A client sent me a list of assets which he want's to capitalise and increase his loan account by £5k.
When I asked for invoices or receipts he said that he didn't keep any and when I asked if we could verify these amounts from his individual bank statement he said he couldn't supply the details as mostly cash transactions.(not sure I would pay £800 cash for a computer).
My reaction is not to capitalise these items as he can't prove the purchase but if the assets could be physically identified and valued would that be enough justification to capitalise these items. Would physical v no receipts / proof of purchase be enough to capitalise.
Thanks
Replies (4)
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Letter of Representation issue
Ask the client to give a written itemised undertaking as to the nature and value of the assets. The suggestion that they should be credited to DLA seems to imply an attempt to reduce an overdrawn DLA. Fair enough but should the company go bump an Insolvency Practionier will review the DLA for 24mths and ask him/her to justify the statement. Get something in writing to cover yourself.
DLA is in credit
The suggestion that they should be credited to DLA seems to imply an attempt to reduce an overdrawn DLA.
OP said the entry to introduce the assets would increase the balance on the DLA, so it must already be in credit.