I've taken on a limited company that aren't VAT registered. They set up on the 1st July and I have just got their first lot of invoices etc to enter onto Sage. I've just set up on my own self employed and this is the first experience I have of a Ltd non vat reg company.
Most of the accounts are fine however - they deal with a lot of cash and most of this has verbally been accounted for but they have no reciepts etc - is it acceptable for me to get them to write down on a sheet of A4 paper where the money has gone and get them to sign it?
I have a lot of invoices that have paid written on them but no receipts. I can see the money has gone out of the bank account. I have told them to ring the companies invovled and get them to send them a receipt in the post. Is this acceptable?
I have beaten them into shape and told them they need to account for everything. Set up a petty cash system, got them to get receipt books etc so next month should be a lot easier. I'm just wondering how to get round this month. Is the course of action I've suggested enough?
I would say if you have an invoice and clear payment to match the invoice then you don't really need a receipt. It helps, but it's not essential. If its a cash purchase and there is no receipt or invoice thats a different story.
Thank you. That is a relief, although I do have three invoices amounting to just under £10k and can only match up just under £5k. Is this a matter I need to pass onto the accountant? How should I deal with it?
There are other credits going into the account all of which I have no other invoices for so I don't know what they are for over £10k!
I believe it is down to not keeping their house in order but what as a book keeper are my limits?! I don't want to end up doing anything I shouldn't because I am unaware.
Its the cash sales - where they haven't given the client a receipt or deposited the exact amount into the bank that is baffling me. They haven't made any cash purchases just sales.
Your engagement letter should state what the extent of your responsibiities are, so you need to ensure that has been agreed with your clients. Normally, a bookkeeper would be expected to provide day-to-day recording of the client's financial transactions (up to - say - trial balance), from which an accountant can produce final accounts. This could be extended, depending on circumstances (such as your actual offering), to the provision of other services, like VAT reporting, payroll, credit control, producing a final P&L and B/S, etc., or it could be restricted (again as shown by circumstances) to - say - maintaining the Bought Ledger only. Rarely, it will include advice, including perhaps, tax advice, but this would not be assumed or inferred without very definite indications that you were, in fact, giving such advice.
So it is important that your engagement letter is crystal clear about what your service is. Any variation or extension must be recorded and agreed before you undertake additional responsibilities. It would be unwise, of course, to agree to do something beyond your abilities, or outwith your practice permissions/qualifications.
Of course, no matter how explicit your engagement letter is, you depend upon the information provided by the client. You cannot reasonably be expected to provide accurate records if the information your are given is inadequate. Unlike husbands, who must know what their wives are thinking all the time, bookkeepers are not required to know what their clients have got up to if there is no record of what they have done. It is the company directors' responsibility to make sure there are adequate records in place. So, record what you can, and press hard for explanations, which you must document. Discrepancies between cash receipts and amounts banked can be very vexatious, as will be any subsequent attempt to reconcile goods sold with stock/purchases. It is important your clients understand this.The gaps are incomplete records and you should pass those on to the accountant to deal with.
(You are, however, expected to be alert to the possibility of money laundering, and if the absence of documentation, or a significant number of high-value invoices being issued by a business which has not registered for VAT, strike you as suspicious circumstances (highly unlikely, but just possible - remember a suspicion is more than a hunch or a mere question in the mind, it must be based on significant indicators that would cause another bookkeeper to be suspicious too) then you will have to notify SOCA without letting your clients, or anyone else, know you have done so. Here, I expect your directors have just been careless, so don't be alarmed by this suggestion, just keep it in mind.)
Iain that has been very helpful. Thank you. I am fairly new to this and I think have put an enormous amount of pressure on myself to make sure the books are perfect even though I don't have all the information. As you rightly point out I can only do what I can with what they give me.
I will go back to my engagement letter and maybe tighten it up.
