Material error going back to at least 4 years

Engaged a New Client -Previous accountant

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I've taken on a new client who runs a limited company. When I wrote to the previous accountant it took a while for the records transfer to come across. In order to prepare this year's accounts I requested bank statement from my client. My client only sent me one bank statement, however the prepared and filed accounts showed 2 bank accounts. When I questioned this my client he told me that he has never had 2 bank accounts. To make matters worse the 2 bank accounts combined had a balance of £27K and yet the bank statements from my client showed 3K. When I asked the previous accountant for more information on the matter the answer I got was "I am not a trained Accountant so all I ever did was bring forward the previous year’s totals and work from there". There is also a Creditors and Debtors balance on the balance sheet,  which my client says he does not have - but I think this is the Directors Loan Account entries. If netted off this will leave a balance of roughly £1K. Retained Revenue sits at 20K.

Should I redo the accounts however the problem is that previous errors seem to be backdating to a number of years. Any advise will be appreciated.

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By FactChecker
17th Jan 2024 16:59

".. however the prepared and filed accounts showed 2 bank accounts .. (but) my client told me that he has never had 2 bank accounts."

You don't need to consider all the making "matters worse" items ... just disengage!

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By [email protected]
17th Jan 2024 18:40

Thank you for your advise very much appreciated

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By CJaneH
17th Jan 2024 18:30

I did once take on a client for which I had to redo accounts from incorporation, fortunately only 3 years. The records I wrote up from the bank and invoices (which were complete) did not match the VAT returns or annual accounts. Client was not the problem but the former alcoholic accountant.
You need to assess the volume of work, the completeness of the records and whether the client will pay for the work involved. Most small business owners do not really understand bookkeeping or accounts.

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By FactChecker
17th Jan 2024 20:20

Agreed.

However, my response wasn't related to the chaos but to the apparent certainty of OP that new client is lying about the number of bank accounts (not just currently but at time of previous accounts).
I've no idea how valid is OP's accusation; but if that is their opinion, then I don't see how they can continue to work for such a client.

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By paulwakefield1
18th Jan 2024 09:07

Are we reading the same OP? Because it doesn't seem to say that at all. (Although of course not impossible client is lying!).

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By FactChecker
18th Jan 2024 13:45

"Are we reading the same OP? Because it doesn't seem to say that at all."

Really? I didn't say client was lying - but DID say the, arguably more important, "the apparent certainty of OP that new client is lying".

OP: ".. however the prepared and filed accounts showed 2 bank accounts .. (but) my client told me that he has never had 2 bank accounts" - which seems to me to say precisely that OP thinks new client is lying.

As I said before ... "I've no idea how valid is OP's accusation; but if that is their opinion, then I don't see how they can continue to work for such a client."

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By Yossarian
18th Jan 2024 10:16

It may be correct and the client does only have one business bank account. I once took on a client from a previous accountant who often used to show overdrawn directors loan accounts as a 'Deposit account' on the balance sheet to avoid S455! I've also known some accountants to erroneously include the balances of personal bank accounts in the company accounts.

Sounds to me more like a useless previous accountant than a dishonest client, but who knows.

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Replying to CJaneH:
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By [email protected]
17th Jan 2024 20:52

Thank you, for the the advise I will take this on board.

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By paulwakefield1
18th Jan 2024 13:53

""the apparent certainty of OP that new client is lying"."

We'll have to agree to differ. I still do not see that in what the OP said.

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