Today I started working for small Ltd company. Owner asked me to take care of the accounts as there is "small" catch up to do.
What I found out is that there is basically no records kept since Dec 2008. Random invoices and card payments slips all over the office.
Company is selling all products for cash, most of it online. Also all purchases are for cash. I don't have to much experience and simply don't know where to start.They have quick books as POS software which records sales and stock (no purchases). Also there is Sage Professional but all activity there ends in 2008. Few random entries in 2009. I know Sage a little, but never worked with Quick Books. Owner insists on keeping both programms. My job is to have both of them up to date.
Whole thing looks a bit strange to me as I don't understand how they manage to declare VAT or Income to HMRC. Please help me to decide what to do first. Thank you for any help
I would agree with Mark but if you really want take it on then it is a case of being methodical, get everything into some sort of chronological order, and start with what you do know.
I would be inclined to forget the software for the minute, and start with pen and paper, or excel
Do have previous accounts? If you have bank statements, that is a good place to start.
I'm in agreement with Mark and Bill, one additional point though would be that if the client does not have the bank statements the bank does so the client can always get reprints of any missing documents from them (printing old statements off the internet doesn't really cut the mustard as far as evidence is concerned. See Practice Note 16).
The problem occurs of course in that every item on the bank statement then needs to be reconciled to non existant documentation.
Does the client have an accountant? Who produced the accounts in 2008?
Although running from this one is the most obvious approach, finding work in this day and age isn't that easy and not having a reference from the last employer doesn't help that situation at all.
So, personally I think the approach should be to talk with the owner about the magnitude of the situation and make them realise that this will take 100% of your time for at least the next month (also find out what the overtime situation is for getting this resolved). Get them to gather as much verifiable written evidence as possible (original bank statements, original credit card receipts, original invoices, etc.) relate the gathered information back to any records that you do have and then try to fill out the gaps.
Bank statements are your least problem as, as mentioned above, you can always get replacemenbt copies of the these from the bank.
Verifying every entry for the last three years is going to be somewhat more problematic.
Is the client VAT registered? Should they be? (turnover £70k plus) if so have VAT returns been made and where is the documentation related to each return as the client can't (shouldn't have!!!!) just have made the figures up?
One last thing to ask yourself, is the documentation really missing or has it disappeared on purpose? Any sign that this is anything other than incompetence is at work here and you're in a whole different ball court and may find yourself in the nightmare situation of being torn between client confidentiality and a legal obligation to report your client. (Note that tax evasion is also a money laundering offence). In the first instance I would seek professional advice from the legal department of your professional body.
Fingers crossed this is all just client incompetence and the missing documentation is all sitting in a big plastic bin liner somewhere. Keep us all informed as to what happens next won't you... Oh yes, and welcome to the forum.
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I think Mark could be right. I took on a client in a mess and VAT returns worked out by going through the bank statement, a lot of cash transactions too. As Bill says I started with the bank statements. Check whether the on line sales have commission deducted and if this is recorded and also when you get more up to date check previous VAT returns.
This sounds so familiar!!!!! Although mine did not go back that far and they had done VAT returns although they certainly weren't correct!!!
My one had a computerised package in place although they hadn't used it for some time and then the one that I took over from did everything on excel and it was all a mess. Anyway did my best with them to get them on a computerised programme and did succeed for a while, eventually I left after some time as was beating my head against a brick wall!!!! The thing is some companies just don't take their finances seriously and then they wonder why they are in a mess!!!!!
The one I worked for installed new software and just uninstalled the old software without asking me, there reaction when I found out and told them they needed it for their records was 'Oh well didn't think we needed it' I told them they better hope they don't have an inspection as they had just wiped out a couple of years of accounts! They had no Backups either as they didn't think it was important.
Needless to say they still don't have a bookkeeper and probably never will, and then they will wonder when they go bust how it could have happened!
The best thing is to give it a go and try your best and if it don't work out don't beat yourself up over it, its not worth it, I had many sleepness nights over my client and never again. Like Shaun said get in contact with their accountant and see if he can help, its surprising what they will tell you about their client ie how bad they are at record keeping. Lets hope its incompetence on your clients part, it may well be that he just doesn't have a clue about paperwork.
Good luck and keep us all posted.
Regards,
-- Edited by Amanda on Sunday 20th of March 2011 10:38:21 PM
