Accounting Workflow Clarity: LTT’s Powerful 16-Step System for Success

For all business owners and entrepreneurs, navigating financial statements can often feel complex 🤔. To demystify the process, we’ve outlined the complete, professional workflow used by accountants. With this systematic 16-step guide, you can ensure your company’s accounts are managed accurately and efficiently. Be sure to save this for your reference! 👇

A strong foundation is essential for a smooth and accurate accounting process.

• ⭐ Core Task: To conduct a deep dive into the client’s business operations, including their Income streams, Expenses, Assets, Liabilities, and Equity structure.
• ⭐ System Review: To assess the client’s current record-keeping methods. This includes any existing accounting software, POS systems, or other management information systems, as well as manual records like spreadsheet stock lists or daily sales reports.
• ⭐ Importance of Full Disclosure: Clients need to be honest about their requirements and disclose all necessary information during this initial stage. This includes details like motor vehicles under hire purchase, bank loans, the existence of additional warehouses, or other specific accounting needs. Late disclosures can significantly impact the workflow; for example, if a major item is revealed when we are at Step 15, we may need to revert to Step 03, causing delays and rework.
• ⭐ Key Action: Analyse the previous financial period’s accounts to establish a baseline for comparison.

• ⭐ Customised Approach: The core of this step is to design a customised accounting approach tailored specifically to our client’s business and key accounting areas.
• ⭐ Transaction Analysis: We identify the primary source documents and the key / major business transactions expected during the financial period. We also estimate the volume of transactions to plan the workflow efficiently.
• ⭐ Anticipating Outcomes: Based on the business understanding, we work to anticipate the financial outcome, projecting key figures like final sales by category, expenses by category, and the anticipated profit.
• ⭐ Workflow & COA Design: Using this information, we create a customised Chart of Accounts (COA) and map out the entire accounting workflow, defining the process from document collection to final reporting.

This phase requires meticulous attention to detail to ensure the integrity of your financial data.

• ⭐ Core Task: To gather all financial documents, in both physical (hardcopy) and digital (softcopy) formats, such as invoices, receipts, and bank statements.

• ⭐ Core Task: To systematically arrange all physical documents, typically by date or transaction type (e.g., Sales, Purchases, Expenses), utilise appropriate interim protection folders for scanning, and thereafter implement a compliant 7-year hardcopy archiving procedure for regulatory readiness.

• ⭐ Core Task: This step is more than just scanning. It involves identifying and grouping related papers into complete ‘transaction sets‘ before digitisation.
• ⭐ Example (Bukku Workflow): A single physical file might contain multiple accounting entries. For instance:
  • A Payment Voucher + Bank Transfer Slip is one set, processed as a ‘Purchase Payment’ transaction.
  • The attached Purchase Invoice is a second, separate transaction, processed as a ‘Credit Purchase’.
  • These must be recorded as two different entries in Bukku.
• ⭐ Digital File Assembly: To ensure digital records are correctly categorised, we may need to manipulate PDF files. This involves demerging a single PDF that contains multiple unrelated documents, or combining several separate PDFs into a single, relevant transaction set.
• ⭐ Non-Accounting Documents: Attachments like Quotations, Purchase Orders (POs), or Delivery Orders (DOs) generally do not have a direct accounting entry. While LTT will not process them into the accounting system, we will scan and file them for complete record-keeping.

• ⭐ Core Task: To organise all digital files according to a strict naming convention to ensure they are organised and easily accessible. The LTT standard format requires four components:
  1. Entity short name — e.g., LTTcfo
  2. Payee / Counterparty name — short and readable, e.g., JiwaBookStore
  3. Document date — in yymmdd format, e.g., 251008
  4. Amount — with a thousand separator and decimals, e.g., RM288.00
• Example 📄: LTTcfo_JiwaBookStore-251008-RM288.00.pdf

• ⭐ Core Task: To perform a thorough review of all collected documents to check for and resolve any missing information.

Here, we move to the core accounting tasks of recording and classifying transactions.

• ⭐ Core Task: To extract key information from the source documents, including the Date, Payee Name, Bill Number, and Amount.
• ⭐ Scope Note: In standard outsourced accounting, we generally do not perform itemised billing or stock control. Invoices are processed based on their total amount.
• ⭐ Custom Services: However, clients who require detailed itemised accounting can collaborate with LTT on a custom pricing package to meet their specific needs.

• ⭐ Core Task: To analyse each transaction on the bank statement and determine the correct processing workflow to prevent duplicate entries.

• ⭐ Key Consideration: We first check if a transaction has already been captured by another process. For example:
  • A Sales Payment may already be recorded if the client issues official receipts within Bukku.
  • A Purchase Payment might already exist if the client has generated a payment voucher.
• ⭐ Workflow Decision: Based on this, we decide whether to:
  • Enter the transaction from a source document first (e.g., a supplier bill) and then match it to the bank statement. This method is preferred for maintaining proper reference number sequences.
  • Create the transaction directly from the bank statement and attach documents later.

• ⭐ LTT Standard Practice:

  • For expenses claims or cash purchases with bills, we record them as a Purchases > Cash Bill.

  • For direct payments without bills, like salary, commissions, or bank charges, we use the Bank > Money Out function.

• ⭐ Core Task: To process all staff-related payments, including monthly payroll, EPF, and SOCSO, as well as employee expenses claims and petty cash reimbursements.

• ⭐ Also Included: Recording payments made by directors or staff on behalf of the company (e.g., using a personal credit card). These are accounted for as reimbursements or changes in the director’s loan account.

• ⭐ Key Action: Establish a strict cut-off date (e.g., the 5th of the following month) for all claims. This ensures expenses are recorded in the correct accounting period for accurate monthly reports.

• ⭐ Core Task: This step is crucial. First, separate transactions into two main groups: Sales / Money In and Purchases / Money Out. Then, record them into the appropriate categories:
  • Sales (Cash / Credit) & Sales Payment 💸
  • Purchase (Cash / Credit) & Purchase Payment 🛒
  • Money In / Money Out ↔️
  • Finally, use a Journal Entry for any necessary adjustments or non-routine transactions.

• ⭐ Core Task: To verify that all customer and supplier contact details are accurate and up-to-date in the system.
• ⭐ Key Details: This includes the full company name, business registration number, address, and contact person/email for both customers and suppliers to ensure proper record-keeping and communication.

• ⭐ Core Task: To format all processed data according to the specifications of the accounting software for a seamless import.
• ⭐ Error Checking: This is a critical control point. Before importing, the data compiled in a spreadsheet is reviewed to catch and correct any potential errors from manual input, ensuring accuracy.

The final phase involves verification, reporting, and ongoing management.

• ⭐ Core Task: Before finalising reports, perform crucial checks to ensure all numbers reconcile.
  • Bank Reconciliation: Match the company’s accounting records against the bank statement to ensure they correspond perfectly.
  • Report Reconciliation: Reconcile data from subsidiary systems (e.g., POS, inventory management) with the general ledger.
  • Supplier Reconciliation: Compare the accounts payable ledger with statements of account received from suppliers.

• ⭐ Core Task: To generate the primary financial statements: the Profit & Loss Statement and the Balance Sheet.
• ⭐ Key Action: Review these new reports and compare them with current or previous financial records to identify trends, evaluate performance, and ensure overall accuracy.

• ⭐ Core Task: Remember, accounting is an ongoing process. Steps 3 to 15 must be repeated at regular intervals (e.g., monthly or quarterly) to maintain accurate and timely financial records.

Please note that our accounting workflow is subject to the following conditions:

• Scope of Application: This process applies exclusively to our full-scope accounting clients at standard rates. It does not cover services such as simplified annual accounting.
• Payment-on-Behalf & Subsequent Claims: The standard workflow does not include recording transactions claimed by the client after the accounts for that period have been finalised by LTT. Handling such subsequent claims falls outside the standard scope.
• Client Responsibility for Documents: It is the client’s sole responsibility to provide all relevant and complete supporting documents. The accounting steps cannot be finalised in the absence of substantive documentation.
• Revisions Due to Late Information: If significant new information is provided after a stage is deemed complete, we may need to redo earlier steps of the workflow. This will impact the project timeline and may incur additional charges.
• Document Integrity: LTT does not create accounting documents (e.g., invoices, claims forms) on behalf of clients. Our role is to process the records you provide.
• Justification of Expenses: For expenses that may contain a personal element (e.g., food, petrol, entertainment), the client must provide a reasonable justification for the proportion allocated as a business expense.