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Am I going mad?!

Too many errors made by previous accountants

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Hi guys...

Last two clients I took over, both needed help with 2nd year accounts, owners used to do their own accounts and the number of errors I identified is extraordinary. I started to doubt myself and wanted to confirm. Here come very basic questions:

 

- Hire Purchase expensed - it has to go on a balance sheet, doesn't it?

- Director introduced capital, recorded it as shares but only 1 share valued at £1 issued at incorporation, no intention to purchase additional shares for a few thousands. Am I right it thinking it should go through DLA

- in 17/18 DLA overdrawn by £20k, no P11D filed, no interest charged - I proposed to file late P11D and advised to amend personal tax return

- dividend declared based on profits before tax - no CT recognised in accounts. Not right, but at the time the director didn't know they need to include CT in the accounts. What would you do?

- would you allow to expense assets worth £1,500 for a company with turnover of £5k?

 

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29th Apr 2019 11:28

Not previous 'accountant' then?
Not surprised tis happens when lay people try to do their own accounts - the P11 issue will be costly for them.
Just 'tut tut' grit your teeth and get paid up front.

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29th Apr 2019 11:30

You said "errors made by previous accountants" and then "owners used to do their own accounts".

If it's the latter, why would you be surprised that they didn't know what they were doing?

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By Maslins
29th Apr 2019 11:38

BarbaraIA wrote:
- Hire Purchase expensed - it has to go on a balance sheet, doesn't it?

Is it actually HP? Might be equipment rental/lease and P&L ok.
BarbaraIA wrote:
- Director introduced capital, recorded it as shares but only 1 share valued at £1 issued at incorporation, no intention to purchase additional shares for a few thousands. Am I right it thinking it should go through DLA

Yup
BarbaraIA wrote:
- in 17/18 DLA overdrawn by £20k, no P11D filed, no interest charged - I proposed to file late P11D and advised to amend personal tax return

Was it definitely director loan? If so, I'd prob adjust accounts in current year for interest (ie potentially 2 years worth of interest charged).
BarbaraIA wrote:
- dividend declared based on profits before tax - no CT recognised in accounts. Not right, but at the time the director didn't know they need to include CT in the accounts. What would you do?

CT charge in next year's accounts to include prior year as underprovision.
BarbaraIA wrote:
- would you allow to expense assets worth £1,500 for a company with turnover of £5k?

If they're valid business purchases, why not?
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29th Apr 2019 12:42

We are finding this more and more. Clients trying to do it them selves (aided by cloud software companies intimating that they dont need any accountant anymore). The things they are claiming for are unbelieveable - full home mortgage repayments. Kids private schooling fees etc the list goes on. BUT THEN they get stuck because they need a mortgage and cant get the required information......

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29th Apr 2019 13:54

I am not sure you know much more than your clients.

HP - it depends on the contract
DLA - Id not do it like that
Dividend - it depends on the situation
I have not idea what you mean by "expense assets". I don't know what the turnover has to do with expenses either.

Id suggest you ask your boss.

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