Here I am once again, I was cut up in another messy case and I have had sleepless nights trying to unravel the mystery of the dreaded opening balances. This case was so challenging, that I handed in my towels, back to the previous accountant to sort out his mess!
Anyhow back to my last case with Ms Lia Bility
Evidence 1 Opening Balances
The accountants Messrs No Discount & Co had sent the adjusted trial balance for Ms Lia Bility to enter into sage, but this was buried under the paper work on her desk!
Ms Lia Bility with the help of the bookkeeping detective will enter the details into sage
Evidence 2 Sales Ledger balances
Ms Lia Bility had entered some of the receipts from the customers as bank receipts instead of customer receipts. So the sales figure were overstated and the debtors figures high as the receipts were not allocated against the customer accounts.
The bank receipts are to be reversed, and the receipts re allocated against the correct customer accounts
Evidence 3 - Purchase Ledger Balances
Ms Lia Bilty said that the previous temp had entered these transactions (really I thought, – a case of shifting the blame!) Again it was clear that the payments had been entered as bank payments which meant the purchases were overstated, and creditor’s figures remain high.
The bank payments are to be reversed and the payments reallocated correctly against the supplier’s accounts.
Yes, Yes, I was correct a case of “cooking the figures”
Using the error correction in Sage Ms Lia Bility could untick all the reconciled transactions and re do the bank reconciliation again and amend the adjustments in the suspence account.
Well, on closer inspection, their were some transactions with the details “ I O U” Ms Lia Bility confessed.. wait for it!!!!! At times she gave staff members small loan from petty cash, and sometimes they did not pay back!!! She also said that at times she paid for items but lost the receipts and could not record them in the system
Well I am not sure here! The company has a set procedure for petty cash which Ms Lia Bility failed to operate. She would have to recover the money back from the staff involved – although the main person had left the company. The directors of the business had to be informed, but they were also guilty of requesting petty cash and not giving receipts!
This was a case of the salary journals not posted correctly.
To record the salary journals so that the true Gross salaries and employers NIC are recorded in the Profit and loss and the PAYE and NIC recorded in the balance sheet, and everything being equal once the payments have been made the balance sheet accounts should return to zero!
This was a case of transactions being posted under the wrong nominal code! So some purchases had income codes, whilst income codes had purchase codes!
The transactions involved could be amended with the right codes.
With all the mistakes above no wonder the accounts did not make sense,
The directors to have an overview of how Sage works, they will attend a course on how to understand management accounts
With all this intact, I decided to have a cup of strong coffee, I noticed I had to ask Ms Lia Bility for this, when she came back looking a bit suspicious, I was not sure whether to drink it as I thought it may be laced with something to get rid of me!
I told her my findings and possible verdict..Oh my, the tears started flowing and she was worried she would loose her job! What could I do, but listen, reassured her that she will learn by her mistake and this would make her a better bookkeeper. I also sneakily told her to have a sip of my coffee (I had not drank it) she did not want any! I wonder why?
Anyhow I had a meeting with the main director and the accountants. The director was not very pleased and they decided to discipline Ms Lia Bility, put also give her the opportunity to attend some training courses, and be supervised closely. The accountants Messers No Discount & Co recommend that instead of making all the adjustments, the bookkeeping was to be redone again. So the Sage data was restored to when the accountants had completed their accounts, the adjustments to the trial balance entered, and MS Lia Bility will work with another experienced bookkeeper Mr Asset.
I hope you have enjoyed this case, please let me have your comments! I am of now for a short break before I take on the next case .
Genny Jones is a Fellow member of the Association of Accounting Technicians. She has over 15 years experience of delivering training courses in manual/computerised accounting and payroll. She specialises in Sage Accounts, Sage Payroll, and Quick books Accounts and Payroll.