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Company incorrectly filing filleted accounts

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Looking for a bit of advice - my employer is extremely guarded with figures, so much so that once I've sent the year-end pack off to the auditors I have little more to do with the accounts prep process, other than answering queries on transactions. I certainly don't see the final accounts or CT600.

It's come to my attention though that, despite breaching the small company thresholds (for many years in a row), no P&L is filed at Companies House. The filing is done by my employer, not the auditors.

Clearly my back is covered - I have nothing to do with the accounts prep and sign off - but it doesn't sit easy with me. Should I challenge it?

Replies (21)

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RLI
By lionofludesch
24th May 2022 23:03

I would.

But I don't know your employers. Or, indeed, your own position.

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By David Ex
24th May 2022 23:34

Silvery Waves wrote:

Should I challenge it?

Sadly, despite whatever legal protection there is in theory, whistle-blowers rarely come out of it very well.

Have a word with your professional body; they should be able to talk you through your options.

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By DKB-Sheffield
25th May 2022 00:09

Out of interest... you say the accounts are audited? Is an auditor's report filed with the Companies House accounts?

It would seem highly irregular that the auditors would sign off on the 'wrong' accounts. Even more irregular for them to 'allow' your employer to file the incorrect ones, and then consider acting (or actually act) for future years - as you say, this has been going on for some time.

Incidentally, and I'm sure I'm teaching Granny to suck eggs but... are you certain the company is not small? You are considering 2 of the 3 criteria (t/o, balance sheet, no. employees) as opposed to 1 in isolation? A company with a turnover of £12M can still be small if neither of the other criteria are met - 'subcontractors' for example, may not be classed as employees!

Clearly, a company may be small yet still require an audit.

EDIT: Is it this company by the way? https://www.accountingweb.co.uk/any-answers/sundry-sales-to-customers-in-eu?

T/o £6M? If so, one can only assume the BS and employees exceed the criteria because, turnover was considerable below the threshold a year ago.

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Replying to DKB-Sheffield:
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By Silvery Waves
25th May 2022 09:03

The auditor's report has not been filed either. There's also no employee numbers note.

Yes, T/O is still below the threshold - gross assets are £7m, average employee numbers is 75 (there are a lot of part time employees!)

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Replying to Silvery Waves:
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By Hugo Fair
25th May 2022 12:02

I'm not sure but I seem to recall that the "average employee numbers" part of the definition is based on what used to be called the WTE (whole-time equivalent) value of the headcount? So, for instance, 2 part-time employees (each working for 50% of full-time hours) would equate to only 1 WTE on the headcount ... in which case 75 part-time employees may well be below the '50 employees or less' threshold.

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Replying to Hugo Fair:
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By Hugo Fair
25th May 2022 12:05

However, although you don't mention whether the Audit was voluntary, it's worth a look at https://companieshouse.blog.gov.uk/2016/10/06/accounts-advice-for-small-...

"Small companies which have had a voluntary audit may choose not to file their auditor’s report.
A small company which has chosen to not file its profit and loss account may also opt not to file a copy of the auditor’s report on their accounts.
In this case they must make the following disclosures in the notes to their accounts:
- the auditor’s name (if the auditor was a firm, the name of the senior statutory auditor),
- whether the auditor’s report was qualified or unqualified,
- and, if the report was qualified, what the qualification was."

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Replying to Hugo Fair:
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By Silvery Waves
25th May 2022 12:11

I'd hoped that too, but Section 382(6) of the Companies Act 2006 states:

"The number of employees means the average number of persons employed by the company in the year, determined as follows—
(a)find for each month in the financial year the number of persons employed under contracts of service by the company in that month (whether throughout the month or not),
(b)add together the monthly totals, and
(c)divide by the number of months in the financial year."

No mention it seems of part time or full time.

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Replying to Silvery Waves:
RLI
By lionofludesch
25th May 2022 13:20

Yeah - you're wrong there, Hugo.

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Replying to Silvery Waves:
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By Hugo Fair
25th May 2022 15:24

Thanks for the reference ... that'll teach me to rely on memory and not check it out properly!

Presumably that may be why the 'employee numbers note' is missing - which doesn't bode well for the intention behind the various filing decisions (although that is of course purely hypothesis).

But returning to my incorrect WTE concept, heaven help an external management accountant reviewing those accounts and trying to calculate whatever has replaced ratios like SPE nowadays. So a silver service supplier, for instance, that employs staff from different banks on different days of the week ... will show as having (up to) 5 times as many employees as its sister company with identical turnover/costs/etc? Makes a mockery of providing that number IMHO.

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Replying to Silvery Waves:
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By Tax is always taxing
25th May 2022 13:39

So you can't be sure an audit is actually being done, if you have never seen accounts I assume you have never seen an audit report?

I've met a lot of people who use the term accountant / auditor interchangeably.

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Replying to Tax is always taxing:
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By Silvery Waves
25th May 2022 13:54

Indeed, I can't be sure. I certainly don't see any audit planning documentation or completion items (such as going concern review, post balance-sheet events review, contingent liabilities discussions etc).

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Replying to Silvery Waves:
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By DKB-Sheffield
25th May 2022 14:27

At the risk of trying to play down the whole issue (i.e. before whistleblowing, taking things to higher levels, taking PB advice - which may well be to resign)... have you actually asked the director (MD etc.)? He, or the accountants/ auditors (whatever they are) may be able to shed some light on the whole thing.

If

... the director has filed accounts that differ from audited accounts (including missing some key disclosure items) and the auditors have ignored filed accounts when preparing for the next year's audit...

... the situation is very different to...

... the accounts not being audited in the first place on account of the company being small, based on XYZ (or more accurately X but not Y or Z).

The missing employee numbers disclosure is of concern (and should be for the director, the auditors and/ or the accountants. I am certain this would be a required disclosure - it certainly is under FRS102 anyway.

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Replying to Silvery Waves:
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By Leywood
25th May 2022 15:49

Or an invoice?

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Replying to Tax is always taxing:
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By Paul Crowley
25th May 2022 14:40

Agree
The word audit means anything the user want it to mean
HR will audit the skils of the workforce, as an example.

And I suppose anyone doing an 'audit' is an 'auditor'

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By tom123
25th May 2022 07:51

What is your function in the organisation - and do you have a professional qualification?

I only ask because one can sometimes feel a responsibility that is outside that which you really have.

If your task ends, for example, at preparing a fully analysed TB with supporting schedules - and you are an employee rather than, say, a self employed bookkeeper, then I would happily leave your employer and external auditors to it.

After all, filing stuff at companies house is not the same as acting fraudulently (in my view).

I have had the pleasure of working with some dodgy employers over the years, albeit not in the last 10 or so. Sometimes you just have to let them get on with stuff, and find another job in due course.

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Replying to tom123:
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By Silvery Waves
25th May 2022 09:12

I'm a qualified management accountant - an employee.

My concern would be that there'd be any come back on me by my institute, but I really can't see how I could be held responsible - the accounts are dealt with at director level, I don't have any involvement beyond TB/audit queries as indicated.

It doesn't sit well with me though - perhaps as you say I just leave them to it and move on in due course.

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Replying to Silvery Waves:
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By tom123
25th May 2022 10:16

Then I think you are fine. It is not in your remit (in this particular organisation) to be involved with that level of finalisation.

It's never great for self esteem if you feel you are cut out of things that you probably should not be.

Don't let it grind you down!

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Replying to tom123:
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By David Ex
25th May 2022 10:42

tom123 wrote:

Then I think you are fine. It is not in your remit (in this particular organisation) to be involved with that level of finalisation.

If you are a member of a professional body, you have ethical obligations which may well go beyond the strict legal. Not sure how far those might extend but the OP should consult his professional body’s ethics helpline to ensure he/she is compliant.

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Replying to David Ex:
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By tom123
25th May 2022 12:59

Yes, of course, we know that.

However, the OP isn't involved in this line of work, and the directors and auditors are taking care of this.

Ethics helplines tend to just advise you to resign - which isn't hugely helpful.

The OP is not being asked to carry out a task they are not happy with. It could just be that they have seen the accounts on companies house and wondered why they are what they are.

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Replying to tom123:
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By Barry Carlisle
25th May 2022 15:24

I've looked at my professional body's code of ethics.

Seems to distinguish between 'All Professional Accountants' and 'Senior Professional Accountants' - the latter of which have greater responsibilities in response to non-compliance with laws and regulations.

Additionally, whistleblowing seems to focus on more serious matters that might cause substantial harm to the employer, investors, creditors, employees or the
general public (e.g. health and safety breaches, fraud and money laundering, tax evasion etc). Unsure how not filing proper accounts for a medium-sized private entity fits with the above...

So I'm not sure there's much you can actually do, other than query it and resolve to move on to another job???

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Pile of Stones
By Beach Accountancy
26th May 2022 11:27

This is of course assuming that Companies House actually care (which they don't).

I tried to complain about an obviously incorrect set of accounts, but couldn't find an obvious way to do it.

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