The Expanding Role of a Bookkeeper: Where to Draw the Line?
For the past three years, I’ve embarked on the journey as a freelance bookkeeper, and I’ve observed an intriguing trend. More and more, clients are entrusting me with additional responsibilities, which I take as a positive indication of their confidence in my skills and reliability.
However, this raises an important question about the boundaries of a bookkeeper’s duties. Where should the responsibilities of a bookkeeper conclude, and those of a general manager or an executive begin? An area of particular interest is budgeting. Is it within a bookkeeper’s purview to construct and manage a client’s operational budget from scratch? Additionally, to what extent should a bookkeeper be involved in handling accounts payable, such as processing payments and monitoring transactions? It’s worth noting that it’s generally considered a poor practice for the same individual to manage both Bookkeeping and payment processing, which prompts me to reconsider and refine my role.
I’d love to hear diverse viewpoints on this topic, especially since these responsibilities may often fall into a grey area.
A bit of context—my experience is rooted in the non-profit sector in Canada. This unique industry perspective might resonate with fellow professionals facing similar dilemmas. Your insights could be immensely valuable as I navigate the evolution of my responsibilities and define the contours of my role.
One response
As an independent Bookkeeping contractor, it’s fantastic that your clients trust you more and are starting to lean on your expertise. This shows your competency and reliability. However, it’s equally important to establish clear boundaries to ensure your work remains manageable and aligned with your role as a bookkeeper, particularly in the non-profit sector in Canada.
Core Responsibilities of Bookkeeping:
Recording Financial Transactions: At its heart, Bookkeeping involves systematically recording all financial transactions. This includes categorizing expenses, income, and accurately posting to accounts, ensuring everything aligns with the organization’s financial system.
Reconciliation: Regularly reconciling bank statements and other financial records is crucial to ensure that the records are accurate and up-to-date. This forms the basis for reliable financial reporting.
Accounts Receivable and Payable: You may manage invoicing clients (accounts receivable) and organizing payments to vendors (accounts payable), but be mindful of segregation of duties. Although processing payments might sometimes fall within your remit, initiating or authorizing payments should typically be separated to mitigate risks of error or fraud.
Maintaining General Ledger: Keeping the general ledger current is quintessential to ensure it reflects accurate and timely financial data. It’s essential for creating accurate financial statements.
Financial Reporting: Generating financial reports such as income statements and balance sheets provides the groundwork for financial management and planning.
Beyond Basic Bookkeeping:
As you navigate these advancing roles, it’s vital to remember that while overlapping responsibilities occur, establishing clear boundaries helps maintain your focus and efficiency:
Budgeting: Building and maintaining operational budgets typically crosses over into financial management. While you can provide insightful data and historical financial trends to aid in budget preparation, creating budgets from scratch is generally a management or executive task.
Financial Analysis and Strategy: Executives and financial managers usually handle deeper financial analyses and strategic financial planning. While informed insights from a bookkeeper can be invaluable, these activities often require a more holistic organizational view beyond the typical scope of bookkeeping.
Financial Policy and Compliance: In a non-profit setting, ensuring compliance with relevant financial regulations and crafting financial policies is usually beyond bookkeeping and should be managed by an executive or financial director with a more nuanced understanding of these obligations.
Segregation of Duties: You’ve already recognized the importance of not consolidating financial transaction recording with payment authorizations. Fortify this best practice by advocating for