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FD's Diary: The trouble with auditors...
April 29 - Back to key performance indicators. I’ve been discussing this with Ops. As far as we can see our most critical measures of likely profit performance are:
1. new sales quotes
2. quoted v actual margins
3. percentage of installations that go on to buy maintenance
4. time the maintenance teams actually spend on site, rather than traveling to it.
Leave cash and so on aside for a moment – you don’t get cash if you haven’t got sales. And we by and large don’t get new maintenance sales if we don’t install new kit. So new sales drive all manufacturing contribution, and in turn maintenance sales. Maintenance margins are then driven, given we sell from an almost fixed price menu, by how efficient we are at getting people to work rather than traveling to it.
This isn’t rocket science. But just thinking about it has made us do several things:
1. think about asking sales to forecast margins as well as sales in future (this is a bit pie in the sky, but the first step will be to build models of the more common installations just to understand product mix in more depth, and so let them do so)
2. made us realise we are only really incentivising installation and not maintenance sales, and that’s daft
3. made us focus once more on maintenance routing. Until recently this was a disaster area – and the changes we’ve already begun to look at are paying off well. But now we’re asking if we can be even better at it. So we’re examining more IT to help and looking at focused selling to fill in the gaps by getting maintenance people to look out for sales opportunities when they’re on the road, and to pay them for them if we get in to make a pitch.
All in pursuit of profit to keep the shareholders happy. It’s time we got our incentive and option schemes nailed down too as I think we’re going to have a big impact on results if we carry on like this.
* * *
April 27 – It was time to meet the auditors. As some might recall, I haven’t been their greatest fan since arriving here, largely because they seemed to miss so much in previous years. Despite the appalling state of the systems they had not commented on them in management letters and last year they missed all the post year-end credit notes the old #1 used to hide bad debt.
But it’s not time for another change so right now they still have the job. And so it was necessary to meet to discuss this year end as part of the planning for this year’s audit.
Now I know it’s a function of age that all audit juniors now look as though they’re still in kindergarten. But it’s worrying when the audit manager seems that way too. She’s pleasant enough – but if she’s 26 I’ll be amazed. I have to remind myself I thought I knew it all at that age.
But at least the partner came along – trying to make amends for last year perhaps and build a relationship with me.
The trouble was he won’t do that by telling me how wonderful it is that I’ve improved things (even if I might share his opinion in odd moments of vanity). Ingratiation is not part of the service. Nor is his blatant attempt to sell more than what I really wanted. I had just hoped for two things. The first was an honest appraisal of what was likely to be needed and how I could help keep the fee under control by prior preparation etc. This seemed to be an approach they were unused to, but surely I’m not alone in thinking it’s madness to have audit staff find stuff when we know where it is (and make sure it goes back?)
And the other thing I wanted was a clear indication that he understood the business. And I’m not at all sure I got that, I’m sorry to say. Surely auditing isn’t just about ticking the boxes now? I thought it had moved on from there. Even when I was doing it analytical review was something we were meant to do. So how come I got no incisive questions about our market, competitors, anticipated performance, the reason for trends, and so on? Have all I have read on these things not happened in small auditing as yet, at least as far is this firm is concerned?
I confess I came away with the usual FD worry. Am I getting value for money here?
* * *
April 23 – CRM is one thing. But it’s virtual. Cash is another. And it’s real.
So Ops and I have been tackling the real thing first, however much I like the idea of IT solutions to cash flow projections. The reason is simple. Since I’ve been here we’ve spent a lot of time dealing with debt recovery. And one of the big problems has been discovering just who we’re contracting with.
This isn’t easy for our top 10 customers. They make up over 50% of all the business (easily) and we know precisely who they are, who to talk to and so on. But what we found when we came to chase some of the several hundred others on the debt list who we supply (initially with product, then with ongoing maintenance in many cases) is that dear old sales weren’t too good at finding out just who we were dealing with on occasion.
We don’t supply many retailers, so as an example let’s just say quite a number of our customers are described by such titles as “The Paper Shop, 170 High Street etc”. Which, as you’ll guess is absolutely no use to us whatsoever when it comes to threatening debt recovery. We have, it seems, never recorded who the legal owner is and in many cases have no contract at all.
So, Ops and I met with sales to discuss this. First we said we’ve got to go and visit all these people and get a contract signed, with all details completed. Second you have to say there’s going to be a price increase. Third you can say they can have it at the same price if they sign a direct debit (and as many of these are small businesses we think this might work). The bank also gave us a direct debiting facility much more easily than I expected. I’m not sure why I thought it would be so hard.
Sales are not over the moon. But Ops has this one firmly on his radar. He hated the bad debt that we could not recover. It was a bit like a personal insult to him to work and not be paid for it. So he’s going to set sales targets for getting people to sign up and other bonuses are going to be dependent upon achieving these targets as well. And from a cash flow point of view nothing could be better.
This job might have its odd moments, but I have to say that working with Ops is one of the good bits about it.
* * *
April 21 – Well, we were going to meet, but the best laid plans sometimes go wrong.
In this case the problem was Mrs CEO. She decided she could not come to a meeting unrepresented. So she has apparently found someone she wants to bring with her. And as we’d made clear lawyers were not acceptable he is a chartered accountant (well, I think it’s a he, Gerry’s can be either I guess).
Ops and I had a discussion, and sent a response to her request. Is this person to come in your place as your alternate (which we can’t refuse) we asked? She didn’t answer. She just said she wanted “Gerry” there and wanted him to be able to speak and she wanted to do so as well.
So we said in the light of the fact that we had no idea what status he had and because the CEO had not had an equivalent opportunity to arrange someone else as well we weren’t having a meeting until the problem could be sorted as to just who this person is, what information they’re getting, on what terms (after all, it may be she’s in breach of her confidentiality agreement) and, as far as I’m concerned most importantly, who’s paying him. If it comes out of the company and affects my bonus I’m dead set against it, I can tell you.
Most important of all from my point of view though, I’m just hoping he doesn’t read this.
These things aren’t meant to run smoothly it seems. I don’t regret what I did. But I’ll be pleased when we settle down to a new routine with everything in place.
* * *
April 16 – I seem to have been obsessed with accounting issues of late. It’s as if personalities had walked out of here with the shareholders.
Actually, the latter haven’t. It’s odd to think that we’re now a month or so into the absent shareholder regime. And at a practical level it’s going well. They have not been in. Not once so far. And no one seems to be missing them. Which is staggering. Morale is good, Ops seems happy in his role, and we communicate easily and often which has proved enjoyable in its own right.
But that’s the practical level. At the paperwork level my hope of getting things sorted as quickly as possible has proved less optimistic. It’s true, the budget did not upset my plans. And it’s true that Mrs CEO’s lawyers have given up telling me I’m the devil incarnate (or something like that). But that has only meant we’ve stopped that fight.
As for going forward, that’s another issue and we now have a meeting next week, the four of us, and with lawyers barred. Neutral territory seems vital so a not too local hotel is providing the venue. And what’s on the agenda? Dispute resolution clauses and the options schemes for Ops and me. That’s what.
The issues are simple. Both the CEO and Mrs CEO want a casting vote for a chairman, and they want to be it. So that’s not going to happen. And neither of them want Ops or me to have options we can exercise before sale of the company, which as far as I can see somewhat negates the benefit of having them.
Perhaps I was optimistic to think this would work. I’m certainly not looking forward to next week. I’ll have to be thinking on my feet again.
* * *
April 14 – I was going to think about key performance indicators and I keep coming back to cash flow.
Of course that’s partly because the ex CEO is obsessed with it, but it is, as other’s have said, the ultimate KPI.
It bugged me therefore when I got here to find that cash flow forecasts were so badly done. It’s always been a source of bafflement to me that if a cash flow is included with a set of accounts the opening balance is not that shown on the balance sheet. Or that it is not shown how the debt on that balance sheet will be recovered, and so on. Here if the latter had been done it might have been obvious just how out of control debt was (a point, by the way on which I can now feel pretty satisfied since, whilst we’ve had to make some provisions on the way, debt is now looking quite nicely under control, and much more so than I expected).
So I have already tackled this deficiency and my cash flows work from this assumption. Even mid month ones start from lists of known balances, because we strive like mad to keep these up to date at all times.
In which case I’ve cracked the first stage to what I see as credibility. The next one is harder, and that’s getting the forecast income right. We’re lucky in that our maintenance sales are fairly heavily predictable. But that still leaves a lot which is not in the other divisions. And try as I might I can’t as yet get sales to create good pipeline data on billing. They always assume that no sale is in anyway capable of being forecast until actually ordered and even then is incapable of being valued until the work is done as variations may arise.
Well of course they will, I scream (quietly) at them! That’s the whole nature of business. But couldn’t they just give me a stab at approximate values for the next few months? It’s like getting blood out of a stone, and I reckon this is the issue I have to tackle. Maybe I should be addressing that issue of CRM software more wholeheartedly. But it’s just one of many things on the agenda.
Given that you’ve usefully reminded me to look seriously at payroll out sourcing (meetings are now being arranged with potential suppliers) anyone got anything useful to add on CRM, software or just how to get sales to talk to me about meaningful forecasts?
* * *
April 8 – I’m beginning to think that anything I mention here is pounced upon!
Thanks for the comments on payroll. Much appreciated. I’m especially grateful for the comments re agency. Curiously I’ve never used one. Here we’ve had a nightmare of data collection for the payroll which the old #1 I know used as a deliberate argument for not using an agency (he liked his empire). I have still not wholly cracked it and passed responsibility for calculating gross pay to the managers who employ people (which is where I think it belongs). As a result I haven’t been brave enough to think we can pass over the payroll to an agency yet, although it has been discussed before (at about the time we also got rid of the payment by the day arrangement is I recall aright).
On the other hand, I’m working on it. My logic is quite simple. If we pay a flat week/month when people start (and we have both) and then put all variances through a month in arrears (except when we know someone’s doing a bunk on us with unauthorized absence) and write the staff handbook to reflect this then the pressure on payroll variances is reduced and can be dealt with calmly before any payroll run. That only leaves the abusers, the starters and the leavers to do in a panic. I think that could work and then we could think about contracting this out.
Well that’s my idea. Anyone have anything to say on such a scheme?
As for those brave enough to think I might be electronically submitting – think on! I’m not in the first wave of such things. Not least because I really can’t see the benefits to me of doing so.
And, I tried phoning up to see if we could send the P11Ds in on a spreadsheet. They laughed! Well, it was worth a try.
So back to the task I go!
I know I said I’d think about KPIs. Next week, maybe.
* * *
April 6 – I can’t be alone in dreading the year end PAYE returns. I know they have to be done. And I’m aware software has taken the burden out of it to some degree (do you remember doing them by hand?) but it’s still a chore.
I just thank the old #1, or the auditors, for having got a good P11D dispensation which will take a lot of the tedium out of that.
Not that he’s made my life any easier in another respect. I’m having to do the inevitable analyses of the P & L account for tax and so on for the auditors. When what was posted was your responsibility this is relatively OK – you know the story in advance. But half of last year I wasn’t here. And it’s taking an age to follow some things through. I insist people write brief notes about entries when posting purchase invoices to give clues what things are about. I know it might appear to take time, but it doesn’t half help when you come to use the data. A purchase invoice reference is not much help, and that’s what the last chap allowed. So I’m surrounded by piles of files trying to see what went on and interpret it.
Now you might realise why I didn’t want to prepare accounts for March. I’ve appreciated the further comments on this. Several people have pointed out the absurdity of using a fixed period, come what may. It’s curious that the fan of them was from an external agency. There’s such a conflict between business need and the needs of external users. I know we have to satisfy both, but what has worried me is that the conventional firm of management accounts satisfies the conventional external user and not the business.
So, I’ll be thinking about those KPIs and how I might report on them. But now it’s back to repairs and the thought of P60s by the metre.
Number of comments: 25
AccountingWEB.co.uk 29-Apr-2004
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"and looking at focused selling to fill in the gaps by getting maintenance people to look out for sales opportunities when they’re on the road, and to pay them for them if we get in to make a pitch"
If you are looking at that route, remember the people on telephone support and those doing any training.
As a support person/trainer/consultant for a software dealer, it used to get right up my nose when I would, in effect, make a sale of an extra module and get nothing out of it while the salesman who's client it was got commission for doing nothing!
A wonderful disincentive to the troops.
"The subsequent discovery of material misstatement of the financial statements resulting from fraud or error existing during the period covered by the auditors' report does not, in itself, indicate that the auditors have failed to adhere to the basic principles and essential procedures of an audit or have been otherwise at fault." (SAS 110 para 20)
My comments were meant to imply that the auditors may well have had no *actionable* duty whatsoever to find errors and misstatements. With neither member of the company taking decisions influenced by the financial statements, they could not by definition be materially misstated in a way that could be legally laid at the auditor's door, whatever they contained.
Further, if FD finds no FRS 3 need to restate last year's comparatives in this year's financial statements then there was no material misstatement last year that could have influenced the decisions of ANY USER of the financial statements to whom the company owed a duty of care.
In other words, the things FD found are probably just annoying, possibly implying a substandard audit but not amounting to an inappropriate audit opinion.
To respond to David’s point directly, "auditors plan, perform and evaluate their audit work in order to have a reasonable expectation of detecting material misstatements in the financial statements arising from *error or fraud*" (SAS 110). So if #1's ploys had led to a *material* misstatement the auditors could be called on to show that their planning, etc gave them a reasonable chance of detecting them, hidden or not. How easy it is to show this we do not know: the surrounding uncertainty invariably means that both parties are prepared to settle out of court.
Of course the auditors may have fallen below the standards expected by their professional body without there being material misstatement. Analytical procedures, for example, are required at both planning (SAS 410.2) and completion (SAS 410.3), and "Auditors should have or obtain a knowledge of the business of the entity to be audited which is sufficient to enable them to identify and understand the events, transactions and practices that may have a *significant* effect on the financial statements or the audit thereof" (SAS 210.1) Were this the case it would, it seems to me, give FD cause to change auditors, whatever the audit fee.
The comments seem to suggest that the auditors were expected to discover errors and misstatements, even those that were deliberately "hidden" by the outgoing FD. I accept that their tests and procedures should be designed to give reasonable assurance that the accounts were free from such items but cannot agree that there was a duty to find these things unless specifically contracted and paid to do so.
The value to the shareholders of last year's unqualified audit opinion was at most a set of accounts for customers, suppliers etc to consider. The value of the audit opinion, qualified or not, to the company was compliance with the Companies Act. When the value of a non-elective audit is so little, it is too expensive if there are clearly ways in which the cost could have been reduced or value added. The absolute numbers do not matter.
What does an unqualified audit opinion mean? That the financial statements are not materially misstated. How stringent a requirement is that?
A material misstatement in the financial statements needs to influence the decisions of a user (from the company's viewpoint as preparer) or the shareholders (from the auditor's viewpoint). If the matters uncovered by the FD would not influence decisions then they are not material and the accounts are by definition true and fair.
Surely Mr and Mrs CEO made no decisions based on the financial statements, which by definition could not be materially misstated whatever they said. That is far too simplistic, but there is a valid argument that doesn't go quite that far. And so far as that argument is valid, the auditors could sign off after the most cursory audit without fear. Not that I believe they thought that, nor that they would have arrived at that decision if they had.
The FD should consider FRS 3. Para 63 addresses the need to restate prior periods found to contain errors: "of such significance as to destroy the true and fair view and hence the validity of those financial statements". If the misstatements FD found are sufficiently material to need restatement then those accounts were not true and fair. If they are not so material, FD has a grievance about the price and / or quality of service rather than cause for action.
It is no less a grievance for that, though. When a "service" is so clearly a commodity you want it delivered at the best possible price and with the least possible disruption.
I don't think my comments disagreed with those of the FD on the whole, and I certainly don't disagree with any of Keith's subsequent comments. But, I fail to see how we can judge whether the shareholders got value for money in last year's audit without knowing what they paid for it. And I still maintain that they got the expected end result if the audit opinion was unqualified.
I do accept, from the FD's and Keith's comments, that the auditors appear to have failed to gather sufficient evidence to support an unqualified opinion on the accounts as prepared by the previous FD. But surely that's their problem, if challenged by their licensing professional body or if the shareholders have cause to claim for compensation in the future.
The FD thinks they failed in their tasks because he has subsequently found certain errors and omissions. Were any of these discovered before the audit report was signed? If so, were those acocunts adjusted before being published? We must remember that the FD was looking for some of these things because he lacked confidence in the outgoing FD and he has since gone looking for more because he knows there are (were) problems in the systems.
If the shareholders have appointed the same auditors for a number of years, have they always missed these things? Or did something change last year? Either way, was it reasonable to expect them to discover deliberate cover-ups by the outgoing FD?
Regarding doing a proper audit, the matters that the FD knows the auditors failed to spot last year give grounds for concern that the audit was not done at all well.
Regarding "added" value, it seems to me that last year (at least) the auditors should have been reporting to management the potentially material weaknesses in, and between, the company's systems that the FD uncovered and has taken steps to rectify, if they had discovered them (SAS 610 again). But then they probably didn't need to understand the systems to any extent to perform what was doubtless an old-fashioned tick-and-bash audit, so are unlikely to have been aware of the weaknesses.
Further added value to the company might come from informed comments from an experienced audit partner that are relevant to the company in its market and industry sector, matters the FD notes the audit partner failed to mention. A modern auditor should recognise that forming an opinion on accounting judgments (such as bad debt provisions) and reporting / presentation decisions (such as income recognition) is not possible without knowing a fair amount about the company, its industry and its market. (Auditing the transactions that David Beard is already happy about is the easy bit.) The partner's failure to mention these matters casts more doubt on how well the audit will be done this year.
I'd say the FD is wholly entitled to feel aggrieved, and for next year should at least explain his concerns to the audit firm and ask for a change of audit partner (if there is more than one), but if he is unhappy with the rest of the team and the conduct of the audit he should change auditors. Not all small auditors are the same, so there's no pressing need to go to the big boys, but they do all have SME practices now and are competing for SME business, so there may be no harm in asking.
I am an ex-auditor but I believe that what I have to say is just common sense and not special pleading.
Responding to David Beard's comments about what he expects, the statutory audit is not intended primarily for the FD's benefit. In theory it's for the shareholders, but in this case their close involvement last year and their reliance on management accounts and management meetings when making decisions should mean they will not rely on the financial statements to inform their decisions. If anyone is going to see any benefit from the audit it may be those people to whom auditors (in the UK) owe no duty of care: employees, providers of finance, suppliers and customers, who may all to an extent rely on the picture shown by the audited accounts in deciding whether to deal with the company.
What the FD appears to want is that the company should get some value for the audit fee that it pays. He implies, justifiably, first that he would like a cheaper audit, and second that he wants the audit to be done properly, not by people just going through the motions. (And third that the auditors should stop trying to sell him things he doesn't want.)
Regarding prior preparation, larger audit firms agree with audit clients when they will visit, the information they will need, and when they will need it, and they may charge for any overruns that result if information is not available when due. Maybe the audit partner is insufficiently familiar with SAS 610 - Communication of audit matters to those charged with governance, which requires auditors to "communicate to those charged with governance an outline of the nature and scope . . . of the work they propose to undertake and the form of the reports they expect to make".
I would firstly like to point out that I am not an auditor! Why? Because my comments and the potentially provocative title may suggest I am.
Like the FD I too have doubts about the audit practices of some firms, not just smaller ones either. I have also followed the "maximum preparation and on-site cooperation" approach in an effort to reduce the time taken and (hopefully!) therefore reduce the audit fees.
However, at the end of the day, I expect only one thing from the statutory auditors, a "clean" audit opinion. This is because I have sufficient confidence in the company's systems and procedures and a proper appreciation of my team's abilities to account for the transactions. Of course errors do occur, the accounts are a mixture of human and computer components after all, but they don't go undetected. My apologies if that sounds arrogant.
I would have to ask: as FD, what else are you expecting your auditors to do?
Probably not - fee pressure means the simplest approach to get the required work done rather than providing added value is the usual approach - no doubt the added value is exactly what they're trying to sell in addition to the regular fee!
"There is going to be a price increase.
There is also going to be a discount for those who take the direct debit option (which should be dependent on the DD not bouncing"
Fair enough - on that basis, I withdraw the implication (which, as clearly stated in my original comment, was based on there being no real price increase).
"If it works for ...
... every electricity and gas company in the country."
Doesn't make it right.
Paul
... every electricity and gas company in the country.
Paul Wakefield
"Second you have to say there’s going to be a price increase. Third you can say they can have it at the same price if they sign a direct debit (and as many of these are small businesses we think this might work). "
I gather from the way this is written, there is no planed price increase. I think this used to be called a lie but I'm probably out of date.
Not correct. There is going to be a price increase.
There is also going to be a discount for those who take the direct debit option (which should be dependent on the DD not bouncing)
This is very common amongst the biggest companies in the country, so why not The FD's company?
Someone else questioned the progitability of thhe small accounts. As this is a maintenance contract business, then small is often beautiful as you do not hear from 90% of them from one year end to the next.
I used to be involved in accouting software support. As long as the support contract covered the cost of raising the invoice and banking the cash, over 90% of the customers never contacted us, as their systems were set up and simple.
The bigger customers would want to change things, or have changes of staff that caused support calls.
Also that small customer can grow into a big one, and they often do.
Paul Wakefield cannot reasonably infer that there is no price increase (I inferred that there is). The leap to accuse the FD of a lie is totally unreasonable. Paul, please withdraw this accusation.
[Because I am using a work email address, I do not wish to show my name]
It sounds like CRM software is not going to help much. If the processes or mindset of being customer focussed is not present in staff than the best systems won't help you.
Mind be worth considering the salespeoples compensation plans. I.E. commission/bonuses will not be paid without a signed order and also will not be paid until the customer has paid the bill. In salespeople this will tend to focus their mind.
Do you know if you are really making any profit with these hundreds of smaller customers? Should you be looking to ditch some of them (and focus on the profitable customers) or can you lessen the overall cost of sale (from prospecting to cash e.g. not having field visits by salespeople but manage them using telesales staff.)
Back to KPIs, how about a KPI for the sales manager on accuracy of forecasting which affects bonus payments?
Bryan
It is heartening to see that others have the same problem over who is the actual client.
We used to refer to jobs by which site they were at (eg Ford Motor Company) rather than whichever 2 bit middle man we were dealing with.
Not any more!
"Second you have to say there’s going to be a price increase. Third you can say they can have it at the same price if they sign a direct debit (and as many of these are small businesses we think this might work). "
I gather from the way this is written, there is no planed price increase. I think this used to be called a lie but I'm probably out of date.
Paul
FD
We have used an on-line CRM system called salesforce.com for some time now, and it is excellent for a sales department.
It can handle all the forecasting for the sales folk, and allow you to easily obtain all the management reports you need.
As it's web based, your staff can use it on the move, at home, in the office etc.
I have used other sales systems in my working life, but this one is excellent.
www.salesforce.com
I am not connected with salesforce.com in any way, except as a happy user.
Regards
Steve
stevet@aps-advance.com
I have a pay week ending on a Friday, timesheets in the following Tuesday, paid the following Friday.
I pay for exactly the hours worked during the previous week, including overtime, holiday, sickness etc.
Intuitively, I like the idea of paying a standard annualised basic pay, with overtime paid on a different basis, maybe further in arrears, but I could imagine the need to keep rolling totals of various things on spreadsheets etc.
I find if I try to simplify the volume of transactions in the nominal ledger I just have to replicate them outside the accounts.
My staff struggle to understand how we pay them over the Christmas period as it is.
When I was involved in the payroll where there were variances, usually weekly pay, the whole payroll was done a week in arrears.
The staff worked a Sunday to Saturday payroll week, which was then paid on a Thursday.
Payroll has been on that basis at 5 or 6 different companies that I worked for, and I used to get paid that way myself when I had holiday or part time jobs.
Adjustments for monthly pay, say commission, were paid in the month after they were earned, but unauthorised absence during the first 3 weeks of the month would be deducted in the month, thereby reducing the risk if some one was doing a bunk. But those people were usually owed more in commission than their months salary.
Oh dear: I hope I haven't spoken out of turn.
I discussed our P11D situation directly with our PAYE Office, and we agreed that provided we (a) set the spreadsheet up to follow the headings and order of the P11D's, and (b) gave all other related information (employee NI numbers, tax references,supporting calculations for things like Car Benefits etc), we would do just what I said - submit a spreadsheet directly to the Tax Office.
This does not involve electronic filing, nor does it go through our payroll bureau. I considered the latter very briefly, but it soon became clear that by the time I had satisfied myself as to the input to the bureau's P11D system, I had already created the spreadsheet I needed to send off directly. And this way enables me to keep my finger on who is doing what in the line of possible taxable benefit arrangements. This last is important when well-intentioned but less up-to-date colleagues occasionally do things which require P11D-related remedial action.
The secret is a good line of communication on all PAYE/NIC/PSA/P11D matters with your local tax office. Some of them are indeed nice people.
I think Ian's spreadsheet alternative to P11Ds is available to him because of either a)the outsourced function (one spreadsheet to the payroll bureau and they complete all the other forms from that) or b)the dispensations and PSAs. I doubt very much that the Revenue will accept a spreadsheet in place of P11Ds!
Ian McLean informs us that "one spreadsheet does in place of the P11D forms themselves. If you need a reference let me know."
Does this really mean I can submit a spreadsheet to the IR rather than a forest of paper with most of the boxes blank? If so, I would love to know how.
Agree with previous comment. We're much smaller (40 employees) & outsourcing the payroll to a bureau is the only solution I could comtemplate when our previous arrangement had to finish. Cost seems very reasonable: £1.68 per monthly payslip & £54 for 48 P60s (incl's all y/e forms except P11D -related). It's one less thing to worry about in the Jack-(or Jill!)-of-all trades, mistress-of-none situation that I 'enjoy' as the person responsible for all things financial in a small co.
The best £600 a month we ever decided to spend was to outsource our payroll - and we have stayed with the same provider for twelve blissful years. We have over a hundred people on three sites working for five companies, all with variable pay elements every month, and it takes me two hours a month to eyeball the input as it gets submitted from the trading sompanies, and another hour to eyeball and approve the output and run-to-run reconciliations.
The payroll is always bang-up-to-date, I have a sympathetic and knowledgeable resource for all aspects of employment pay and rewards. Try getting that in-house for under £10k a year.
And I don't have to prepare a single end of year tax form. By the way, in addition to a useful P11D Dispensation (and battery of PSA arangements) one spreadsheet does in place of the P11D forms themselves.
If you need a reference let me know.
Yesterday's entry sounded like you're only dreading the endless run of P60s on continuous stationery. Does this mean you have embraced the e-filing opportunities for the P14s?
