I hope someone can help me, I have a client who i have taken over from someone else, I can see there is a loan as the loan has a bank account of its own eg nim code 1210, the loan was for £25,000, I have a statement here saying the current balance is £33,811 therefor I am assuming that this extra bit is the interest which has not been included in the loan bank account.
I am struggling to think about how i go about incorporating that without changing the figures, it probably is very simple but I think too much time has been spent on this to rationalize this, can someone please advise?
Might your client have failed to record an interest expense of £8,811 in its accounts? Maybe over several years? If so, I think this would probably warrant a change to the figures.
I'd ask to see all the statements for the loan since it was taken out, analyse the movements and take it from there.
-- Edited by Onion4Sage on Thursday 26th of March 2015 12:11:17 PM
This seems unlikely to be just interest, are any repayments being made, as you the repayments should cover the interest and some capital and the balance should be decreasing. Has the client taken out an additional loan. As Ian says you need to look at all the statements, and if it is all interest make sure you get paid up front!
