I have taken over the bookkeeping for a small Ltd Co - Director & two employees. Previously, there was no bookkeeper - the director collated all of the financial information on spreadsheets sometimes backed up by receipts but not necessarily. He would then pass everything to his accountant to prepare annual accounts.
Now I've taken over and am insisting on receipts for everything. He tends to draw a small amount of cash from the company each month (c£75) for parking, taxi fares, office supplies etc. I have been posting this to a petty cash account. He provides me with a sheet each month listing roughly what the cash was used for and with some receipts. When there is a receipt - fine. But the sheet may say for example 'stationery/tea/coffee for office £20.00' with no receipts. It appears that previously his accountant would just take this at face value and put it through the company. Am I being too picky by not doing so? Can I rely on the sheet as his 'certification' that the cash is being used for business related purposes? (incidentally - I do think he is genuinely spending the cash on business expenses). We aren't talking about massive sums here - there is only about £100 discrepancy over the full year ie cash drawn not covered by receipts which makes me think I'm making a fuss about nothing!
Any advice how to handle this would be much appreciated!
the main thing that clients do not appreciate is that our main role is attempting to protect them from themselves.
We know what will happen when HMRC comes a knocking.
Conversely they are expecting that minor amounts won't even be picked up on.
I've had the chat sooo many times with clients that it's not simply a matter of pay the tax and a bit of interest if they can't prove something. It's interest, penalties and surcharges that can make the real debt absolutely insignificant in comparrison.
I am however coming around to the idea that some clients will not learn until it actually happens to them.
kind regards,
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 - having lurked on the forum for a while I think I read somewhere that you are an ex-banker. So am I. I think 'pickiness' is in our nature!!
We're a growing contingent (reflection there methinks of all the back office banking jobs now being in India!).
I still take the occassional contract in that world but decent roles seem to be becoming few and far between.
Don't know if you've ever used the service but over the counter pre packed foreign currency for NatWest and RBS was one of my babies.
Most of my others (including for other banks as well) are things that the public never see's but keep things running smoothly (#1).
Jo (Cheshire) is another ex banker on here.
All the best,
Shaun.
#1 and before anyone mentions the problems with RBS and NatWest systems I just want to say that they didn't happen on my watch!
__________________
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.
Also consider that the accountant is preparing the accounts "In accordance with your instructions, we have compiled these unaudited accounts from the accounting records and information and explanations supplied to us."
Or similar wording, which means that the accountant is taking the bookkeeping at face value.
As the bookkeeper, you are in a different position, which places the burden of responsibility for the accuracy of the bookkeeping at your door
And this is exactly what I worry about in my job. All I can really do is put things into drawings when I'm unsure or there is no evidence and make a note to the accountant as to why, if he thinks it should be moved then he is free to move it, and this is the advice I would offer (albeit not necessarily the right way :) ).
Have you considered getting him to sign a letter of representation, which states (in much better words) that he has heard your advice but decided that he wants to take the risk of having no receipts?
the main thing that clients do not appreciate is that our main role is attempting to protect them from themselves.
We know what will happen when HMRC comes a knocking.
Conversely they are expecting that minor amounts won't even be picked up on.
I've had the chat sooo many times with clients that it's not simply a matter of pay the tax and a bit of interest if they can't prove something. It's interest, penalties and surcharges that can make the real debt absolutely insignificant in comparrison.
I am however coming around to the idea that some clients will not learn until it actually happens to them.
kind regards,
Shaun.
Ditto!! Just had this issue (and several rows) with one client.
Hello Clare - to an ex banker, from an ex banker. I used to be proud of it, now I tend to hide although I foresaw the RBS probs back when they took over NatWest in 2000 cos Fred the Shred came across like a lune! Anyway - Im was a NatWesty for 28 1/2 years, mostly in Corporate Banking - how about you?
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Thanks for all the responses. I've spoken to the client again and we have agreed that going forwards any cash payments not covered by receipt will go to his director's loan account although to be fair he is now far better at keeping receipts so it doesn't arise too often. Also, he will sign all of his petty cash record sheets as confirmation that any previous unreceipted payments were business related expenses. Think I will just leave it there.
Hi Jo - I was HSBC for 18 years. Then I jumped ship to join the Clydesdale Bank business banking revolution in 2005. It was great in the early years but then the cracks started to show when the economy took a downturn and it ended up a massive car crash lurching from one disaster to another!! Clydesdale retreated from the south of England where I am based and my office and all of those locally closed and we were all made redundant. Some of my colleagues joined other banks but I decided to see it as an opportunity to escape an industry that I'd come to dislike intensely and here I am. Much poorer but much happier!!!
Some of my colleagues joined other banks but I decided to see it as an opportunity to escape an industry that I'd come to dislike intensely and here I am. Much poorer but much happier!!!
Sounds very familiar. No way could I go back to it and often wonder how I lasted as long as I did after 2000, but before that it was a great job and career.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
my eldest boy got a job in banking (after me completely changing his CV to one that I might actually read) and it very quickly went from helping customers to filling sales quota's (I won't mention which bank).
He's now a recruitement consultant and he considers that a more honest career path!!!
Being back office I was never hit with that sort of change, my issue was in seeing the people who if you lopped their heads off would have the banks name written all the way through them like a stick of blackpool rock pushed out of the door to be replaced by cheap offshore resources that didn't have a clue about how the banks systems and interactions between the systems actually worked.
The arguement (from those with bonuses riding on cost reduction) was often that they could get three to five Indian workers for the price of one UK staff member... Sure that you could get twenty telephone sanitisers for the cost of one chartered accountant but lets see which would be better at putting together a set of accounts and tax return.
I have absolutely no sympathy for the banks when things now go wrong with their IT systems.... You get what you pay for.
__________________
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.
