Taking over a letting agent client from a previous accountant, investigation of their balance sheet and working papers shows they have treated deposits received by my client (and subsequently paid into a Custodial Deposit Protection Scheme) as a bank account - ie a current asset in the balance sheet. There are no creditor balances in the accounts.
Review of the Ts an Cs of the scheme shows that DPS hold tenant deposit through tenancy and repay it when they leave the property - directly to the tenant.
I'm aware there are some discussions already on here regarding the correct accounting treatment - eg. Dr Asset, Cr Deposits refundable, netting off etc but I'm hoping someone might be able to shed any light as to why this would ever have been treated as an asset with no corresponding liability? Am I missing something?