I'm working for a small to medium partnership. Been here for about a year now. I dealt with all the simple bookkeeping processes for the complete 09/10 year. Then passed to the accountant. Asked about A&P's, to which he said this year I could do them. So here we are 10/11. 09/10 and previous had been manual cash book. From 10/11 I'm computerising everything.
Now I've never gone about doing A&P's before. So the way I've started this is in a spreadsheet by having all creditors listed in a column. I've then got 2 columns for 'Accrual' and 'Prepayment' to enter a figure accordingly once I've established which one is correct, if at all. Then I have what I've called a 'Payment Particulars' column where I enter the to and from date that payment covers. (I'm currently calling all creditors to ask for this info.) I'll add a note to each A or P cell value showing how it's calculated. Then I'll total all below. Is there any other things I should consider? Any examples as to how you have administered this from scratch?
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Also, the "to the Nth degree" point. Some A&P's are quite simple. I'm wondering about others where only a few days are involved or it would be a pain to calculate. Say for example where parts of a bill are ahead and part behind. I'm sure there's more 'pain' esq examples than that, but I can't quite think at the moment. With the materiality concept I guess small amounts can be left, relative to rev and exp etc. But surely things have to be spot on, or where does the line stop?
A Limited Company that produces regular management accounts must have these totally correct, yes? If the statements are monthly, produced a day or so after the reporting period, then the A&P's must be a bit of a nightmare to work out because they have to be calculated there and then. In my situation, I can pass the partnership's books to the accountant any time up to January next year. So I can just make a note of what items should be accruals then wait for the correct figure to come in due time. This because the owners have never had monthly reports. I've started to do cash flow forecasts, but never P&L or BS.
What do you do with DD's (in A&P's and o/s creditors) where you pay a set monthly amount? Use the monthly amount even though that's not truly reflecting usage?
Thanks for reading through. If you have answers to the questions that's great, but if you have other thoughts outside the box of those questions and can flesh out what I was waffling about then please chat away. Always looking to converse about things and learn more :)
Hi there. I wouldn't expect it to be cash accounting. You need permission to do that from HMRC dont you? The business is a partnership now, but used to be a Limited Company. They reverted for reasons I'm not totally aware of. But the accountant has been the same for years on end. So if it was a Ltd Co on accrual accounting, I guess it shouldn't be any different now.... any thoughts or advice?
I just give the accountant a list of the accruals and prepayments at the end of each year. As most (bar two) of the businesses I work with don't get their year end accounts to the accountants for several months after the year end the accruals and prepayments are easy to back track!!! For the ones who want the books to the accountant within a week of the year end I ask them to take meter readings for utilities to enable a correct accruals to be worked out, during the year I make a note on a spreadsheet of prepayments as they are paid.
