Starting from scratch using an opening B/S supplied by the accountant sounds like the perfect solution. It pushes all the historical problems back at the client and the accountant, where they belong. All you need to do is make sure that the control accounts in the opening B/S match the ledgers and query what the solution to that should be with the accountant if they don't. Likewise the starting bank account should be reconciled by someone, I guess.
-- Edited by Tom McClelland on Tuesday 2nd of October 2012 04:33:04 PM
This is more a sanity check than a request for help actually... I'm relatively new to bookkeeping and am wondering how I could have handled this better.
I took over the bookkeeping for a business where the owner had been doing it himself for about three years using Sage. Basically he had only been entering enough data to be able to do his VAT return, so he hadn't entered any sales receipts, and had just lumped all the expenditure into a supplier account in his own name, regardless of whether it was payable to him or had actually gone out of the bank. Despite two years' worth of final accounts having been produced, the bank had never been reconciled, and there were numerous transactions missing from Sage, some of which are from years ago and which the owner can no longer identify. He had been paying himself amounts from the bank without considering whether they were repayment of expenses, dividends or salary, and I have had to try and work this out for him (I'm not sure I've succeeded).
The client does his own VAT and PAYE, and having battled for so long trying to work out what he'd done with everything else, it didn't occur to me that I should be able to provide the paperwork for this too - the client hasn't kept copies of any of this, and am now having to explain to the accountants why the payroll journals weren't done, and why I don't know where the VAT returns are.
I was working on the client's computer and getting in his way, and I felt under considerable pressure to get the bookkeeping done as soon as possible. I'm now worrying that I've not done my job properly and shouldn't have handed over the accounts in the state I did. I feel like it's almost worse now than if I hadn't done anything!
Is this a common scenario, that you end up trying to untangle issues going back years, which the accountants have already had sight of when doing the final accounts for previous years? How much responsibility does a newly-appointed bookkeeper bear for what's gone before - should it be a team effort between me, the client and the accountants to get to the bottom of things, or is it down to me?
Sorry for the rant - I sometimes find it very difficult working alone and without much support.
I hear of this kind of thing happening quite a lot.
I don't think you bear any responsibility for the mess that you found before you began. Ridiculous to say that it is your responsibility to decide what historical client withdrawals are wages, what is dividends, and what is DLA. Strictly they should all be DLA unless there is contemporaneous documentation to say that they're wages or dividends.
If I were you I'd make a list of all the things that you believe to be issues along with an separate estimate for each issue of the number of man hours required to sort it out at your normal rate. In these estimates state that they're contingent on the client being able to find the source paperwork that you require. Payment to be in advance.
It sounds to me as if the accountant must know perfectly well that the problems with the client's paperwork data aren't your fault, but that they'll be very glad to see you get blamed for the client's current problems. I'm quite sure that it shouldn't be down to you.
Thanks Tom - that makes me feel a lot better. I did originally set out to produce a list of issues and did my quote accordingly, but as I got further and further into what had been done, I realised I had underestimated. It's been a really good learning experience in that respect. I'm sure that the accountant must know there are issues, and I'm hoping that we can all put our heads together to get things sorted out.
I concur with Tom but also in addition just want to break out one point from your note.
You were using the clients computer and felt that you were getting in his way...
Its not your problem that the client doesn't have enough computers.
He couldn't need the computer for Sage as it sounds obvious that he shouldn't actually be allowed loose on that again without a chaperone and safety harness.
If the client need a computer when you are working then he needs to go and buy another one, either for you or for him. Do not be pressed into rushing work for such reason.
I have actually used the line with a client before "and that's my problem how?"... Might be a good line for you to memorise in this instance.
I was also thinking when you were relaying the story that it sounds as though it would be so mych easier to redo everything from scratch rather than trying to fix what is already there which really must feel like trying to make a cullender waterproof at the moment.
Good luck moving this forwards Claire,
kindest 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.
Thanks Shaun - you're right that it would have been easier to start again - I wasn't sure I could do that with the final accounts having been done for previous years. Could I have asked for opening balances for the start of the financial year and proceeded from there? I don't think they would have been right, actually, but again, maybe that's not my problem (must learn to say that more!). I did ask for any adjustments from previous years and got nothing back.
The good news is that from the start of the current financial year, I'm starting again on new software, I will be working at my own office and the client will not be going anywhere near it.
