What a challenge!
This won't be a complete answer, but a place to start - then you should be able to follow through when you have done some investigating
First - has the accountant picked up these errors and adjusted for them already? If so, you should simply be able to clear the items with the opening balance adjustment journals. There's no point in you doing this work if the accountant has already done it, so this would be my first step.
Next, I think it's always helpful to find out what happened in real life - ie were these invoices really paid?when and how? Then find out what the bookkeeper did instead of recording the true picture.
1) Are the invoices duplicate postings?
2) Are the invoices valid?
3) Are there missing credit notes?
The supplier statement will help with all of the above, although you might need to go back to the supplier and request full statements or activity reports.
The above should give you some confidence that costs were accurate in last year's P&L.

Based on what you have told us, it seems likely that he has failed to record the payments. You say that he posted some journals to correct the bank account balances. Have a look at were the other side of the adjustment journal was posted. If this was just one or two isolated incidences it would be easy to untangle, but without full notes you will struggle, although you might find that a pattern emerges. At this stage you should try to make sure that the balance sheet is correct. It sounds as if the bank balances may have been correct in the TB when the year was closed, but the "dodgy" journals would have created balances elsewhere. Where are these balances? Have they affected the final accounts for last year? What has the accountant done with these fictitious balances?

As I say, this isn't a complete answer to your question, but I think that when you have a clear idea of what has happened, you will start to see how you can correct it.

Another vote for starting from scratch here.

I do it regularly for young businesses and for older ones quite often redo the previous years books which at least puts me on top of the real position with the accruals and prepayments (#1) which invariably I find to be the area that many bookkeepers have found difficult (and the one area where I cannot see why people find the concept difficult to grasp).

kind regards,

Shaun.

#1 unless you start from scratch you cannot guarantee correctness of the historic data held in the books but one has to start somewhere and the accountant / previous accountant has already had two opportunities at getting those right so if they're not then I have to adopt the position of "thats my problem how?".... lol. wonder if that will catch on like "There or there abouts?"(tm).

"errors by previous bookkeeper, how to eliminate them"

I find a nice double barrel bolt action rifle helps :)

Sure there are less "messy" ways to resolve it though....



Hal MAAT FFA FFTA

Haha! Brilliant quote, Sean!

Tick up the bank, identify the "adjustments" on Sage and try to link them up to non ticked bank items - then go through, and correct as necessary. I would vote for Sean's advice of start again though.. It could be quicker?

But in these sort of instances where it is not viable to go back to the start of the business does it not make sense to go back one year and take the signed off set of books from then as your base start point then redo the previous periods books so that you have a firm basis upon which to build your new year.

You need to ensure that you have a clause in your engagement letter where the client accepts full responsibility for the information in the signed off accounts that you are using as a basis and you cannot be expec ted to have responsibility for books over which you had no input.

When you have reprocessed the previous period you will need to talk to the accountant about the reality compared to the signed off accounts that have already been filed.

Once you have firm foundations moving forwards you will have total control over the clients books which I am positibve that in your good hands will be squeaky clean and six years down the line the client can breath a sigh of relief that any former unnoticed indiscretions by the previous bookkeeper will to all intent and purpose disappear.

Personally I would say that a good 80% of clients who come to me I end up redoing their previous years accounts (often at my own expense) as I want to know such things as :

1) How much trust I can put in the figures that they give me
2) How their business works (supply chain from manufacture to delivery)
3) Consider Business risks facing the client
4) Understand the ownership and identify related parties
5) Get a grasp of the day to day operations of the business and how and when transactions are recorded
6) Consider Industry specific issues that may face the client
7) Look at the regulatory environment specific to the clients business
8) Consider the entities internal controls and information systems and consider whether such prevent issues from occuring
9) How is the business financed
10) What is the businesses financial performance like compared to its own history and to comparable businesses
11) How is the business structured? What is the operating form?
12) What are the businesses objectives?
13) Is there any pending litigation against the business?
14) what is their attitude towards making payment to suppliers (immediate/30 days/when goes to court! (avoid those ones!!!))

There are other factors that I am looking for but that gives the general reasoning behind why I think that almost always going back one period is advantageous as to me it seems the only way to properly understand the clients business.

Of course, at worst my clients tend to have no more thasn a few hundred transactions per year. if they had thousands of small transactions I would not be so happy about adopting that approach

Anyway, thats just my approach and others have different ones.

kind regards,

Shaun.

One has to wonder then if he realises that he is making mistakes?

I think that there will always be issues between two accountancy firms or two bookkeeping practices in that nobody does things in exactly the same way unless they have acquired their skills under the same mentor.

I know that I very often end up having to break down bank entries in the reconcilliation which would give other book-keepers nightmares over such not being a straight ticking excercise.

The key is though that regardless as to whether we agree with each others approaches we know that we are doing it correctly and doing a good job for our clients.

Where it crosses the line is where a bookkeeper starts making figures up to make things balance or just using figures because they are a similar amount to what they are looking for, or even missing figures because they do not fit.

In such instances I would be surely tempted to report the bookkeeper concerned to their professional body for gross negligence.

You would hope that in such instances the reporting would result in at least enforced retraining or review of the quality of the practicioners ongoing CPD but somehow I feel that action is not taken as often as it should be against sub standard practices.

And of course there are a good many out there who have no professional body to report them to.