Chokes Chartered Accountants.

A LARGE BANK BALANCE PROVES PROFITABILITY

Myth: A large bank balance proves profitability.

Reality: The balance may include VAT, borrowings, advance receipts or money reserved for imminent obligations.

Why it matters: Because weak financial discipline can distort profit, cash requirements and partner decisions.

KNOW THE TERM: LEAVE PROVISION

What does “Leave provision” mean—and why does it matter?

Leave provision means an accounting estimate of the employer’s obligation for accumulated leave where applicable.

Why it matters: Because unused leave may represent a real financial obligation not visible in the monthly salary payment.

KNOW THE TERM: TRUST AUDIT TRAIL

What does “Trust audit trail” mean—and why does it matter?

Trust audit trail means the complete path from mandate and source document through posting, approval, payment and reconciliation.

Why it matters: Because a final ledger balance is insufficient if the practice cannot prove how the money was received, held and paid.

MAINTAIN A FIXED-ASSET REGISTER

Is “Maintain a fixed-asset register” treated as a routine administrative matter?

Maintain a fixed-asset register.

Why it matters: Because ownership, location, cost, depreciation and disposal of material assets should remain traceable.

KNOW THE TERM: PAYROLL LIABILITY

What does “Payroll liability” mean—and why does it matter?

Payroll liability means an amount deducted or accrued but not yet paid to the employee, SARS, fund or other beneficiary.

Why it matters: Because deducted or accrued amounts remain payable even after employees have received their net salaries.

KNOW THE TERM: OUTSTANDING DEPOSIT

What does “Outstanding deposit” mean—and why does it matter?

Outstanding deposit means a genuine receipt recorded in the cashbook but not yet reflected by the bank.

Why it matters: Because an unsupported reconciling item can overstate the trust funds actually available at the bank.

WRITE OFF BALANCES FORMALLY

Is “Write off balances formally” treated as a routine administrative matter?

Write off balances formally.

Why it matters: Because irrecoverable balances require documented approval; silence does not convert an old debtor into a collectible asset.

KNOW THE TERM: NET PAY

What does “Net pay” mean—and why does it matter?

Net pay means the amount payable after valid statutory and authorised deductions.

Why it matters: Because the final bank amount is correct only if every deduction is lawful, authorised and accurately calculated.

KNOW THE TERM: TRUST-TO-BUSINESS TRANSFER REGISTER

What does “Trust-to-business transfer register” mean—and why does it matter?

Trust-to-business transfer register means a record linking each transfer to the client, invoice, entitlement, approval and bank transaction.

Why it matters: Because every transfer must be traceable to entitlement, approval, invoice and the affected client matter.

KNOW THE TERM: GOING CONCERN

What does “Going concern” mean—and why does it matter?

Going concern means the assumption that the practice can continue operating and meet obligations for the foreseeable future.

Why it matters: Because historical profit does not prove that the practice can fund its next twelve months of obligations.