Is it a legal requirement to have a stock system if you sell goods?
I ask for two reasons. This first came to my attention when I was required to give a closing stock figure, which had to be a possiblethereorthereaboutsguesstimateish.
Also I did a quick report on the profitability of our ebay shop, which was fine except I didn't have any purchase figures for the stock.
it would make my life easier if it was a legal requirement
At the end of the day, unless is an audit, stock just needs to be a reasonable figure approved by the owner/director. No need even for stock count at year end.
As Mark states, there is no direct legal requirement.
But...
There is a legal requirement that the financial statement give a true and fair view / faithful representation of an entities affairs as at the date of the financial statements. (Companies act which is law defers complexity to accounting regulation where such are more detailed giving such regulation legal status).
For inventories refer not only to IAS2 / SSAP9 but also presentation of financial statements (IAS1 / FRS3 & 5).
As Mark hinted at, the likelihood of managers obeying the rules where there is no threat of an audit is an issue but of course they always have the prospect of an HMRC investigation to keep them on the straight and narrow.
The responsibility for the business to keep adequate records lies ultimately with the director so if processes and procedures are not adequate it is their kneck on the chopping block.
hope that helps,
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.
I believe that ultimately in the eyes of the law any breach of legal requirements be it tax law or Company Law the responsibility lies with the business owner not the agent.
If it came to the crunch they would be the ones prosecuted.
....notwithstanding the fact that if they thought you'd messed up they could sue you afterwards!
Nice answer there from Melanie and to my mind the case law to back that one up is RBS v Bannerman, Johnston, Maclay (2002 & 2005) where RBS went after the firm where the blame was (apparently) on a seconded employee. It was then down to the firm to resolve matters associated with their employee.
The basis is that ultimate responsibility to the outside world is held by those deemed to have such and actions of staff cannot be viewed in isolation of managements responsibility to have policies and procedures in place to minimise risk.
Such does not divest the employee of responsibility but their responsibility is primarily to the firm and it is management who are responsible to the outside world.
Think also of the corporate homicide cases from high profile rail crashes. It is not management who are on the front line with a monkey wench but they were ultimately responsible for the ensuring the efficiency and effectiveness of the employee's who were.
In your case Steve the partners can fire you but it was there responsibility to ensure that the business policies and procedures were fit for purpose wich in this instance they do not seem to be.
HTH,
kind regads,
Shaun.
__________________
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.
