Client does bookkeeping - What should I be checking? - The Book-keepers Forum (UK)

Leger · Master Book-keeper

Client does bookkeeping - What should I be checking?

Shamus · Forum Moderator & Expert

Leger wrote:
If client has done their own bookkeeping should I just ask for receipts for anything that stands out or at random?
I recall when I first got thrown into bookkeeping the accountant would come in at the end of the year and spend a couple of hours just checking a few items.
The main one I do the bank reconciliation, VAT on a monthly basis and the year end accounts at the premises so I can check anything I need to whist I'm there.

That may be because the accountant knows that its in their terms and conditions that the responsibiity for the books and records lies with the client. Also remember that the accountant may be looking only at things that are material to the accountsrather than looking at every transaction.

Used to be a real bone of contention on here with the friendly battles between Rob and myself where I dot every i and cross every t where he was quite happy with there or there abouts.

In my experience clients are generally incompetent at doing their own bookkeeping.

Errors. ommissions and transpositions are one side of the coin. Not understanding what should and should not be put through the books the other. It drove me up the wall with clients that when they came to me with their books "done" I knew that it would take me an age, that half the documentation would be missing, and worst of all they would think that I was goiing through everything with a fine toothcomb just to up my hourly's. But I for one willl not put my name to something that I do not feel is factually correct.

In addition, your client will be under the impression that you represent HMRC and if they get soemthing p0ast you then they are home and dry... We are looked at as the enemy rather than the one's trying to save them from thermselves. But of course, if anything does go wrong then it's all our fault, not theirs. And thats the line they will happiuly take in an inspection.

So, basically I check everything but I understand in principle the time / profit motivation of those who don't as we are businesses, not charities and doing the job properly costs much more than smaller entities are willint to pay.

All the best John,

Shaun.

Leger · Master Book-keeper

Shamus wrote:
So, basically I check everything but I understand in principle the time / profit motivation of those who don't as we are businesses, not charities and doing the job properly costs much more than smaller entities are willint to pay.
All the best John,
Shaun.

Thanks for your post Shaun, some insightful advice there that I will take on board. Thankfully I only have two that I don't do the bookkeeping for, but if you're checking everything aren't you more or less doing the bookkeeping again? I thought the idea was a bookkeeper in it's truest form did up to trial balance and an accountant took over from there. Obviously at the micro business end the two roles combine and, like most small business practitioners, I'm a one stop shop

And I don't think it's so much what small businesses are willing to pay, but what they can afford to pay.

Rachel19 · Veteran Member

If the client does all the bookkeeping up to TB, then I tend to treat it like a mini audit.

I'll reconcile, or check the client's reconciliations, of all the balance sheet balances including checking depreciation. I then normally flick through the P&L, looking for anything "funky", paying special attention to things like repairs, sundries, travel and motor expenses. After that I'll check against the prior years to see if anything looks odd, or the gross profit margin has gone weird or anything like that. Oh and I usually double check the accounts against the payroll records to make sure they match.

Like you say, clients often can't afford to pay a lot, so I've found that they prefer a one stop shop,as they're effectively getting accounts standard bookkeeping which usually works out a little cheaper.

Cheshire · Master Book-keeper

Agree with the mini audit comment.

If the client has done their own bookkeeping, check everything. You will most likely find wrong allocations. Ok maybe not wrong for them, they can shove expenses in whatever pot they like, but you will most likely report them differently for the signed off Accounts and tax purposes.

Plus that way you will be able to properly ascertain the accruals and prepayments situation.

Most often all sorts of bits end up in the wrong financial year. Reconciliations of all the control accounts a must, plus to HMRC/pension/supplier statements etc. ## Check creditor and debtor schedules actually match the TB (you would be surprised!!). Check bank recs. Plus what the others say.

If they use a bookkeeper, check all year one. If clearly competent, you could probably go for spot checking but still do the control accounts reconciliations year two onwards.

Also check opening TB on their software agrees with your closing TB (highlights if anyone has bunged something in prior year in error) and grab the bank statement for at least a month afterwards for any shenanigans.

Basically trust no one!! Lol

If clients cannot afford it....then can sod orf elsewhere.

##I have a bookkeeping only job and new one to software. Accountant (not one I've worked with before) provided Opening TB. What a bag of cack. Clearly of the there or thereabouts type. Closing supplier balance taken from supplier statement without taking due regard for payment on last day of financial year for client which supplier didn't show on their statement until 1st day of next period. They took clients bank from his bank statement. So now supplier account is out and nowhere to put the balance!!!!! (Just one eg!!)

Leger · Master Book-keeper

Thanks Joanne and Rachel. Pretty much do most of that when checking my main one, but see that as part of the "accountant" side anyway. Some helpful pointers though, especially the TB.

It's the checking everything bit, does that mean I go through every receipt to make sure it's allocated correctly and the amount is right, or running my eye through the categories to see if anything is out of place? I do the latter now, but not the former. (1) (My client inputs cash sales, purchases, invoices and receipts, and the bank payments when paying a supplier and I do the credit card rec, bank rec and the year end stuff) It's easy for me to spot a wrong allocation or summat out of synch, as I know the business well, but that wouldn't be the case on something less well known.

(1) Having said that, I'm on the premises anyway, so can access every receipt I want to

My thinking behind this, is I want to do more of the "accountancy" stuff, which I enjoy. (and is more lucrative) Still keeping the bookkeeping, as I want to pass on more of the data entry stuff (which I hate) to my data entry lady anyway.

How much time do you factor in, or would it vary from client to client?

Rachel19 · Veteran Member

The time taken completely depends on the skill and effort of the "bookkeeper". For some, everything will be fully completed and reconciled, right down to prepayments and accruals, whereas some won't even have reconciled the bank!

Cheshire · Master Book-keeper

Agree with Rachel. I would have a check of the purchase invoices and check allocations,notably that the VAT reclaim is correct and for dates (spanning 2 financial years, to pick up any prepayment issues etc). The 'mini audit' is about right IMO.