P&L, BAS and bank statements do not match: what should a buyer check?

First check whether the figures are comparable. A profit and loss report, a business activity statement and a bank statement can describe different measures, on different accounting bases, across different periods. A difference is a question to investigate. It is not, by itself, evidence that revenue is overstated or that anyone has acted improperly.

Suppose you are buying a small Australian business and the seller gives you an annual profit and loss (P&L) report, quarterly business activity statements (BAS) and a transaction export. The totals disagree. Before calculating a “shortfall”, establish what each total includes, whether the bank coverage is complete and which evidence could explain the difference.

Three records, three different starting points

A P&L reports income and expenses according to the report's settings and accounting treatment. Bank records show movements through specified accounts. The BAS is a tax reporting document; it is not a second P&L. Obtain the reports behind the BAS as well as the lodged or amended statements, so the accountant can inspect the transaction selections and tax treatment.

Cash and accrual accounting differ in when income and expenses are recognised. An earned sale and the later collection of its invoice can fall in different periods. Xero's Australian explanation is useful for this general distinction. Do not use the choice of a P&L report setting as proof of the business's GST or income-tax method.

For GST, keep three fields separate: reporting method, accounting basis and reporting cycle. The ATO's reporting-method guidance expressly distinguishes them. “Quarterly” tells you the cycle; it does not tell you whether cash or non-cash accounting applies.

Complete this readiness worksheet first

This worksheet is a manual preparation aid, not a Dealensics output. Enter “unknown” where a fact has not been established; do not make the documents comparable by assumption.

If an essential field is unknown, leave the comparison unresolved. For example, an export showing transactions between two dates does not necessarily establish full statement coverage or the completeness of the account inventory.

Why dividing G1 by 1.1 is not a general solution

G1 is a total-sales label, not a universal instruction to remove GST by dividing every dollar by 1.1. The underlying sales can have different GST treatment. Before using a GST subtraction in any comparison, check whether G1 on the lodged BAS was reported including or excluding GST. Subtracting GST again from a GST-exclusive G1 amount would understate the figure. The ATO's G1 guidance describes the reporting choice; a qualified BAS or tax reviewer must confirm the treatment for an actual statement. The ATO's accessible full-reporting overview identifies separate sales categories; the accountant needs the actual preparation detail before constructing an appropriate comparison.

The following is a hand-built educational illustration in Australian dollars for a single fictional quarter. Assume the supplied sales schedule contains A$11,000 of GST-inclusive taxable sales with A$1,000 GST, and A$5,000 of GST-free sales. Assume the schedule has no other categories, adjustments or timing differences. The combined amount is A$16,000; removing the evidenced A$1,000 GST gives A$15,000. This assumes the supplied A$16,000 schedule includes GST; it is not a reason to subtract GST from a GST-exclusive G1 amount. Dividing A$16,000 by 1.1 gives A$14,545.45 when rounded to cents, which is not A$15,000.

The method is addition followed by subtraction of the supplied GST component, with Decimal arithmetic. The figures are invented inputs to illustrate why a blanket divisor fails, not a model of every BAS or a tax-return instruction. An actual comparison still needs matching scope, periods and the accountant's treatment of relevant adjustments. Where the treatment cannot be established, do not display a converted revenue figure as though it were supported.

Investigate timing with a bridge, not a balancing plug

An invoice recognised in one period and paid in another may explain some disagreement. Ask for the invoice, the ledger entry, the receipt and the opening/closing receivables detail. Check whether the explanation works in both the original period and the later period; merely moving an unexplained amount between months does not establish it.

Keep a bridge with one line per explanation: source amount, inclusion or exclusion, dates, evidence reference, reasoning and reviewer state. Leave a residual difference visible if the bridge does not account for it. Do not create an “other timing” line simply to make the totals agree.

Also inspect amendments. A later P&L journal or BAS correction can mean the two files were never intended to match in their supplied versions. Ask which version was current at each reporting date and why it changed. Preserve both versions and identify which comparison each belongs to.

Separate bank inflows from customer receipts

Borrowings, owner funds and transfers can appear among bank credits. A merchant deposit may be net of fees, refunds or other adjustments, with timing that differs from the underlying transactions. A short bank description alone cannot settle the classification.

Use the bank record to establish the observed movement, then request the evidence that identifies its nature: paired account entries, a loan drawdown record, an owner-contribution record, invoices or a merchant settlement report. Those documents support different explanations. They do not automatically prove that all reported revenue was collected or that all relevant bank accounts were supplied. The transaction classification guide develops that narrower task.

Three useful outcomes

Ready to compare: the inputs have compatible scope and sufficient evidence to perform the particular comparison. This is a readiness condition, not an assessment status. State the period, measure, source versions and method. The completed result retains the appropriate assessment, including Partially supported where limitations remain. Equal amounts alone do not establish revenue or validate the business as a whole.

Not reconciled: a valid comparison has been performed and a difference remains unexplained by the evidence reviewed. State the difference only with its calculation and inputs. List possible explanations as possibilities and ask for the missing support.

Unable to assess: the comparison cannot safely be made, for example because a necessary account period is missing or the basis is unresolved. State the blocker and the evidence needed. Do not convert this outcome into either a zero difference or a calculated revenue shortfall.

These are distinct states, not a progression in which every file eventually receives a favourable verdict. Sometimes the most accurate answer stays “Unable to assess” after further enquiries. See missing bank statements for a worked coverage example.

Take a specific question to the accountant

Ask: “Can these exact versions be compared for this entity and period, and what bridge is needed?” Then ask which GST detail, invoice timing, additional accounts or amendments are required. For the seller, a neutral request is: “Please identify the report settings and underlying records that explain this difference, including any transactions recorded in a different period.”

Keep the response separate from the reviewer's conclusion. A written explanation is useful evidence of what was said; its financial effect still needs checking. Do not change original figures to agree with a verbal assurance.

Acquire's relevant role is to preserve evidence, comparison status and unresolved questions within its supported workflow. Its synthetic demonstrations do not establish that it automatically identifies every timing, merchant-settlement or GST explanation. The Acquire page explains its preliminary role. Appropriate accounting and tax review remains necessary; this worksheet is not an audit or advice on BAS preparation.