Keeping disastrous accounts

Keeping disastrous accounts

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HI

Please can anyone help?.....  I have inherited a sage account that is completely wrong.  For instance the bank account balance is at £690K  when it should be 20K.  Is there anyway to correct these figures without it effecting the profit & loss, VAT etc? 

The Sage account is a few years old and the owner has attempted to do the book keeping but has failed dramatically!  Hence the reason It has been passed to me.

I really do not want to start a new Sage and if possible just adjust the incorrect bank balances.

Thanks in advance for any advice given

Replies (12)

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By Sandnickel
27th Apr 2015 15:21

Start from the last accounts

If you construct the balance sheet from the last filed accounts then in theory the "balance" will be the profit & loss b/fwd. Your current p&l will not be affected. If there are any errors in this year then it will have to affect your p&l as logically these will also be incorrect.

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Man of Kent
By Kent accountant
27th Apr 2015 17:07

Back to basics

You should start with reconciling the bank account.

From your limited description it doesn't sound like this has been done.

No affect on the P&L - are you dreaming? 

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By Onion4Sage
27th Apr 2015 18:00

If the basic bookkeeping is OK
Jennymegan, I'm not sure if you're saying the bookkeeping is in a mess (i.e the transactions recorded are incomplete/wrong) or that Sage balances are out of kilter with the underlying transactions.  If it is the latter, I have an Excel spreadsheet that I've used to troubleshoot these sorts of problems before. It extracts the nominal ledger totals and the transactions, and then compares the totals from both sources. If you'd like a copy send me a message together with what version of Sage you're using so I can set it up to use your ODBC driver to get the data.

Regards, 
 

Ian

Ian Brown FCA
Onion Reporting Software Ltd

www.onionrs.co.uk

Comprehensive Sage reporting packs in Excel to go. No set-up necessary.

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By ChrisScullard
27th Apr 2015 18:18

KA has it right.  If the bank

KA has it right.  If the bank is out by £670k it's more than likely that the P&L will require some adjustment (how much depends on why the bank is out).

I find it unlikely that if this is the case that the VAT returns will be correct either.

Best starting point is to do a bank rec at the last balance sheet date.  As part of this make whatever other adjustments are necessary.  Once done 'force' the other balance sheet accounts to be correct (or whatever you deem to be as good as you can get it).  P&L difference falls out.

Depending on the size of the P&L difference you make a call on whether prior year accounts need re-doing.

After this make sure current year transactions are recorded correctly.

This is not likely to be a 10 minute job......

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By petersaxton
27th Apr 2015 19:11

Excel

If the accounts have been absolute nonsense for years I would use Excel to compare Sage to the bank account going back as far as necessary. You can export Sage to csv and you can sometimes download the bank transactions using online banking - some banks think the last three months is acceptable!

If you have all transactions in Excel it is easy to compare transactions and move them to a reconciled area of the spreadsheet and be left with unreconciled transactions.

I would expect that there's a lot more work needed on the other nominal accounts and not just the bank.

 

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By jennymegan
28th Apr 2015 11:30

Thanks for all the info.  The

Thanks for all the info.  The Sage had been run for 6 years and I believe not all the expenses have been entered out of the bank account.  As its soon the year end I think I might try and start from scratch.  Thanks so much

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By richardterhorst
29th Apr 2015 13:52

Don't fix, start fresh.

Been there done it. More than once.

You will be getting a rod for your own back if you try and correct Sage. Best is to take knowns;

Bank balanceDebtorsCreditors

Reconcile them to a date. Obtain fixed assets from purchases (That usually is correctly captured) and do journals into Sage. Look at last years AFS's and submissions and see the differences that stand out. If material journal to directors accounts if you cannot allocate but check you are not creating a false credit balance. The retained income will be the net results.

Worms will likely surface over the next 2 years and just deal with it as it arises.

I have no sympathy in that situation with the director ending up with a debit loan balance. Come now 6 years and bank out by £670,000!!

You then grapple with prior submissions made to CH and HMRC. Good luck with that.

My advise document everything and keep the client closely informed of all the [***]-ups you are fixing and the implications with CH and HMRC.

I agree with other posters. This will be a long job and I would suggest at your top rate.

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By petersaxton
29th Apr 2015 14:24

Forget sage

use an extended trial balance and bank analysis on excel

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By The Minion
29th Apr 2015 14:40

Had this

We took over a client from another accountant and they had done the bookkeeping for them, and not reconciled anything for about four years.

They had however managed to produce accounts for those years, but never done year end closedown.

We tried to figure out what happened and eventually told the client to do a year end close and not bring any balances forward for the last year where accounts had been done up to. Then re input everything for the open year.

They refused, changed accountants and the new accountants then charged them to re input - because it was a really complex operation apparently :) :)

The new accountants then blamed us and reported us to professional body because we had not done the bookkeeping properly for the previous four years and we hadn't been any where near the records!

The only way to do it is do it properly again and charge them.

Peter is probably right just to blast it into Excel to get it up to date with a trail.

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By WongR
29th Apr 2015 16:52

Use TB movement

I've encountered something like this before - 

My approach would really depend on how many entries we are dealing with ie size of the company in terms of number of transactions:

- generate the sage TB at last financial year end 

- generate the sage TB at this financial year end 

Add on the movement onto the opening trial balances - generated from the last set of submitted accounts (using excel)

 

Compare the bank, cash balance and assets of this new adjusted trial balance to that of the physical books and records.

 

If differences are not so bad - attempt a reconciliation

If differences are very big, and there are not a huge number of transaction, consider starting from scratch but as many state - don't use sage - excel is your best bet.

 

I would speak to the client, if prior year accounts look like they need changing as you will obviously need to charge more for this.

 

Going forward, start afresh in sage and teach the client to the job properly.

 

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pic
By jndavs
29th Apr 2015 17:45

Sage reset
You can reset Sage with out reinstalling by deleting the contents of the ACCDATA folder (or rename it). The New Company wizard will run next time Sage is opened.

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By petersaxton
29th Apr 2015 18:40

and remember

some people are incapable of learning anything!

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