Closing balance Income/Expenditure sheet

Closing balance Income/Expenditure sheet

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Good evening

I've been tasked with typing a charity's income & expenditure sheet for year end 2014 while casting my beady eye on the figures.

At the bottom, it shows receipts and payments represented by

Opening Balance and a Closing Balance

I take this to be the balance of bank accounts, which when I checked through prior year bank statements, the opening balance (yr end 2012) is correct.

However the closing balance for 2013 is way out (as in £82,000) out. Am I missing the point here? And if these figures do relate to the bank balances, should I type the wrong opening balance or the true balance?

Thanks in advance

Pauline

Replies (11)

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By tom123
18th Jan 2015 20:52

Are there other assets?

The income and expenditure account should reveal an increase in cash generated during the year.

If the only asset the charity has is the bank balance, then one would expect the bank balance to have risen by this amount.

When you say the opening balance was £82,000 out - is this just by comparing the reported balance to the statement?

If you work forward from the reported balance, with the income and expenditure added on - do you reach the closing bank balance.

I am wondering if there were uncleared amounts at the start of the year. Did you receive a large grant by cheque from a funder at the start of the year for example?

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Replying to Tax Dragon:
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By Preppie
18th Jan 2015 21:22

Thanks for replying

I printed off the financial report as was filed which shows opening balance for 2013 which tallies with bank statements

I've added filed figures for income, less payments, and closing balance filed is £80k less than actually in the bank. There is no provision for assets (I'm assuming the odd bit of furniture was included in premises expenses. The first funding received was 2 months after year end. The receipts for year end 2013 agree with bank statement.

I keep re-calculating it thinking I must be a pumpkin head, but if opening balance was £154118, receipts were £155649 and payments were £111374, (surplus of £44275) shouldn't closing balance should be £198393 or thereabouts? The bank total for yr/end 2013 does actually total £191784 but that could be wages which I can't cross check.

Confused and going round in circles. Hoping for that Geronimo moment

 

 

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By johngroganjga
18th Jan 2015 21:03

Bank reconciliation
You need to look at the bank reconciliation. It is quite normal for the cash book balance to differ from the bank statement, and the bank reconciliatiin is where the reasons for the differences are explained. Until you have seen the bank reconciliation you have no idea whether there is a problem or not.

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Replying to Accountant A:
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By Preppie
18th Jan 2015 21:45

bank rec

Thanks John, the accounts for year end 2013 were prepared by someone who no longer does the accounts for this charity.

For year end 2014 I have hand written recording detailing all transactions into and out of account, all clearly listed for me to categorise for the financial report. The person who keeps records, totals bank balance per transaction and she's spot on. When I saw the 2012 closing/2013 opening balance it agreed with the bank account as at 31st August 2012. It threw me when the 2013 closing/2014 balance differed. If I use the filed closing balance for 2013, it won't reflect the correct closing balance for 2014.

The hand written book balances agree with the bank for years ending 2012/13/14 so I'm assuming the error is in the 2013 closing balance.

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By tom123
18th Jan 2015 21:39

John manages to be more concise

As usual, John manages to be more concise than my 'stream of consciousness' style of reply :)

How are the accounts maintained - in proper software, or on spreadsheets?

Have double entry principles been followed?

Is there a Trial Balance that sums to zero.

Have you looked for obvious things like transposition errors?

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By Preppie
18th Jan 2015 21:55

Tom you're not alone in style of reply

When I re-read my posts even I can't understand them.

What I'm trying to say is the lady who keeps hand written records of money in and out is spot on. But the person who did their accounts has either mis-filed the closing balance or knows something I don't.

What is the best way to correct this? Type in revised opening balance?

 

 

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By tom123
18th Jan 2015 22:16

You should get further assistance

If the difference is not immediately presenting itself, then you really should try and get another pair of eyes to look. The amount you have talked about is large by any standards. Do you have any trustees you could involve who have a financial background. This is more than just a bit of miscasting of floats etc and needs a fully signed off check.

(I speak as a charity trustee for a charity that suffered a misappropriation before I joined)

Hope things get sorted to your satisfaction.

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By TerryD
19th Jan 2015 12:29

You need to check all the entries on the bank statement against the hand-written records. Is there another bank account, such as a deposit account (and if not, why not, with that amount of money swilling around)?

As an aside, I recommend you read the Charity Commission's guidance on Receipts and Payments Accounts That is what you are preparing, it's NOT an Income & Expenditure Account. That's something completely different. It's booklet CC16, I think. You can get it from their excellent website.

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By Alan Davies
19th Jan 2015 13:01

SOFA

If its a charity won't you be using a SOFA type format where the balances at the end represent the charitiable reserves?

I've only ever been involved in larger charities and tried to avoid all the Charity SORP that wasn't relevant to me so this may be incorrect!

The charity commission website is proabably the way forward though as its actually pretty useful.

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By TerryD
19th Jan 2015 13:07

Under £250,000 income

Under £250,000 income charities can opt for Receipts & Payments Account plus Statement of assets and some Notes. And a Trustees' Report, of course.

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By Preppie
19th Jan 2015 13:35

Thank you all

Many thanks for your replies. I will be in touch with the treasurer today.

Somehow I think this might have been, as Tom suggested, a transposition error, where closing balance entered 10 instead of 19.

Thank you again

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