I have been asked to provide an independent examination for a local school PTA. I do independent audits for a lot of schools, but this one is different.
The treasurer has basically netted off all the income from an event against the expenses for that same event to give one figure as her profit. Isn't that wrong? I usually look at the expenses posted in the analysed cash book and the income as separate entries - this way those reading the financial statement can see if the profitable events require a large outlay - or if the events are regular it is easy to see why there may be changes to historical profits.
She has all the back up documents, so she's just adding up all the expenses and income, offsetting, and then recording the income once she pays it into the bank.
Should I let it go? Or advise that next year they should show the items as income and expense analysed separately.?
if you want to beat the client around the head with regulation (They've kept all of the documentation so avoid the urge of first wrapping said legislation around a brick), both section 2.37 of FRS105 and section 2.52 of FRS102 explicitly forbid the use of offsetting (I don't imagine that they are preparing accounts under IFRS but if they are that also has the same requirements embedded within IAS1, presentation of financial statements).
Good spot. Brownie points for you
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 - that's made me feel much happier. I think they may have just given the job to a lady who is 'good with numbers', and she means well. I'm glad I was on the right track - and will avoid the use of the brick!
A requirement for being a School PTA Treasurer - dont have a bleeding clue about what you are doing!
Or it seems that way to me.
I constantly have runs ins with said muppets who do this netting off process and all of said muppets seem to be on school PTAs/Governing bodies. Gawd help the children!!!!
__________________
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
