For those of a certain age, accounts preparation started once a data backup had been received and the data restored to a desktop version of the software in the office. This was usually a once a year occurrence. If there were any errors, these were “adjusted” through the working papers. The client was supplied with a list of journal entries to put through to tie up his accounts with the final version from the accountant. Sometimes a special trip was necessary to make the postings as they did not understand them!
However, the cloud accounting – always on, always available, near “real time”, means that the data is visible 24/7/365 and not just once a year. Accounting is therefore also really not sufficient to do just once a year either. For the client, who had posted £20,000 to an expense code and then to see a journal – just a one-line entry – reanalysis – taking £10,000 out elsewhere does not really explain anything. Which lines of figures were included in the £10,000 re-analysed?
Posting adjusting journals was a pain – especially where it was not actually possible to journal into control accounts for instance. It required the use of dummy credit notes or dummy invoices to post to sales and purchase ledgers.
Nowadays, with “find and recode”, the original transactions can be moved, and purchase and sales invoices can be voided or amended as necessary.
It is contended that more than a “review” should be done, and in fact each time it is looked at, “interim workings” are needed. There is little point in identifying that the PAYE account is out by £917.22 at the end of September if nothing is done about it. The difference might be higher again at the end of December! Sort it out!
With annual accounts, it was not uncommon for the client to think he had made a handsome profit, and then we come along and post a huge depreciation figure and turn his profit into a loss. The use of integrated fixed asset software run monthly should avoid this shock.
There are some postings, mis-postings or omitted postings that crop up frequently. Just a few examples are listed below. They can be told or shown time and time again, but they crop up all the time!
Clients invariably post corporation tax payments to the corporation tax account and not the liability account.
Despite providing posting documents where the payroll is not integrated with the accounting software, the Employers Allowance journal does not get entered – the reason for the PAYE difference noted above.
Motor expenses posted to Motor Cars – asset account. They see the word “Motor” and accept the first one they come to.
Posting bankings as sales as soon as the money comes in rather than waiting for the bank feed and allocating the receipt against the sales invoice.
And the list could go on……
Some practices advocate “daily bookkeeping” – it won’t work for all, but surely there should be at least monthly or quarterly “interim workings”?
Do you agree? How frequently do you do bookkeeping or “interim workings” for clients? Is it systemised?