if you take over a new client accounts with no history apart from a bank balance form the previous year do you enter the sum as an opening balance in the bank account?
What about the companies house filing, CT600, self assessment, bank statements (available from the bank if not available from the client).
Are you the clients first financial professional or can you talk to an encumbant?
If there were previous financial statements prepared then there must be a trial balance that they were based upon.
The less information that is readily available the more it will cost the client for you to consider taking them on as the more you will need to rebuild.
Also ensure that your engagement letter emphasises that the preparation of the financial statements and tax returns is their responsibility not yours. Make sure that such is pointed out to them clearly and in in writing.
Whatever you do, do not compromise your own position because of a clients lack of paperwork.
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 had one in the past whose accountant just did a P&L so completely one sided system..
Explanation was that it was in a cash basis for self assessment tax returns so it did not matter what rest of balance sheet was.....
We wont mention the HP liability (and interest) , bank loan (and interest), trade debtors or VAT balance on cash accounting rules that they did not post - hence very poor credit control and constant cashflow issue... let alone the capital allowance adjustment required which did impact the tax liabiliy in client favour...
Balance sheet reconciliations should always be performed, is an option to include on ITR, however still should be completed as a matter of course.
Ltd Company accpunts should be easier to trace balance sheet accounts as this is all that is required to be submitted to companies house - abbreviated mind you..!
Hope that Helps
Jeremy
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As an aside from all that I have yet to take over a client where the bank balance on the balance sheet is actually the same as the bank balance on the bank statement. Am I missing something?!
As an aside from all that I have yet to take over a client where the bank balance on the balance sheet is actually the same as the bank balance on the bank statement. Am I missing something?!
Unreconciled cheques and/or late bankings would be the reason the bank balance in the accounts not matching the balance sheet. The bank reconciliation would give you the breakdown in reconciling items - unless of course it is just plain wrong....
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I just read this post and am in the same position! I have a new client who is a sole trader, who started his business in 2010. The 2011/12 SA tax return was done by a previous bookkeeper, and no tax was due for either 2010/11 or 11/12. I am now doing his 2012/13 accounts, and have no history from the previous bookkeeper, despite having tried to obtain closing balances from her. I now have income from invoices raised in the previous year, however no o/s invoices to post it to. Not quite sure what to do with this. Any help much appreciated!
Thrweaten to report the previous bookkeeper to their professional body for disciplinary action unless the bare minimum information is supplied to you.
You are entitled to a copy of the previous periods accounts and the trial balance upon which such is based as that is the work that the client paid for.
All other information including the clients permanent file is the property of the bookkeeper rather than the client. On occassion they may be willing to sell the additional data back to the client who could then pass it to you, but more often they will not part with it as anything missing or incorrect could be used to prove negligence (not suggesting that there is any negligence here, just saying why some bookkeepers and accountants are adverse to parting with their paperwork).
It could just be the the previous bookkeeper does not realise that they have to give up the trial balance and a properly worded prompt may sort out that misconception.
Normally the threat of legal action / reporting to their supervisory body is enough to get the documents needed,
HTH,
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.
Thanks Shaun, will try her again. I have all of the previous year's receipts, invoices etc, and spreadsheet workings for the tax return, but it does look like its been done by someone perhaps not entirely qualified, so to speak! There is no TB, just a list of sales, a list of purchases, and thats about it! I'll see what I can get out of her.
