I hope it's ok to post this question here. I think I'm a little over my head! I'm a part-qualified accountant who has worked in the finance dept of several large corporations for 10 years. This year I quit my job to start a bookkeeping business.
I have my first client (hurray) who are a small charity. They fired their last finance manager a few months ago for gross misconduct, and they need someone to sort out Quickbooks for them as the FM wasn't using it correctly. I have used Quickbooks, but SimpleStart, not Pro, before. However I'm more familiar with packages like SAP and Oracle, and I've never done a complete month end myself.
Here's where my lack of experience with small organisations kicks in: I don't really know where to start? I decided to start with getting their overdue invoices paid and in the system, then to import their outgoing invoices, and now I'm doing a bank reconciliation, but I'm really worred that I'm going to miss something important.
They also have their year end audit coming up and they want me to create their statutory accounts for submission to their auditors - I'm not sure I'm confident enough in their accounts to do this!
I had a meeting with their auditprs who told me not to code each invoice to different projects - they want me to journal this information in at the end of each month. I'm not really sure how to do that!
Basically, where would you start? Can anyone give me a checklist of what needs to be checked in Quickbooks so that I can at least present a set of quarterly management accounts to them?
The approach I would take (and something I do in all accounts) is to start with the known facts of the Balance Sheet. These being things like cash in hand, bank account balances etc. If you know what the balance should be, reconciling will be easy.
Hopefully, you should be able to match payments coming in and going out to suppliers and customer accounts which should ease the bank recon slightly. Identify any other bank entries and journal them in accordingly. The bank account is probably the main source of information and just about everything goes through them these days.
Personally, whatever the auditors say, I would disregard. At the end of the day, the accounts belong to your client, not the auditors and you (and your client) need to have confidence in them. Once you have got all the information in and reconciled the bank account, recorded all sales and expenditure, the other aspect will be items such as accruals and prepayments, fixed assets etc. I had a similar task a few years back and I adopted this method; essentially, I analysed and proved each account on the BS which had the knock-on effect that the P&L was correct.
And remember the golden rule; have faith in your own ability!
Thank you David. Yes I thought the same about starting with getting everything in the bank account into the system. I'm finding some direct debits to suppliers that have never been accounted for though! I ran an initial Quickbooks Balance Sheet report and presented this to the MD, but she had no real idea what it should look like. Apparently the last finance manager never created monthly or quarterly management accounts! Just stat accs at year end for the auditors. I don't know how the Trustees ran the show with no information, but I think because they have a separate membership database they were able to track donations that way, which was their main area of interest.
Also, the FM never put membership invoices in the system until they were paid! So according to Quickbooks they have no aged debtors, whereas in fact they have thousands of pounds in membership income that's overdue. They mostly pay suppliers in cheques and receive membership income in cheques, which they cash at about 10 at a time, making it hard to identify what's what when the deposit book isn't properly filled out!
You're right - total headache! Thanks again for your comment.
What a mess! But well done on getting your first client, and in many ways a good one to start with, if you can sort this out you'll be absolutely fine with whatever any further clients have to throw at you!
I would also work on what David has said, what happens in the bank is fact, so start there and work backwards. I'm sure that they will be surprised once they realise how much they have in outstanding fees, which if you can start chasing once the accounts are done they will definitely think you're the bees knees!
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
Now this is the ideal first client. A real eye opener and a good challenge to give you the confidence to move onwards and upwards.
Best place to start is to do the bank rec. Do this at a month at a time. I find that printing off the bank account transactions each month and then ticking them off to the bank statements and doing month end rec's. Any missed transactions or incorrect transactions are easily correctable on quickbooks. just unreconcile and edit the entry accordingly.
Obviously as you go along you may find errors and will need to correct not only the bank transaction, but perhaps correct income invoices/donations and purchase invoices.
Just concentrate on a month at a time and you will be fine.
Once the bank is done, review the other balance sheet nominal codes and then the profit & loss to ensure everything is in the correct place.
Its hard work and will be very time consuming and will require a lot of brain power but even when you are done you will still not be fully confident in the figures. All you can do is make sure that that the balance sheet nominal codes agrees to the relevant evidence such as bank statements, VAT returns, Payroll records.
Considering what the Auditors have said about the different projects, this is a tricky one. why journal when you can do it as you go? seems a strange request to me and at the end of the day you are doing the books for the client, however you have to take into consideration the auditors request to ensure you keep their fees to a minimum.
I would be prepared for the auditors to correct lots of things so don't worry about it too much.
I have no idea on quick books with projects or Departments (as they are called in Sage) as I have never done it for a client with quickbooks. Sage, yes!
Well done with the new client and what sounds like an exciting time!
My advice is to get a copy of the financial statements from the previous year and compare the balances to your opening balances for the year. Your auditors/accountants will also be able to give you a copy of the final Trial Balance. If your opening balances are wrong then you will need to put through a journal entry to correct them. I can help you with advice on how to do this so easily, so don't panic!
Please disregard what David said about ignoring auditors since they are the ones who prepare the financial statements and let you have the journal entries to correct the books!
The bank account is important, I hope it balances or that you have a monthly reconciliation.
If accounts payable/receivable look wrong, then they probably are. What often happens is that an account payable is put through the AP and then when the payment is made it is posted to the expense account rather than the AP. This results is balances on AP which have been paid. Best way to correct this is to look for the payment going out the bank account. If it was posted to the expense account and not the AP your expense has been duplicated. Solution: credit the expense account and debit the AP. (apply a similar but opposite fix to AR).
Thanks everyone for your help and encouragement. Going systematically through the bank statement has certainly been very enlightening!
I challenged the auditors on why I had to journal in the allocations rather than just code the invoices as I entered them - from their perspective, it makes it easier to unpick anything they query. Apparently they queried a LOT of the last FM's work!
I'd agree with Merlion on the projects. I think it would be very difficult to separate out transactions to different (particularly restricted) funding streams and journal them monthly, when Quickbooks has Classes to which each project can be allocated. It seems a really cumbersome way to do it and actually means doing double the work (inputting then journalling out) when invoices (customer and supplier) can be allocated to each project (class) on prime entry. It's really easy and you can then do individual reports for each project (P&L, Balance sheet) which I am sure the funders will require. The reporting is really flexible as well in Quickbooks you can create virtually any thing and the beauty of them is that you can drill down.
-- Edited by semsley on Friday 6th of May 2011 04:51:29 PM
