I received an e-mail enquiry from a heating and ventilating firm and I did as I often do and did a credit check. 'Imagine my surprise' when I see that their last set of submitted accounts didn't balance, so I cheekily sent a reply:
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bad joke alert
the last time I checked a heating and ventilation firm I found them to be full of hot air.
Shouldn't get through
I find it amazing how many sets of accounts I see that don't balance or are just plain incorrect. Particularly amusing are the ones where they have filed a set of 'full' accounts instead of abbreiviated, usually prepared on excel with decimal points etc.
Analysed - non balancing
That's how they're showing and they were submitted 2 months ago.
Yes, I've seen some bad one's, such as a Sage P&L and Balance Sheet with the small companies exemption disclosure typed on the bottom.
I had a new client
come to me with a problem that he couldn't get his accounts into the HMRC template and they worked last year so he didn't know what the problem was....
Well, last year's worked because he put a balancing figure in the P&L b/f. It was the first year of the company...
The accounts filed at Co House bore no resemblence to the set he'd typed in Excel with pence and all, which didn't balance at all. He had absolutely no concept of the fact that they didn't balance or that most figures were incorrect, such as including purchases as fixed assets and as an expense. He then added the depreciation on as income instead of deducting it, all as a separate section underneath the net profit line......
The icing on the cake is that he is training to be a Business Manager for one of the High Street Banks!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Excuse the amount of exclamation marks there but frankly the situation warranted it.
I agreed to do the current year on the condition that I'd re-do the previous year too. He now thinks the sun shines out of my posterior and he realises that he has a lot to learn.
auditors/ accountants
The news in the past 6 months will not lead to confidence in auditing and accounting firms .
Starting with PWC and Morgan Securities, then Tenon with errors in its own accounts, PWC auditing? Tenon's accounts and not discovering these errors.
Could it be that these firms have themselves grown too large to be properly controlled? Senior partners are doubtless fully capable, but cannot be expected to carry out every procedure. They have junior staff for the 'humdrum' tasks, but are juniors properly supervised?
One of my own experiences of this occurred when a major Glasgow retailer went into liquidation (I had previously told both the FD and the MD they were overtrading, but was ignored). The accountants moved in, and for the first 2 days there were 2 seniors and 4 juniors.
For weeks after that we had the 4 juniors, seniors appearing at only the final day.
The Big Five is now the Big Four, and I understand a threat to their dominance is on the horizon.
Companies House Quality Control
We had a sizeable client who decided on a DIY approach to filing its accounts.
From our previous knowledge, we could see that the balance sheet comprised receipts and payments and ignored opening balances. Most of the figures were minuses yet Companies House accepted them!
I guess the director must have signed with a black pen so the accounts must have been 'right'.
Companies House checking
On a slightly different tack we had set of group accounts rejected at CH because "You have not presented both a consolidated and a company profit and loss account. Please ensure that these are attached".
The accounts did include disclosure that the exemption had been taken. We re-submitted the same accounts and have heard nothing back The client has still not received the apology that we requested CH to send to him.
It can happen anywhere
Many years ago I was carrying out a cold review of the accounts of a very famous hotel. There had been a share issue in the year and I discovered that the share capital disclosure note had a fundamental error in it which was mathematically impossible. The accounts were in the process of being mass produced by the printers and when I pointed the error out to the audit manager he went ashy white.
No share capital at all...
I looked up the accounts on Companies House of a semi-rival who was exploring a partnership deal with us. Reasonably sizable; turnover in the high £100k.
Their limited company apparently had no share capital at all or any other kind of equity, which didn't exactly inspire me with confidence.
Accidents Will Happen / Waiting To Happen
Reminds me of the time I was called out to a local office supply company on the pretence of picking them up as a client. Before long the personal innuendo started to flow with rehearsed malice from the mouth of the MD interviewing me. I had already switched off by this time as the megalomaniac was treating me like I had come along to meet him for the job of 'office boy' or something. Anyway, having heard enough, I stood up, told him bluntly I was leaving and wasn't interested in the engagement, as this whole charade was obviously some kind of a wind up. Before he could pick himself off the canvas from that, I then delivered the knock out blow, that being his present ACCA Accountant had filed their full company accounts and report, (as they had a preference for), instead of abbreviated accounts at CH and did he know? No obviously! All this as the obvious discomfort spread around his face, like a man with a mouth full of wasps, at the sudden realisation that all his competitors and suppliers were giving his company's latest financials a good going over without him knowing it. Probably his Accountants did this 'accidentally on purpose' seeing as he was such an unpleasant person. Well I like to think so.