I'm having a nightmare correcting errors from a previous bookkeeper and need some help as i'm only a fledgling myself.
I took on a new client recently who only needed me to do his bookkeeping on Sage. He told me that he doesn't use the data from Sage for his accountant as his accountant didn't trust the figures from his previous bookkeeper. He only needed me to data input for the previous month and print of reports so he could see how he was doing.
Upon seeing his books for the first time I could see that none of his bank a/c's were correct. He had 4 bank accounts listed. 1 was his business a/c that was about £15,000 out, 2nd was his personal a/c that had £150,000 in it which he assures me isn't there. the other 2 bank a/c's are loans [with credit balances] that were taken out 2 maybe 3 years ago but no re-payments had been made to those accounts. None of these accounts had been reconciled so i suggested that that would be a good place to start. I've now reconciled the business a/c and it is now correct. But the personal a/c is just a nightmare! from what it looks like, the previous bookkeeper opened up the 3rd loan a/c and just transfered the funds in the personal a/c. This was 2 years ago and the money was for a morgage that he had taken out for his private property. But the repayments have been coming from his business a/c in the Loan nominal code [2300]! Consequently i have a long term liability with a Debit balance! The previous bookkeeper has also made errors by posting any wages to either gross wages or net wages [ presumably depending on how they felt that particular day], I also have huge debit balances on PAYE [2210] and NI [2220].
I was starting to see why the accountant didn't use her figures! Now my client wants to stop using Sage and start using Xero for a fresh start. He wants me to transfer the figures over but his TB isn't correct. And although he knows this wants it done quite quickly and for the converstion date to be 1st march.
How do i correct all of the errors so that they are right?
Apologies if all that doesn't make much sense [ it hasn't to me for most of the day]
Sounds like you have a bit of a nightmare on your hands there! When is the company's year end? If the accountant didn't use the client's Sage data to prepare the year end accounts, where did he/she get their information from?
To be honest it might be worth asking the accountant for a TB at the year end and entering this as your starting point for Xero. If the figures in Sage are in such a mess it probably isn't worth your time or effort in correcting it all. I wouldn't put any more data into it either, as if the figures aren't correct then the reports produced aren't going to mean much to your client.
Is he a sole trader or limited company? He shouldn't have his personal bank account in Sage at all.
This is just my opinion...someone else might have some better advice
Thanks for getting back to me. He's a sole trader and the year end is 31st March. I'm assuming his accountant got figures from His bank statements, I'm not entirely sure.
My client says his accountant is very slow at giving him his annual accounts would it be worth getting figures from last years year end and starting from there? My client does come across as if he wanted things done yesterday. He also likes to see how he's been doing so wouldn't allow no data to be entered, even if the data is completely wrong, which i've tried, and half successfully, convinced him that it is.
I'll mention using the accountants TB and take it from there.
I would get the accountant to give you the TBL at 31 March 2010 together with there balance sheet schedules so you can see the composition of the balances (as this is their papers they may not give you it but most accountants would be happy to give) and start from there by posting the bank statements (reconciling on a regular basis as you go along).
I assume your client isnt VAT registered as dont know how they would be able to do their VAT from what you are saying.
If you can get everything posted fairly quickly you should be in a position to have the 2011 accounts ready in the next month or so to give to the accountant to prepare the year end accounts.
As the accounts will be in the form of a trial balance (rather than the accountant having to prepare from bank statements) the accountant should be able to prepare the accounts much quicker which should reduce your clients fee.
Go one better if you are confident and process all the year end adjustments such as prepayments, accruals, depn etc together with working papers so the accountant really just needs to fire the trial balance into their software, copy your working papers and then work out any tax liability. Shouldnt take longer than half a day to a day and dependent on charge our rate (say £50 per hour) should make the fee somewhere between £175 - £350 + whatever they take for doing the tax return say £100. So shouldnt be any more than £500+VAT in total.
I agree, I would be tempted to get the TB from the accountant if possible, but if that is not a possability, could you not do a Statement of Affairs to draw a temporary line under things and move on from there. You could use the actual bank balance, do a stock take, get supplier statements and reconcile these with the bank statements (Direct Debit mandates, cheque stubbs, BACS payments, etc) and that could give you a creditors balance. Assets and liabilities could be created with checking of regular outgoings (loan accounts that you aren't aware of) and creating an inventory list. Once done, you may be able to amend these figures as you go should other information arise.
This is not the best solution but may be a logical way to go if getting the TB figures will be difficult. I walked into a job once that had "SAGE Software for the accounts". The MD failed to tell me that the software was still in the box and the company were running a manual system with no period ends, no reconciliations, DD payments paid by cheque, double payments and drawings left right and centre on multiple business credit cards. It was a nightmare scenario but I had little option but to get on with it as I had bills to pay. I used the above method and really heavily relied on external info from Creditors Statements which was not ideal but had little options. I was then able to add to this as more information presented itself. The good thing about this was that it gave me some good skills to fall back on and gives you the confidence to move on into other positions (and to take a tour of the office and systems prior to accepting a job offer
Thanks for the input and advice. I'll try my best to get the TB from the accountant, from what my client says he's quite flexible but doesn't work to deadlines all that much so i may have to wait for a while for it but i think it'll be worth it.
@ DeanoFTM sounds like my scenario is a walk in the park compared to yours. But i'll use the statement of affairs route as plan B! There is no way he would pay me for all that work.
Thanks guys, really do appreciate your replies this evening.
Dont see why you need to wait a while as i said to get the TB from last year (March 2010) and use that to prepare the March 2011 accounts. To give to the accountant to prepare the 2011 accounts in the next month or so.
I understood what your saying, the reason for the wait would be because the accountant has one speed........extremely slow. My client says if he asks for the TB today he might get it next month if he's lucky.
After 2 hours of discussion with my client [ got quite heated as well], he went against the advice of getting the TB from the accountant for 2 reasons, 1 that it would take him a month to get it to us and the other is he didn't want to pay me to update the figures from 2010! I told him i wasn't happy with working with these figures and he said "then alter them!" I asked if he meant that i manipulate the figures so that they look realistic and his reply was " I wouldn't use the word manipulate, but just alter them so they are as close as possible to reality. Its not like i use these figures for my tax returns!"
He even said that if i wasn't happy using these figures to transfer to Sage that he would just hire some else! to which my reply was " then do that, but you'll just have another bookkeeper telling you that the figures aren't correct and that if they are happy to use them how professional would they be if they let you continue using them" It just seems to me that he doesn't want to pay to get those figures correct.
I adjusted the TB the best i could for him basing it from a his bank statement from March 2010, but i'm still not convinced but he is as happy as a sand boy.
Now, if he is only using the figures that i have to see how his business is performing on a month by month basis, is there any harm in this? He is aware of where i stand on the matter and is aware that his figures are wrong but he believes not by much. I'm a perfectionist at heart and it bugs me that the figures are out, but he sees no harm in it.
As long as he knows that they are not right and you have told him that they are not right then dont see a problem if he is happy.
At the end of the day given it is his business he should have a fair idea of how he is doing without necessarily looking at a profit and loss account.
Like yourself i used to like to get things right but after working in the profession for 15 years now then being reasonable tends to suffice.
As an example i an doing an audit at the moment where the pre tax profits are £1.15m. I wanted to reduce WIP by about £110k but the client was reluctant given they already had projections with both suppliers and bank about how they would do. When i approached from a different angle and said how much corporation tax they could save they agreed to reduce WIP by £250k. I am happy reporting on that and so are they as in one swoop they are saving CT of £75k and still showing profits of £900k which is up about 15% on the previous year. There is never a black and white in accounts as many people think, Just various shades of grey.
The accountant should be there to work for you, not the other way around.
If they cant provide it the same day you request (given the importance) it really is time to think about changing accountant.
I recently rang my electrician as one of the two lights in the loos at work is not working (yes, we really are p*ssing in the dark!). He said he would be able to come through next week. At first I was a bit miffed, but then I realised that he wasn't sitting at home waiting for me to call, but had work scheduled.
The same goes for me, and I would guess you too Mark. We all plan our time to be as efficient as we can. I have a certain amount of flexibility, and if someone rang up with a job that would take an hour or two, I reckon I could squeeze it in today, but if we have other deadlines?
As service providers, we always do our best to meet our clients' needs, but let's be reasonable about our expectations.
