AND IS IT YOUR ACCOUNTANT’S FAULT?
We all know that if you are trying to run your own business and do everything that sometimes the accounting records fall below the required standard. But when you pay a professional, either an accountant or a bookkeeper, to look after your books of account you expect better. How I wish that was always the case.
I have seen instances where businesses have relied on bookkeepers and accountants to keep their Cloud or desktop accounts packages up to date and correct but the fees they have been charged have been a waste a money.
The worse Cloud examples have been on KashFlow, which is probably due to their system being too complicated with the accountants and bookkeepers not really understanding it all. However even on Xero I have seen mistakes. I have also witnessed similar errors on desktop accounting packages like Sage.
These are all genuine examples:
Ignoring the accounts package.
The year end accounts should reflect your accounts package but some accountants forget to put the year end adjustments and journals on to the clients’ accounts. This means that every year the accounts package and the financial statements grow further apart and have little in common. If you run a balance sheet report at your last completed year end does your retained profit figure agree to the year end accounts? If it doesn’t your accountants are not looking after you.
Year end routine.
Every accounts package has a year end routine to run so that it knows the old year’s accounts have been finished. This can be as simple as entering a date or a tick on your accounts package or like KashFlow it can involve running their year end adjustment, which bizarrely is found in reports and not in journals. I could tell you about 2 companies, both of whom used KashFlow, where the previous accountant or bookkeeper had no idea about the year end routine and at any point the client could have entered an old item in a year that had been finished but the accounts package had not closed down.
Setting-up your accounts package
There is one bookkeeper whose work I have seen where they did not realise they were acting for a limited company but had set up Xero for a sole trader. This meant they treated a number of items incorrectly: Directors’ loans are not the same as Owner’s drawings, a personal car cannot be treated as an asset of the business, where was the share capital etc?
Have they done what they said?
I have had an argument with one sacked freelance bookkeeper who was adamant she had filed the client’s VAT returns, despite the fact that HMRC were still showing them as unfiled and we ended up filing them. This was one of many errors that bookkeeper made, but she was always so convincing in arguing her case that she had done everything. I do not mind giving people the benefit of the doubt but once they start to lie it is time to replace them.
Does the bank account balance?
Generally if the bookkeeper or accountant has a bank account balance that agrees to the bank statement you know there should not be too many problems. But if they cannot justifiably get your bank account to balance you should replace them. One bookkeeper, who had not been helped by the accountant, managed to have 3 different bank account balances in various sections of KashFlow!
So to summarise: if you want accurate accounting records that tie in with your year end accounts do not simply get any accountant or bookkeeper to look after them. Make sure they have experience in that accounts package and keep checking up on their work. We offer a review service when we can look at your accounts and report back to you about the quality of the work: please use the contact us page to get in touch with us to discuss this further. For more information on cloud accounting, check out our blog post here.
And if your accounts are a mess then you need to do something about it now. It will require an investment to sort it out but the cost of doing nothing will be more. Again please use the contact us page and let’s have a conversation about it. We are here to support you and improve things for your business.