A Xero file can look tidy on screen and still hold problems that surface at BAS time or at review: two contacts for the same supplier, an ABN keyed with one digit wrong, a bank line left unreconciled since winter. At Toby we built the Health Check to find that kind of problem and say where it is. Fixing it, and deciding whether it is a problem at all for this client, is work it hands back to you.

Read-only access, and what that means

A Xero connection is read-only. You authorise it in Xero, the token is held encrypted in Sydney, and Toby writes nothing back to your file, as our security page sets out. You can revoke access in Xero at any time, and it stops that moment. If you would rather not connect, the Health Check also accepts a Xero export, either an .xlsx workbook or three .csv files. Where a workbook cannot be read honestly, for example when its columns cannot be identified with confidence, it is refused rather than guessed at.

Read-only cuts both ways. The check cannot damage the file, and it cannot repair it. Every correction is made by a person, in Xero.

What it looks for

Our FAQ lists the checks: duplicate and near-duplicate contacts, contact ABNs that fail the check digit or repeat across contacts, dormant accounts, missing or inconsistent tax codes, transactions coded to the wrong account, and transactions left unreconciled past their age. Each finding says what it found, where, and why it matters. You get a list of findings, with no overall score.

The ATO's record-keeping guidance explains why these matter. Its overview says business records "need to contain enough information for us to determine the essential features or purpose of the transactions", and that the minimum on a record generally includes the GST information for the transaction. A missing tax code, or a sale coded to the wrong account, makes a transaction harder to read later, for you and for anyone reviewing the file.

Reconciliation is on the same list. The ATO's page on when to do record-keeping tasks puts "Do your bank reconciliation" under the monthly tasks, next to "Cross-reference payments with invoice numbers." An unreconciled line from several months back marks a month where that step was missed.

What to fix first, and the PDF

Findings are ranked by risk, highest first, and each one says where in Xero to correct it. Our pricing page describes the result as a report of "what is wrong, what to fix first and what it adds up to".

Each check is saved to History, where you can reopen it, compare it with the next run, or save the report as a PDF. A PDF taken before you start and another taken after the fixes give you a dated record of the file at both points.

What it leaves to you

A finding is a prompt to look, and some findings will be wrong for the file in front of you. A dormant account may be one the client keeps open on purpose. Two contacts sharing an ABN may be two branches of one supplier that the client wants kept apart. The Health Check has no way to know that. The person who knows the client does.

Our FAQ draws the line for registered agents: Toby does the finding and the arithmetic, and "the professional judgement, and the sign-off, stay with you". Toby keeps no ledger, writes nothing to yours and never lodges. You or your registered agent lodge, as you do today.

The ATO makes a related point about record-keeping systems: "The same record-keeping principles and practices apply, regardless of the system you use." Running a check over the file does not change what the records need to hold. Where you are unsure how a rule applies to a client, the ATO's overview says to "ask your registered tax or BAS agent".

How to use it on a file you look after

  1. Run the check before you start work on a period, so the list shapes the job.
  2. Work from the top of the list down, and note why you leave any finding as it is.
  3. Make each correction in Xero, then run the check again and compare the two runs in History.
  4. Save the report as a PDF and keep it with your own working papers for that period.

The Health Check is free for everyone with a free account, and no card is needed. The Health Check page has the detail.

Check a file freeFree for everyone. No card needed.

Related reading

For what happens to client data when it reaches AI software, see where your data goes when you use AI in a practice.

Sources

  1. Australian Taxation Office, Overview of record-keeping rules for business. Supports the points on what a record needs to contain, including GST information, and on asking a registered tax or BAS agent.
  2. Australian Taxation Office, When to do record-keeping and reporting tasks. Supports the monthly bank reconciliation and cross-referencing of payments with invoice numbers.
  3. Australian Taxation Office, Business record-keeping systems: digital or manual. Supports the point that the same record-keeping principles apply whatever system you use.