Opening balance journals

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Client keeps very poor Quickbooks records (eg bank balance on QB is £160k and on bank is £800) so we have always prepared from scratch with our opening balances/movement off QB/bank recs. 

Engagement letter states client responsible for company records. 
 

Only ever engaged for annual accounts and client prepares own VAT/personal tax/bookkeeping.

Trial balance and schedules sent to new accountant who has now kicked off about balances on QB being wrong and client is threatening complaint to ACCA unless she has opening balance journals.  
ACCA advisory as vague as ever. 

 

Is this now the standard? Do I need to make sure all clients keep their bookkeeping to a high standard before accepting engagements in future? 

 

Replies (42)

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By williams lester accountants
13th May 2024 12:51

Don't understand why you would not update QB each year end, surely that is part of the job??

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Replying to williams lester accountants:
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By Paul Crowley
13th May 2024 13:48

No point if the record keeping by client is as bad as described by OP. If they cannot even get the bank sorted correctly, then the true accounting records are those in the possession of OP.
I update nothing unless we are the bookkeepers. The client gets a journal to fix the opening balances.

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Replying to Paul Crowley:
By williams lester accountants
13th May 2024 15:09

In which case the client needs help and training on QB, not to just be left to it.

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Replying to williams lester accountants:
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By bettybobbymeggie
13th May 2024 14:11

Part of your job maybe. Absolutely no, never.

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By williams lester accountants
13th May 2024 15:09

Why?

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DougScott
By Dougscott
13th May 2024 12:53

Well why on earth did you send the wrong TB to the new accountant (and perhaps should have also told them that you had no involvement with the clients posting of Quickbooks)?

Or are you saying she is complaining you haven't corrected Quickbooks? In which case she has a point because it would be good form to correct the clients Quickbooks every year in case there is an HMRC enquiry.

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Replying to Dougscott:
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By ES accountancy
13th May 2024 13:44

The volume of correction to be HMRC inspection compliant would be basically redoing all of the client’s bookkeeping. I have full details agreeing to the accounts in my working papers but the Quickbooks is so poor it would be a mission to unpick.

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Replying to Dougscott:
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By Paul Crowley
13th May 2024 13:52

I read it as OP gave the new accountant the correct opening TB. If the monkeys at the new firm cannot figure out the journal to fix the opening balances on the poorly maintained records, then are they really accountants?

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Replying to Paul Crowley:
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By ES accountancy
13th May 2024 14:03

Yes I supplied a TB agreeing to the filed accounts.

New accountant has probably been told Quickbooks is all perfect and it’s an easy job and are now realising it really isn’t

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Replying to ES accountancy:
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By Paul Crowley
13th May 2024 14:25

Agree entirely
I have a couple where we treat the client software as if it is just a cash book.

Both your client and the accountant are complete arses.
The complaint, if ever made would go nowhere. The ACCA rules are that the client gets a TB for free and pays for anything else.

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Replying to ES accountancy:
RLI
By lionofludesch
13th May 2024 18:03

ES accountancy wrote:

Yes I supplied a TB agreeing to the filed accounts.

New accountant has probably been told Quickbooks is all perfect and it’s an easy job and are now realising it really isn’t

Pffft !!

How hard is it to jot down the Quickbooks TB and the accountant's TB on a spreadsheet or a bit of analysis paper, take one from the other and stick the differences through as a journal?

Seriously, I'm often shocked by how folk are phased by what I would see as the simplest of tasks.

Whose job it is to ensure that making sure the one agrees with the other will depend on what the engagement letter says. Personally, I would've ensured that the journals were posted but, if the OP is sure that it's not his job, I would suggest that he write to the new lads to say so and, if they're unable to cope, he would be delighted to offer his services as a consultant and do it for them.

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Replying to lionofludesch:
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By Paul Crowley
13th May 2024 18:46

Brilliant

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Replying to lionofludesch:
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By bettybobbymeggie
13th May 2024 19:14

How do we know the OP is a 'he'?

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Replying to bettybobbymeggie:
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By lionofludesch
13th May 2024 19:41

bettybobbymeggie wrote:

How do we know the OP is a 'he'?

Interpretation Act, s6.

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Replying to lionofludesch:
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By Matrix
13th May 2024 19:34

Can you post a journal to the bank account? A client once uploaded their personal bank account and had to close the QB account as removing the transactions wasn’t an option (worth considering given my bookkeeping prices…).

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Replying to Matrix:
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By lionofludesch
13th May 2024 19:38

Matrix wrote:

Can you post a journal to the bank account? A client once uploaded their personal bank account and had to close the QB account as removing the transactions wasn’t an option (worth considering given my bookkeeping prices…).

Dunno, but you can open a dummy account and post transactions to that. Obviously, the closing balance on that should be zero.

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Replying to lionofludesch:
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By bettybobbymeggie
13th May 2024 19:55

lionofludesch wrote:
open a dummy account and post transactions to that

Oh no - it's Nick Leeson!

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Replying to bettybobbymeggie:
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By lionofludesch
13th May 2024 20:09

bettybobbymeggie wrote:

lionofludesch wrote: open a dummy account and post transactions to that

Oh no - it's Nick Leeson!

[chuckle]

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Replying to lionofludesch:
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By Matrix
13th May 2024 20:04

Sure, the bookkeeper sister could have done this but I thought you said it was the simplest of tasks?

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Replying to Matrix:
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By lionofludesch
13th May 2024 20:11

Matrix wrote:

Sure, the bookkeeper sister could have done this but I thought you said it was the simplest of tasks?

Depends how wrong they are, I suppose. There comes a point when it might be easier to set up a new account.

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By Bobbo
13th May 2024 13:45

Did you never think to provide the closing journals to the client as part of the accounts preparation work? Would've taken you two minutes to attach to an email and send.

Or perhaps offering to post them to QB yourself (with a nominal amount added to the annual accounts fee)?

Maybe the client could've learned after the first year of a long list of adjustments.

Surely it's just been more work for you every year having to disregard the client's own records and use your own?

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Replying to Bobbo:
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By ES accountancy
13th May 2024 14:06

Opening balances had never been posted when we inherited it.

We looked at first year and realised accounts needed much more work than just posting journal to agree opening balances.

The general bookkeeping each year has been poor. Recommended client sought a bookkeeper to be told it was ok her sister would sort it. It remained poor.

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Replying to ES accountancy:
By williams lester accountants
13th May 2024 15:11

Did you at any point tell them the ongoing bookkeeping was not to an acceptable level?

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Replying to williams lester accountants:
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By ES accountancy
13th May 2024 15:44

Yes as I’ve said in the post you replied to, I recommended the client sought a bookkeeping and was told it was ok the sister would do it.

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By adam.arca
13th May 2024 13:55

I'm with you, ES, and your approach to these jobs sounds like my approach.

I like to treat my clients equally (it makes the admin so much easier) rather than bespoking everything and, as I have never written up clients' cash books, by analogy I don't correct their software. Quite happy to do both, though, if the client feels the need and is prepared to pay for what I regard as and market as an additional service.

With respect to WL, I've never been swayed by the "it's all part of the job" argument. The ONLY time where the software needs to be in balance with the accounts is where the client is using the software to produce periodic figures they want to rely upon. Since 99% of the clients I deal with treat their software as a bookkeeping only module (principally for the preparation of VAT returns), that makes the "power" users vanishingly rare and our SOP shouldn't be built around them. All in my opinion of course.

As for the new accountant, he needs to be advised to remove his head from his nether regions. Is it beyond his abilities to post a balancing journal to bring the software back into line if it's that important to him? Why does he expect to get an audit trail going back to the year dot when he wouldn't get that were the client still on manual records?

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Replying to adam.arca:
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By Paul Crowley
13th May 2024 14:32

Same here

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By Matrix
13th May 2024 14:07

Don’t we all ask about the quality of records before quoting?! I expect the newbie has underquoted.

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Replying to Matrix:
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By ES accountancy
13th May 2024 14:20

I definitely ask but clients are far too generous about how good their books are!

I suspect newbie wants to file accounts directly from Quickbooks from the information I’ve seen.

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Replying to ES accountancy:
By williams lester accountants
13th May 2024 15:15

Surely asking is not the way to do it. Get something like XenonConnect, hook it up to the QB ledger and you will have a report you can share with the client that tells them in black and white just how good or bad their efforts are. This should (in my opinion) be an opportunity to either assist the client with some training in how to use QB or an opportunity to upsell them bookkeeping services. It should never be a chore to deal with the clients. If there are any you just can't be bothered to do the job for, then disengage and let someone else do it!

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Replying to williams lester accountants:
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By bettybobbymeggie
13th May 2024 15:22

williams lester accountants wrote:
disengage and let someone else do it!

I'd do that in preference to any other suggestions you've made on this thread.

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Replying to bettybobbymeggie:
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By ES accountancy
13th May 2024 15:46

Me too. This is also making me think I’ll just decline any Quickbooks jobs in future too as they are the poorest in my experience. I’d rather just prepare them straight from the bank.

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Replying to ES accountancy:
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By Paul Crowley
13th May 2024 16:06

Never yet had a client on Quickbooks that knew what they were doing, other than for just VAT. Never had a client that the bookkeeper (independent) has chosen Quickbooks for.
It is an observation that users of Sage and Xero just seem to keep better records.

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paddle steamer
By DJKL
13th May 2024 15:21

The catch is if this is a limited Company, and effectively its accounting records are prepared each year by its accountants, then surely said accountants need to furnish to the client each year a complete set of these records in order that it meets its legal requirement to keep proper accounting records etc.

CA 2006 s386, 387 , 388 & 389 seem on point re what a company ought to hold, where and for how long.

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Replying to DJKL:
DougScott
By Dougscott
13th May 2024 16:03

Well, it is the clients responsibility to keep proper accounting records and not the accountants. The OP has told the client that the records aren't proper so there is no more he needs to do.

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Replying to Dougscott:
paddle steamer
By DJKL
13th May 2024 16:27

But the accountant appears to have ignored the client provided records, has we are told written up new records and therefore has implicitly charged for said new records as part of the overall accounting service- accordingly providing a copy of these records to the client seems obligatory.

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By ES accountancy
13th May 2024 16:43

And the client was supplied with a TB agreeing to the accounts. New accountant was provided with TB and schedules agreeing to accounts. What I don’t want to be involved in is touching the client’s Quickbooks which is wholly inaccurate.

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Replying to ES accountancy:
paddle steamer
By DJKL
13th May 2024 16:56

Forget Quickbook, surely the records you wrote up are the accounting records, it is from them the TB is formed and from the TB to the final accounts.

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By ES accountancy
13th May 2024 17:39

So beyond providing TB and reconciling schedules with accounts what more do I need to supply?

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Replying to ES accountancy:
RLI
By lionofludesch
13th May 2024 19:55

ES accountancy wrote:

So beyond providing TB and reconciling schedules with accounts what more do I need to supply?

Assuming you're not responsible for making year end adjustments in the client's accounting records, I don't think you have any obligation beyond saying "this is what the opening tb of the new period should be; get cracking."

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By tom123
13th May 2024 20:19

I love reading these threads. I admit they are so far from my industry/commerce experience that I wouldn't know where to start.

25 years of having a full TB every month with supporting schedules, and usually having nominal activities stretching back at least a few years (change of software notwithstanding) - this problem would bring me out in hives.

A key part of each year end is updating our records to the statutory ones - although, if you will permit some smugness, I've had no audit adjustments for a few years.

Not casting aspersions, of course, but it does reveal that many of us are doing almost totally opposite types of work.

Always makes me smile when an "industry" person expresses desire to move into practice - maybe thinking "how hard can it be" :)

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By HL86
14th May 2024 07:13

We also have clients that "keep" (for want of a better word) their own records on a software. When we complete professional handover I do state in the letter that they use said software and we have used only as a point of reference only when preparing accounts due to errors in their bookkeeping.

If the software is wrong we also advise the clients and do also offer to update the closing balances... for a fee. Time is money etc
We do not update their software unless there is an engagement with an associated fee in place.

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By ES accountancy
14th May 2024 08:44

I think it’s time I’m more explicit about this then. I did tell the client their software was not up to scratch but maybe it needs to go in the letter of rep when it’s very bad like this!

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