What was broken
A construction company had operated for years with fragmented bookkeeping spread across spreadsheets, informal ledgers, and multiple bank accounts. When the promoters sought a working-capital facility, the bank required audited financials the company simply could not produce. Several years of accounts had to be reconstructed before any filing or financing could proceed.
What we did
CapEasy rebuilt the books from source — bank statements, vendor and customer records, and contracts — reconstructing multiple years of financial statements, reconciling balances, and preparing the accounts for audit. We then completed the overdue statutory filings and set up an ongoing accounting process to keep records current.
Where it landed
The company obtained a clean set of reconstructed, audit-ready financial statements and cleared its backlog of filings. With reliable numbers in hand, the promoters were able to progress their banking facility and finally see an accurate picture of the business.
Construction is one of the few industries the ATO reports on twice
A building and construction business sits inside the taxable payments reporting system (TPRS), one of a short list of industries — alongside cleaning, courier and road freight, IT, and security services — that the ATO requires to lodge a Taxable Payments Annual Report (TPAR) every year. The report covers every contractor paid during the financial year: ABN, name, business address, the total gross amount paid including GST, and the GST component of that amount, reconciled to payments actually made, not invoices raised. It is due 28 August, covering the year that closed the preceding 30 June.
This is the same failure pattern as any bookkeeping backlog, but construction has a second consequence attached to it. A ledger with contractor payments coded to a generic "subcontractors" account, with no ABN captured and no split between labour and materials, is not just an audit problem — it is a TPAR the business cannot lodge accurately, on a report the ATO uses specifically to cross-check what contractors declare as income against what builders report having paid them.
Progress claims and retention money need a paper trail that outlasts the job
Construction work is billed and paid differently from almost every other trade this firm serves: progress claims staged against milestones, retention amounts withheld from each claim and released later, and variations that change what was originally quoted. None of that is optional detail for the ledger — it is the record that shows what was actually earned and owed at any point in a multi-month or multi-year contract, and it is the record a lender, a surety, or an incoming auditor asks to see reconciled against the bank statements and the contract itself.
A retention schedule that lives only in a spreadsheet nobody updates after the claim is paid becomes exactly the kind of gap this engagement had to close from scratch: retention held on a job finished two years ago, never released, never chased, and no longer traceable to the contract that created the obligation. The fix in this engagement — walking every bank statement, vendor record and contract back to source and reconciling the balances — is the same fix a construction ledger needs before retention and progress-claim history are allowed to go stale.
The ATO's five-year clock runs on every one of these records
Australian tax law requires a business to keep records explaining its transactions for five years from whichever is later: the date the record was prepared, or the date the transaction it relates to was completed. For a construction business that clock touches contractor invoices and TPAR working papers, progress-claim and retention schedules, and the bank statements a reconstruction like this one has to walk line by line. Records tied to a depreciating asset — plant and equipment held for years on a job site — run longer still: for as long as the asset is held, plus a further five years after disposal.
A backlog like the one in this engagement is what happens when that clock is never actively managed: records exist somewhere, but not in a form that reconciles, and not with the ABNs, contract references and payment splits a lender, an auditor or a TPAR needs pulled straight out. Rebuilding from source is possible — this engagement did it across several years of accounts — but it is days of reconstruction work that a maintained ledger would have made a routine reconciliation.
What to take from it
- A construction ledger carries a reporting obligation most industries don't: contractor-payment reporting needs each contractor's ID and a tax split captured at the time of payment, not reconstructed from invoices months later.
- Progress claims and retention money need their own schedule — tied to the contract and the milestone — or retention held years ago becomes untraceable exactly when a lender or auditor asks for it.
- The record-keeping rule for a business is a floor, not a suggestion; a backlog of years, as this engagement had, means every one of those years has to be walked and reconciled from bank statements and contracts, not estimated.
- A bank asking for audited financials is often the first hard deadline a fragmented ledger ever faces — the record-keeping discipline it forces is the same discipline contractor-payment reporting and retention tracking need anyway.
- Reconstruction from source — statements, contracts, vendor and customer records — produces books that hold up to scrutiny; patching the existing spreadsheet forward does not.