I have recently started book keeping for a company, registered as a partnership. I was going to log year end 16/17 when I ran the trial balance, balance sheet and profit and loss before submitting. On the balance sheet, the totals balance but figures are off. It seems there is a balance brought forward from last year, for instance under director loans the figure is 157,000 plus, but the actual figures is in 3,000. Is there a way to clear the balances to give a true reflection of 16/17.
The reason for the balances may be the person doing the book keeping previously would pop on invoices but pay them by bank payment not pay the actual invoice and so forth.
Can I clear all balances from 15/16 and before so it show a true representation of the books?
Hi Fiona
Before we start can we have a quick into-we usually ask newbies.
What prof body, what qualifications do you have, what exams currently doing/where up to with studies, do you just work for this one company as s/e or employee, what did you do before this, where based? Etc. That sort of thing. Helps to get to know you and pitch answers.
Also, do you normally stop at TB? Who has done the final accounts and tax returns for this client? Also, given the comment you make about the invoices, how is this being sorted within the software so the bank is correct, as well as the trade debtors, before the year end is run?
Just to clarify you mention the words company partnership and directors loans....what is the exact legal status status of this one?
Not sure what you mean by 'log' the year end....can you expand.
What has happened to bring the balance on the dla down so much (I can hazard a guess, but better to have fact)
You mention sage, but at the moment I don't think this is a software specific issue, more an Accounting one, but if you need help with the sage specifics then it's also worth mentioning the type of sage as well as the version.
__________________
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
What prof body, what qualifications do you have, what exams currently doing/where up to with studies, do you just work for this one company as s/e or employee, what did you do before this, where based? Etc. That sort of thing. Helps to get to know you and pitch answers.
As part of my previous job I did the books for the same company that I am asking the question about now for 3 years. I left there in 2014. I fell into the role, started with issuing invocies etc to entering all transactions for the book keeper to come and run the tax returns / year end, to me doing the tax returns and now obviously year end. I am self taught but I am currently doing Accounts and Book Keeping 1 with the intention of doing AAT level 1. My old boss asked would I take up doing the books again (self employed) as the person that filled my place has left and didn't have great knowledge of doing the books so they are a bit messy. It is a small company based in south wales.
Also, do you normally stop at TB? Who has done the final accounts and tax returns for this client? Also, given the comment you make about the invoices, how is this being sorted within the software so the bank is correct, as well as the trade debtors, before the year end is run?
I've never submitted year end before so I was printing out the reports for my boss before I submitted year end and sent the accounts to the accountants. I do the tax returns every quarter. The advise I have received about the outstanding invoices etc is to run year end and then enter the correct bank balance for 17/18. So that opening balances at the start of the year are all correct. I do not know what to do with the trade debtors, I would like to have all figures correct for the start of this year. No bank rec have been done for nearly 3 years, so I was hoping there is a way to have all bank balances, debtors and creditors correct as of April 17, without having to retrospectively correct everything. The accountants had been given all the information so presumably the HMRC has all the correct details but the software I am working off does not.
Just to clarify you mention the words company partnership and directors loans....what is the exact legal status status of this one?
I was informing readers that the company I do the accounts for is a partnership, directors loans was mentioned as this is this the nominal code (3101) that my boss noticed the figures were incorrect for the year
Not sure what you mean by 'log' the year end....can you expand.
Submit
What has happened to bring the balance on the dla down so much (I can hazard a guess, but better to have fact)
I don't know, i am presuming the number is from inaccuracies from other years. I really want just to be able to tell the company director the correct information from 16/17 without the previous years figures throwing them out.
You mention sage, but at the moment I don't think this is a software specific issue, more an Accounting one, but if you need help with the sage specifics then it's also worth mentioning the type of sage as well as the version.
I agree that it is an accountancy issue, the soft ware was mentioned as I notice it is given in some posts on other topics.
Thanks,
Fiona
-- Edited by Shamus on Saturday 24th of June 2017 10:52:54 AM
Hi Fiona Bit hard to pick out the bits youve answered as the colour seems to have gone on the 'quote' screen. It does that if you press delete of a word, but you can go back in and edit it/add it back via advanced editor.
Firstly re being self employed. I do hope you have MLR cover and PII insurance - if you havent stop all work NOW and get it in place, as its illegal to work without the former and madness to work without the latter (especially with a client like this one whose books are in a mess and he is expecting you to sort it out!!)
BUT you also need to consider - if this chap has previously employed you as staff and the previous bookkeeper as well, I wonder if he is trying to avoid PAYE tax and Ni by saying you are now self employed. Could be an issue and one you should be very careful of (IR35), especially if you havent got a good spread of clients and cannot meet the usual criteria for this not being seen as deemed employment. You do also refer to him as your boss. He is not your boss if you are self employed.
Secondly when folk refer to a company generally they are talking about an incorporated body ie a Limited company, so if your client is a sole trader or a partnership then you need to get away from using the word company and use the word business instead. Saves confusion.
Also if this is a normal partnership rather than a Limited company there will be no Directors Loans, they are drawings/current accounts. 3101 is not a Directors loan nominal code in sage. This should be in the 2300 range. Now obviously you dont need Directors loans and indeed the 3101 figure is in the Capital range, but clearly someone has been messing with sage as 3101 is normally undistributed reserves, but at least its in the right range of accounts! I suggest for clarity you change the 3101 nominal name to 'partners drawings' rather than DLA.
Next - the biggest issue. This sounds like a right old can of worms. What a mess!!
Accountants being given all the information does not mean they nor HMRC have the correct details. Accountants will only go off the information processed (#) so crap in means crap out! HMRC do not get the Accounts for partnerships. So it could well be that the Accounts and therefore tax is incorrect for the past few years.
# Accountants will only check the whole years information if they are undertaking an Audit (which is not necessary for small businesses/entities) or if they are very diligent in their work. Many are not. Some indeed just do spot checks. You really need to find out which kind of Accountants these are/what they have done before (and by speaking to them, not the business owner!)
If the Accountants have undertaken a FULL check of the work processed then they MUST input adjustments for the prior year end, so that you can ensure the debtors, creditors, VAT and Bank can be corrected/reconciled from the start of the year when you took over.
If they have not then you have a major issue.
I presume when you say you do the tax returns each quarter that you mean VAT returns. Is the VAT reconciled/checked in any way?
To start to sort this - you can easily check the balances on the supplier accounts in your sage versus all the suppliers by asking for up to date supplier statements from all of them as at the year end date (better still get a FULL activity list of all of their transactions with the business since inception or say the last two years and start a tick back, querying any you disagree with). You should then at least have correct supplier accounts and correct creditors control account. Check that the balance on the latter equals the total of all the suppliers account for the same period.
Next - you have to do the same with the debtors? But how can you check this? You have to go back through the bank and adjust all the bank payments that were keyed that shouldve been customer payments to start the process. Do you send customer statements out? Have you had many disputes? This needs sorting, because even if you just dump a load of opening balances in then these two control accounts will still be wrong.
Also - what would you use as your opening bank balance? You cannot use the actual Bank account balance from the Bank statement on the opening day of the year as the opening reconciliation has not been done so you dont actually know what should be included ie what o/s lodgements/cheques there are that shouldve been included in the prior years accounts.
Plus - you say you have no idea what the difference in the incorrectly called DLA between the figure in sage v £3k. Where has the £3k come from? You cannot make assumptions and just change a figure to suit Im afraid! You also cannot get the figure from the business owner - if its from the owners then its probably a false figure anyway. I do not know one signle owner who has someone else doing their books, or often even their own who would get this figure correct, given they put things through to the business which are not allowed and professionals will put it through to drawings so they are not breaking the law!! Their figures are always under estimated. Besides - where would you put the other half of the double entry if you dont know what it relates to?
Do NOT process anything before the start of the period you are working on (as the Accounts will have been , albeit may now be incorrect and may need re-working.)
Do NOT rollover the year end in sage, unless you have specific instructions to do so from the Accountants.
The reason I say this is because Accountants work in different ways. Some will do the year end adjustments on the last day of the year and some on the first, so it is crucial you check with them prior to doing so - always ask them when they do their adjustments and the best time to process the actual year end routine.
But I also wouldnt do any more until you have spoken to them and explained the total carnage of the sage input and asked for their view. If they are good Accountants they really should come and sit with you to see it for themselves before you go any further and provide some guidance as to how to correct it, or have a look at the sage back up/nominal reports etc first.
Besides - if they have not yet keyed the previous years adjustments (you indicate they havent given the ''innacuracies from other years''), then by you rolling the sage over means they CANNOT do those adjustments so they reflect properly in the new opening balances. So you will just have the same problem next time round.
Do not use the opening balances option as that just means items will dump into suspense and will also not solve the problem of unreconciled control/bank accounts. Remember this is not just about getting the right information from the start of this next financial year, but getting the right information for the financial year end just finished as well.
Hope Ive covered everything off at this stage/ Dont mean to frighten you, but seriously - get the Accountant in before it gets any worse and the guy takes action against you as his current advisor.
Who is the 'Accounts and Bookkeeping 1' course with, that you are currently studying?
-- Edited by Cheshire on Saturday 24th of June 2017 11:00:44 AM
__________________
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
Hi Fiona Bit hard to pick out the bits youve answered as the colour seems to have gone on the 'quote' screen. It does that if you press delete of a word, but you can go back in and edit it/add it back via advanced editor.
Sorted
__________________
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.
Hi Fiona Bit hard to pick out the bits youve answered as the colour seems to have gone on the 'quote' screen. It does that if you press delete of a word, but you can go back in and edit it/add it back via advanced editor.
Sorted
Thanks!
__________________
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 your reply and taking the time to write such a details answer. It'll take me a while to sit down with it to go through it and understand it.
It is a city and guilds course. I know that it won't help me too much with the mess the accounts are in at present but I'm wanting to start at the beginning and get a good basis of knowledge. I realise I am very out of my depth with this so I'm going to suggest that he gets someone qualified and experienced to look at the accounts as I don't think I can fully and clearly explain all the issues here.
I do thank you for your help.
