transactions after account have been closed

transactions after account have been closed

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i joined this organisation last month and this is what i noticed

1. some reciepts and bankingslips where not posted since march 2014 and bank reconciliation was not done since march 2014 my question is how can i do my bank reconciliation correctly becouse management accounts have been closed and sent to the directors?

question 2  should i post this 2014 banking slips and reciepts current year, month and date?

Replies (9)

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Routemaster image
By tom123
04th Jul 2015 16:07

Basic accounting here

This is covered by the basic principals of accounting, accruals, prepayments etc.

Do you really mean 2014, when we are in July 2015. If so, how has the business run without a bank rec for so long?

When you first join somewhere it can be difficult to know what things to look for when posting accruals - especially if your software cannot offer you any assistance. Once you get a feel for the recurring charges, you will know which items occur every month, and therefore need an accrual if no invoice has been posted.

If the items are not material, then I would just carry on with the current months, and, if required, be prepared to add a file note with the next months report pack.

If your system is date based, rather than period based, be careful about posting transactions received after month end with a date in the prior month.

If the item is significant, then you could consider informing the directors now, and also see if the software prior periods can be re-opened.

All matters of judgement really.

Thanks (1)
Replying to carnmores:
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By jomoding
04th Jul 2015 16:56

thanks alot tom123

yap the system is date based.

and now  am trying really to figure out how to post this transactions which occured last year  but where not posted in the system this month(july 2015) because they are dated prior month and prior year and yet we are in july 2015.

just of recent the organisation is planning to change the accouting system and we need to up date every thing and make sure its in the right position

the other question is. Do i need to start bank rec from march 2014 to date??

am also scared if i reverse any wrong posting from last year it will affect prior year financial statements already signed off forexample some of the accruals where actually posted in prepayments.

 

please advice mostly on these prior year transactions after accounts have been closed

 

thanks alot in advance

 

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By petersaxton
04th Jul 2015 17:43

Accountant in charge

Is there an accountant responsible for all financial matters you can talk to?

If it's you then you should talk to the directors and explain what controls have not been used for 15 months.

I would suggest that trying to mess around isn't a good idea and you should try to do things properly. You haven't said when the year end is or what accounting system you are using or if they have decided on the new system. I don't know whether there's any external accountants.

Effectively, you have said: "Things are wrong. What should I do?"

Thanks (1)
Routemaster image
By tom123
04th Jul 2015 23:01

This sounds quite bad

I agree with Peter, as you confirmed the events were March 2014 not March 2015. You have just started, so none on your watch. Therefore give a summary to the directors and get guidance.

That way, you will know the way forward. I wouldn't put a new system in place until this is sorted. I guess, as you haven't had a bank rec for so long, the business is fairly small?

You may need to engage external support to put this all right, rather than get out of your depth.

Thanks (1)
RLI
By lionofludesch
05th Jul 2015 10:49

Too soon

Surely this is a fault in your system that you need to resolve internally.

The problem is that you're closing off the accounts before you've entered up all the transactions. These are only management accounts, so there's no legal problem. But you need to decide whether speed is more important than accuracy.

Only the users of the accounts can decide that.  If they go for speed, they'll have to accept that accuracy may be an issue.

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Replying to indomitable:
Routemaster image
By tom123
05th Jul 2015 12:15

Agree about the compromise

lionofludesch wrote:

Surely this is a fault in your system that you need to resolve internally.

The problem is that you're closing off the accounts before you've entered up all the transactions. These are only management accounts, so there's no legal problem. But you need to decide whether speed is more important than accuracy.

Only the users of the accounts can decide that.  If they go for speed, they'll have to accept that accuracy may be an issue.

I quite agree about the compromise between accuracy and speed - however I think there could also be an issue with a previous financial year end - 

Thanks (1)
By petersaxton
05th Jul 2015 12:37

Yes, there was a year end

It would make sense if they worked out what the correct accounts should be at the year end and post the corrections required at the start of the new year.

We still don't know what software they are using so we don't know what entries are possible.

Thanks (1)
By petersaxton
05th Jul 2015 15:28

Year end

Have the year end accounts been submitted to HMRC and tax return been submitted to HMRC?

If not I would make all the corrections needed.

If they have been submitted you can always amend if the differences are material.

Thanks (1)
RLI
By lionofludesch
05th Jul 2015 21:13

Indeed

I read this as a management accounts issue but if this is about final accounts, I agree with Peter.  If the adjustments have a material effect on profit and not, for example, some cosmetic adjustment such as more cash, less debtors, then it should be reported as an amendment to HMRC.

 

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