I have a new client who has given me his Balance Sheet and P & L for last year, and he has asked me to look at his accounts for this year.
His Balance sheet reads:
Current Assets
Cash at Bank 1201
Creditors 1190
Amounts falling due in one year
Capital and Reserves 11
P& L 0
My client will not give me his Accountants Report which may give me an indication what the Creditors Amount is for.
As far as I can see nothing has been paid to any Creditor totalling this amount. The Company had a roof repair done during the year, but this equated to £ 2700.00.
The Company's previous Accountant has now retired so there is no way of finding out what the £ 1190 was put into the accounts for last year.
What do I do, just enter it as an Opening Balance and leave it, or could I debit it off the Repairs and Renewals account where I have posted the roof repairs.
My client seems rather reluctant to advise me what this amount was entered for last year.
Seems "odd" doesn't it. Can your client remember if it was a single creditor or an accumulation? Can you get your hands on any Supplier statements? Post year end payments, which i think you've looked at?
Maybe it's worth mentioning to your client, that unless he can "prove" the creditors validity, you'll have to write it off in this years accounts therefore increasing his profits / tax liability. That will probably jog their memory - especially if it was one major creditor.
Edit: Even if the previous Accountant has retired, I don't know why you couldn't speak to them.
-- Edited by ADAS on Tuesday 23rd of August 2011 03:36:17 PM
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
Agree with Tony, get contact details for the previous accountant and ask.
The client's reluctance may also start alarm bells ringing.
However, we've had cases before where we've taken over from other accountants and there are creditors sat on the BS that don't seem to relate to anything, and the client doesn't know what they relate to. It usually turns out to be provisions made years ago which have never been reversed! I know, strange but it happens.
It's seems odd to me that you've been given these as a Creditor, rather than an accrual. Utility suppliers don't exactly wait for their money, so that element should be straightforward to prove. For the insurance I'd expect to see a policy, stating the period it covers and a payment schedule.
If it was me and I couldn't contact the former Accountant, I'd post it to suspense in the current years P&L. That way you can be certain that the current years charges for insurance / utilities are correct and then adjust suspense at the year end as / if appropriate.
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
