can anybody please tell me why accountants put adjustments through the sales tax/purchase tax/vat control accounts, it wouldn't be so bad off the debit & credit marry up, but to put through a credit adjustment on all three accounts just doesn't make sense to me!! And the adjustment to the vat control account would leave me with an outstanding balance which baffles me since all payments have been paid and corresponds with vat returns!!
It's also possible that when you are given the year end journals in say, September, for a March set of accounts, that you have already done some of the adjustments during April - Aug, that the accountant is unaware of - and his adjustments are technically duplicating some of yours. Furthermore, when this happens year on year, it can get confusing, as his journals will be fixing duplicates from the prior year, as well as clashing with adjustments you've done for the current year... I hope that makes sense! I guess all you can do is chase him and get a proper breakdown. Sounds like its not in your favour if its credits! So maybe wait until you get concrete confirmation that your are to actually pay back money to HMRC ;)
-- Edited by FoxAccountancyServices on Tuesday 14th of May 2013 11:27:49 PM
Being serious, I imagine that the adjustments to the sales and purchase tax codes reflect VAT issues that have come to light when preparing the accounts. For example, an adjustment to the purchase tax control might be because VAT had been reclaimed on an item when it shouldn't have been (or not reclaimed when it could have been). Such adjustments could either be posted (i) in such a way so as to be picked up by Sage when the next VAT return was run or (ii) as T9 adjustments (but this would require details of the manual adjustments to be made in the next VAT return to be given to the person preparing the return).
The thing to do would be to contact the accountants and ask them for details of the adjustments.
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Pearce & Co - Chartered Accountant and Chartered Tax Adviser
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.
Yes I have asked the accountant and as usual when I question his journals he takes an age to respond.....If he responds at all!!! Robert thank you for your response I would have done as you stated, by either letting sage pick them up or adjust on the vat return. It's the values of the journals that are worrying!
Yes absolutely I have no intentions of putting the journals through until he has given me the reasons behind them, still not convinced they are correct
Apparently the adjustments are because my client has posted the transfers into liability account in the wrong year, should have been Nov 12 she did the transfer in Jan 13. Therefore I understand the reason for the adj into the sales/Purchases but not the Liability. If I post the £4k credit into this account dated 1st Dec which the accountant wants it will always sit there as this is the payment and was paid in Jan. at the moment the liability account balances but it won't if I do this posting? Or have I got it wrong?
The accountant will have punched your TB figures into their system and then made adjustments. Their software will probably then give them a print out of journal totals, that they need to pass to you.
Personally, I like to go down to the clients site, and do the journals, so I can check everything is in order, by looking at the current year on Sage (and cos it used to get me out of my miserably quiet office!). Or, where that would just be too much for the bookkeeper to handle (a few were control freaks), I usually make notes on the "non adjusting" journals, and take them out of the figures, before I pass them to the client. Or I explain it to the bookkeeper - it depends....
The other thing to consider is whether the accountant knew that the item was in Jan13... bear in mind that, that info wouldn't have been on the print outs you sent them, so they may have just thought it was a totally missed item.
Either way, its easy fixed. And from your accountants point of view.. Believe it or not, you would be surprised at how many bookkeepers don't worry about the effect of the journals. In my experience, hmmm... maybe 70% wouldn't think about it. (For example, a lot don't use the VAT transfer wizard, so the VAT liability account isn't really balanced - but the three accounts combined, will be, when the journal goes in) And, there are many times I have given out a journal, and then the following year found that it was also corrected by the bookkeeper.. yet they never noticed or called me to say the account was imbalanced. So, its not really a wrong doing by the accountant, its just something that happens, but it all comes out in the wash :).
I would be more concerned that you don't get prompt replies when you ask the question. They could be busy, but a few days is enough to produce a reply.
Either way, its easy fixed. And from your accountants point of view.. Believe it or not, you would be surprised at how many bookkeepers don't worry about the effect of the journals. In my experience, hmmm... maybe 70% wouldn't think about it. (For example, a lot don't use the VAT transfer wizard, so the VAT liability account isn't really balanced - but the three accounts combined, will be, when the journal goes in) And, there are many times I have given out a journal, and then the following year found that it was also corrected by the bookkeeper.. yet they never noticed or called me to say the account was imbalanced. So, its not really a wrong doing by the accountant, its just something that happens, but it all comes out in the wash :).
I would be more concerned that you don't get prompt replies when you ask the question. They could be busy, but a few days is enough to produce a reply.
Totally agree scary isn't it!!. this is what I find puzzling because the year end is Nov, the accountant came in to the office for 3 days apparently to close down in Feb! he had to have seen them.
As for the concern unfortunatly he is one of those accountants who thinks the bookkeeper is beneath him......... and how dare I question his judgement!! I'm 4 exams of ACCA qualified I hardly think I'm stupid!
