A Producer Offset claim requires a Producer Offset audit before you submit your application to Screen Australia. This is an independent audit of your Qualifying Australian Production Expenditure, or QAPE, spreadsheet. The Producer Offset audit is a legal requirement, separate from a production audit (which some investors request to confirm spend against their investment). Both audits follow a similar process: your auditor reviews a sample of transactions against invoices and bank records. They differ in that the Producer Offset audit focuses on the tax treatment of expenses for Screen Australia whereas the production audit is a report to investors on the overall financial status of the production.
Neither type of audit needs to be daunting, especially if your books are already reconciled in Xero with invoices attached.
In this post we’ll walk through what each audit actually involves and how to make the process as painless as possible, so the phrase “we’re here to audit your accounts” doesn’t send a shiver down your spine.
Related article: What Is The Producer Offset? A Guide For New Producers
At Above The Line Accounting, we work with these audit processes daily, and we assure you that no matter the state of your accounts, they don’t scare us!
What’s the process for a Production audit or Producer Offset audit?
For either audit, the first thing you need to do is to choose an independent auditor. If you don’t have one, we recommend the brilliant Roger Wong at Calibre Business Advisory.
If you are using Xero software and have all the invoices attached to the relevant transaction, this will make the audit process relatively painless.
If you are having a production audit, then this will occur after the project is completed. At this stage, you should have all your accounts reconciled, and the auditor will select some transactions and ask for the original invoices, details of payments through the bank, and other information. The focus is the Final Cost Report, although they will also look at the Statement Of Investor Funds.
If you are having a Producer Offset audit, then the document being audited is the QAPE Spreadsheet. The rest of the process is the same – the auditor will select some transactions and ask for the original invoices, details of payment through the bank, and other information.
Finalising the Producer Offset audit is usually the final step before submitting your application for the Producer Offset to Screen Australia, and as such, is a crucial step.
That’s it. Done and dusted (like vampires on Halloween).
Related article: How Do I Apply For The Producer Offset?
What can I do to prepare for an audit?
To make an audit easier for everyone, one of the most helpful practices is to keep organised copies of all invoices.
We also recommend:
- making sure all bank accounts are fully reconciled
- making sure all your balance sheets are reconciled
- making sure you have paid as many creditors as possible
Conclusion
Ensuring compliance with audits in the Australian film industry doesn’t need to be a daunting process.
We’re happy to help you through every step of the audit process. We’ve prepared over 150 Producer Offset applications so we can help you complete your application without breaking a sweat.
Reach out to us today, and let’s start preparing for your audit.
A note on this article:
Information provided by Above the Line Accounting on this website is general in nature and does not take into consideration your personal financial situation. It is for educational purposes only and does not constitute formal financial advice.