Hi there. Hope everyone is doing fine. I'm sorry if this isn't the right kind of forum for this post!
just a quick summary - I started a new job a few months where I'm the sole person in finance. I have experience with management accounts previously but this is my 1st stand alone job. My company is relatively small and they used to outsource the accounts but now brought in-house for me. The p&l is straightforward and my versions always matched the accountants (before we stopped using them) The issue is with the balance sheet. My business were never concerned with the BS initially (main focus was P&L) they didn't have any BS codes so I set that up. The issue is that as nothing had ever been posted to the BS before, my version doesn't match the accountants at all. It's out. I know their version must be right as they had access to everything.
my question would be what is the best place to tackle this? How would I even begin?
thank you so much for reading this and sorry if it's really long!
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Replies (15)
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Hi. Thanks for the reply. Debtors and creditors mainly.
The fixed assets I can probably reconcile going off the fixed asset register.
What software do you have?
Does your aged debtors print agree to the control account?
Same for creditors.
Do you have large credit balances on sales accounts and debit balances on purchase accounts? These could have been transferred in year end accounts.
Does your opening p and l reserve agree to the stat accounts?
Can you ask your external people for a reconciliation from the trial balance they worked from?
we're here to help with this kind of stuff :)
Hi - I would ask the Accountants for the brought forward TB and their copy of the FA register, together with the DR and CR schedules & the prepayments / accrual schedules too. What software are you using - I use Sage - happy to help further if you need any assistance.
Make sure the VAT transaction history is good.
Ask yourself can the software produce the next vat return, with the data imported.
Director loan account, you may want some transaction history leading up to the balances...no netting off.
Thanks all. I have the accountants Fa register but definitely need to ask them for the TB and their recs.
I’m using Sage 50.
For those very kind enough to reply to this, once I’ve figured out the difference (will take me a while!) -would I post an opening / closing balance on sage so it is accurate? Or another way?
Thanks again for answering. I felt so silly asking this but I’ve never come across this before and I hate being this stuck!
Fairly standard year end process I find. You are not meant to be psychic.
Once you have the journals it should make more sense.
Generally you will post a balance sheet journal dated on the last day of the prior period so that you start off from the right point.
I'm sorry if this isn't the right kind of forum for this post!
It's not. Don't feel embarrassed about asking. Not your fault if the records you inherit don't make sense.
....my version doesn't match the accountants at all. It's out. I know their version must be right as they had access to everything.
Maybe the external accountant's version *isn't* right. There could be actual errors or perhaps they made adjustments but didn't post them in Sage.
In my experience it is quite likely you can receive adjustments presented in a way that is incompatible with how your software actually works - for example journals to sales and purchase ledger control accounts.
Don't worry about keeping going until you get this sorted, you will come across this type of thing whenever your job changes.
Don't assume everything will be 'right' either. It is unlikely to be dramatically wrong, but there could well be things you don't quite agree with or wouldn't have done the same way.
Accountancy is an art not a science!
I think simplest to get overview is ensure last year is closed in sage , then run brought forward tb - this is what needs to reflect the statutory balance sheet,
youre probably just looking at nominal adjustments to agree to final accounts balance sheet , bank, sales and purchase ledgers hopefully will probably agree topical accounts with a bit of tinkering.
You'll need full analysis of closing balance sheet from previous accountants to make it easier, they will have made accruals and ,possible adjustments for sales purchase ledger credits debits etc.
Thank you all for your replies.
Just a quick update - I spoke to the external accountants and they are sending across their TBs. As I only started the company a few months ago, and I set up the BS codes in sage then, I’m thinking that to reconcile the BS from the start of time (approx 4 years ago) will be fruitless.
I was thinking to post a closing end balance as at end of May (year end) and reconcile from that point onwards to today. Does that seem right?
Thank you again all.
Yes I wouldn't bother going back. The accountants will have all the details if they are ever needed.
Hi Miriam - has the year end process been completed in Sage? If not you need to:
Change the program date to 31 May 2020 & run the year end process - this will clear all the P & L codes (from 4000 - 9999). Then produce the 'BFWD' TB and use that with the Accountants TB & journal appropriately to get your SAGE figs to match their opening balances - as others have said be wary (ie don't) of adjusting the 'control accounts', Vat and Bank. The 'adjusting' journal should be dated 31 May 2020 too.
Do not drive your self to distraction.
This is a common situation with Sage
Use the TB figures from the latest approved accounts as your starting B/S figures
Use the transactions from that date to current date, to complete a T/B.
You will probably have a difference in suspense.
Ensure that your Drs & Crs at current date are OK.
You may well have a difference in suspense, so what!
As long as your P&L figures are accurate, and you are sure all current date Drs & Crs are correct, including taxes and loans, let the accountant worry about what to do with any Suspense balance.
Generally in private non-audited companies the reconciliation of accountant's figures with client's Sage and similar is an art wrapped in a mystery.