We are about to discuss accounting matters.
Hey, don't click past, it really is important!
Well yes, a little boring too, but sometimes you need to get into the detail of the boring to get the information you need in order to do all the glamorous stuff like building a vibrant business. In fact often you need to get into details to make sure your product or service delivers its promise. Think of a mechanic - no point creating a culture of caring for the customer if your mechanics fail to bleed the brake valves every time. Or a lawyer who's innovative and really digs deep for the client - not proofreading and the typos will get him every time.
So, one of the crucial (boring) details in any business is the accounting. You can hire a tax accountant at the end of the year; you can hire a once a week book-keeper; you can even employ a full time accounts-person and buy an expensive accounting software system; but the decision about some detail must lie with you and while you should take some of their advice, you need to decide on some key elements of your books.
The one particular aspect I want...Read more
I have worked with clients on their businesses and when asked about some detail like " what profit margin do you make on that product" or "how many hours do your people work on average", they don't know.
Now don't get me wrong. I'm not talking about micromanagement here - I am a firm believer in systems and procedures and a living vision that explain to team members what they do, how they should do it, and why they should do it, leaving you to concentrate on strategic matters that have impact.
However, you do need to know, nay, must know, the detail of your business model and your business functions.
When I was in my thirties, my mother developed terminal cancer and I looked after her palliative care at home because she wanted to die at home. I was assisted by an effective tertiary care medical system - home nurses, oncology visits, medical equipment supplied and so on. Her GP was also mine and once he asked me what medication she was getting and I replied "I don't know, some large white pills that the oncologist prescribed" thinking that was the affair of professionals whom I had delegated professional care to. My...Read more
The Australia Taxation Office has released a Draft Ruling (TR2014/D5 Special Conditions for Various Entities whose Ordinary and Statutory Income is Exempt) for public comment. This Draft Tax Ruling applies to entities which include registered charities, a classification under which many Australian Indigenous corporations have registered for tax exemption. These entities have been registered as tax exempt under Division 50 of the Income Tax Assessment Act 1997 and in doing so, had to comply with a number of conditions. The Draft Tax Ruling deals with two of of those conditions, being:- 1. the entity must comply with all of the substantive requirements in its governing rules; and 2. the entity must apply all of its income and assets solely for the purpose for wehich the entity is established. While the Draft Tax Ruling in part merely confirms our understanding of the legislation, it does clarify a number of matters, including how the Tax Office will view compliance should you be subject to a tax audit. The first item that is illuminating is that the Draft Tax Ruling views the constitution or Rule Book as the main, but not the only source of "governing rules". It goes on to say that other sources of governing rules may be legislation....Read more
There has been significant attention paid to governance in the last few years, as more and more Native Title Prescribed Body Corporates are incorporated, and the tide has turned from welfare-based Government funded Australian Indigenous organisations towards well-run Not for Profit entities and social ventures seeking the philanthropic dollar. This is only right because governance underpins the development of modern Aboriginal corporations as these seek to make a sustainable and resilient existence in the “mainstreaming” of their services. In my work where I advise, guide, help plan and facilitate the business of Indigenous Boards, I have seen this attention on governance leading to a trend to appoint “Independent Directors” to the Boards of PBC’s and Australian Indigenous NFP’s. The question however is whether the emphasis on governance equates to a need to appoint Independent Directors, and what should be the criteria used to select them? Firstly we should define the term. In actual fact, all Non-Executive Directors (those Directors who are not employed by their corporations in an operational or executive capacity) are “independent”. That is, they are “independent” of management. Indeed the legal fiduciary duty of all Directors, including Executive Directors, includes the duty to act for the good of the company, and not for any group, family or interest they represent,...Read more