 37a and Section 37aa. When a breach of the accounting
principles set out under the Accounting Act in the aforementioned
paragraphs occurs, the tax office - who are tasked with hearing the
administrative offences - will impose a fine amounting to 3-6% of the value
of the total assets. The penalty is therefore dependent on the sum of the
company’s overall assets, stocks, receivables and funds.

Are you worried that your accounting is not being done properly? Has
the tax authority already come across significant inaccuracies when
checking your accounting unit? Have you had a loss of electronic data
without back-up? Don’t despair! It can all be sorted out by
reconstruction of accounting..

Reconstruction of accounting is also applied in other cases. Sometimes it is

necessary to return to earlier years because:
 the inventorying of the balance sheets on the balance sheet date
is not available, i.e. the balance is not supported with evidence,
 the accounting shows discrepancies and is significantly
incomplete,
 generally binding accounting principles have not been followed,
 the accounting unit did not conduct proper accounting as a result
of the conversion of an enterprise etc.

Progress of the job

A key decision before the reconstruction can get underway is how far back
to go. The decision is governed by the nature of the accounting books, which
must respect the principles of continuity from one accounting period to the
next. The reconstruction of a single period resolves nothing if we introduce
to the period an unverifiable status of the balance sheet accounts, and at the
same time we do not want to overburden the company with tax by using
possible allowances above the financial result. A key input in the decision
is therefore a thorough analysis of individual accounting periods. This will
also indicate to us whether it is sufficient to correct the defects in the existing
accounting records.
Once it is clear that the existing accounting cannot be used and we have
chosen our starting point, then we can get on and begin the actual
reconstruction of the accounting. The process is difficult and relies on the
active participation of the representative of the accounting unit and the
people who were familiar with transactions conducted during the
reconstructed periods. Crucial for any reconstruction is for the accounting
unit to have archived all its documents and that ithas available original
documents or their copies. Where this is not the case, it is necessary to
request such documents from other parties; however, a reconstruction
carried out under these circumstances cannot guarantee a positive result.

Accounting events are newly recorded and accounted as they arose, i.e. how
they should have been accounted. We first proceed from primary
transactions, such as invoices received, issued, bank statements, till receipts
and internal documents. This is followed by secondary accounting, e.g.
matching up documents and checking the balances of individual accounts.

The result of the reconstruction is a new balance sheet that is documented

and verifiable. The new balances are subsequently taken forward into the
current accounting period.

Conclusion
Although reconstruction of accounting is not a simple or inexpensive matter,
in a great many cases it is essential to perform. Not only because of the
disproportionate financial impact on the company, but first and foremost
because of the personal responsibility of the statutory body.
Investing money in this way can resolve problems in the past and solves
the need to sort out such problems in future. At the same time, travelling
the route of reconstructing faulty accounting makes matters much easier
when entering into administrative proceedings, since the legal person has
undertaken every effort that might be asked of them to prevent any breach
of their statutory duties.
If you are dealing with a similar situation, then please don’t hesitate to
contact our team of qualified experts comprising accounting and auditing
specialists.

Other news from category - Case Studies

The importance of maintaining proper books of accounts and sound accounting practices has
been emphasised in ensuring proper financial management in an enterprise. In this study, we
investigate the record keeping utilized by an entreprise business on a Bridal shop. We foud

SMEs. In this study, we investigate the record keeping strategies utilized by SMEs in Kumasi
(Ghana) through data based on responses to a structured questionnaire from 210 SMEs in
Kumasi. We report that majority of SMEs fail to maintain complete accounting records as
they think there is no need to keep accounting records and that it exposes their financial
position. It is recommended that training programmes must be organised to sensitize
owners/managers on the need to maintain proper books of accounts. The government should
also come out with the necessary legal instruments to make the preparation of proper books
of accounts mandatory in order to improve SMEs practice of accounting in Ghana.