Wrong accounts filed, who's to blame? Client or accountancy firm?

Wrong accounts filed, who's to blame? Client or...

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I'm always wondering...if the bookkeeping of a small business is kept in house and accounts are given to an accountancy firms for year end submission, who's responsible for the accounts to be correct? For example if the client's bookkeeper posts capital items into expenses, overheads includes various repair costs,  personal expenses, legal expenses, no prepayments or accruals are posted even if there are items that don't belong in the period.  If those accounts are filed to Companies House/HMRC, who's to blame for not making the right adjustments?

  • Client says that it's the accountant, since he prepares the final accounts
  • Accountant says it's the client, since it's his business and he's responsible for his accounts.

Replies (81)

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Out of my mind
By runningmate
24th Sep 2015 18:29

Who cares?

Why do you ask?

In terms of the legal responsibility to HMRC / Companies House the accounts are approved by the directors & signed on their behalf by a director.  The Corporation Tax return is signed by a director.  So the responsibility is that of the company.  If penalties are chargeable for incorrect accounts they will be charged against the company.

The company may then make a claim against the accountants if the company has relied on the accountants & they have been negligent in their duty to the company.

But whether the accountants have been negligent depends upon the contract between the accountants & the company.  Often there is a letter (called a letter of engagement) which the accountants issue to the company which sets out who is responsible for what.

RM

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By User deleted
24th Sep 2015 21:16

Why bother

Are you basically saying that the accountant takes whatever the client prepares and put the TB in their system, without any responsibility? So may as well for a client to buy IRIS or any year-end accounting software and submit the accounts himself, since the accountant doesn't care.

Especially nowdays where with cloud accounting software is usually the business owner who maintains the books (and since he's not an accountant, perhaps he doesn't post things in the correct place?) and the accountant has nothing to do for filing incorrect accounts, which he didn't bother check or posting any adjustments?

For this reason I believe accountants should also take their share of responsibility, since they are paid to do a job and as a client, I would expect to do it right.

 

 

 

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Out of my mind
By runningmate
24th Sep 2015 20:29

That's not what I said

I am saying that HMRC / Companies House place the responsibility for the figures / returns they receive on the company.

Whether the accountant has any liability for incorrect figures / returns is a matter between the accountant & the company.  The accountant's responsibility for errors in the work he does is to the company - not to HMRC / Companies House.

RM

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Replying to 0098087:
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By User deleted
24th Sep 2015 21:23

Errors

runningmate wrote:

The accountant's responsibility for errors in the work he does is to the company - not to HMRC / Companies House.

RM

This is what I'm talking about, errors in the accounts, which are finalised by the accountant, not by the client.

I understand that HMRC/CH will chase the company for any issues, however the company should then chase the accountant, since it's the accountant (not the client) who prepares the final accounts and also the corporation tax computations.

If the accountant allowed some disallowable expenses in the tax return, the client has the right to complain about his incompetence and ask for compensation/refund of accounting fees.

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Out of my mind
By runningmate
24th Sep 2015 21:51

The right to complain

Yes I agree that the company has the right to complain to the accountant & to ASK for compensation / refund of fees.

Whether the company will actually receive any compensation / refund of fees is an open question.  It will depend on what the accountant was instructed to do (which may be set out in a letter of engagement), what the accountant did do & how well he did it.

But an accountant would not be expected to check every transaction in the year.  Some accountants will look at the figures for the year & then decide if they look about right & only go into more detailed checking in relation to any figures that don't look right.

So whether the accountant is to 'blame' will depend to some extent on how large the errors were & what type of errors they were.

RM

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Replying to DJKL:
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By User deleted
24th Sep 2015 22:01

Not every transaction, but...

runningmate wrote:

But an accountant would not be expected to check every transaction in the year.  Some accountants will look at the figures for the year & then decide if they look about right & only go into more detailed checking in relation to any figures that don't look right.

So whether the accountant is to 'blame' will depend to some extent on how large the errors were & what type of errors they were.

RM

Of course I don't expect an accountant to go through every transactions, however they should look for the obvious ones, ie: capital items, repairs, personal items, accruals, prepayments, etc...

example if a client bought 2 computers and posted those in computer expenses in the P&L, surely the accountant should have check them? Or insurance paid until June 2016 when year end is September 2015? So many items that can change the result of the accounting year....

That's why I'm saying that accountancy firms should held some responsibility as they are the ones who prepare the final accounts for submission and the client trust them for this task

 

 

 

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Replying to AndyC555:
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By User deleted
25th Sep 2015 09:40

Responsibility

Regina wrote:

Of course I don't expect an accountant to go through every transactions, however they should look for the obvious ones, ie: capital items, repairs, personal items, accruals, prepayments, etc...

example if a client bought 2 computers and posted those in computer expenses in the P&L, surely the accountant should have check them? Or insurance paid until June 2016 when year end is September 2015? So many items that can change the result of the accounting year....

That's why I'm saying that accountancy firms should held some responsibility as they are the ones who prepare the final accounts for submission and the client trust them for this task

 

They do have a responsibility - a responsibility to prepare the accounts, as agreed in the Letter of Engagement (as previously stated), from the records provided, for the approval of the [Management].

 

After the accounts are so approved by [Management] - I, as well as most others on this thread, are assuming that you are said [Management] - the Accountants job is complete and, as also previously stated, unless any actual Negligence took place [Management] are responsible for the accounts that were filed (wherever they were filed).

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Out of my mind
By runningmate
24th Sep 2015 22:18

Your examples

What was the cost of the 2 computers & what is their expected useful life?  I would not lose any sleep about writing off a typical PC costing under, say, £1,000 in the year of purchase.  For tax purposes if it had been capitalised it may well have attracted a 100% allowance in the first year.

As for insurance prepaid I think making the adjustment will in many cases be more trouble than it is worth.

Do you consider these to be significant errors (seen in the context of the accounts as a whole)?

If you are unhappy with your accountants then change to another accountant.

RM

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By Anne Robinson
24th Sep 2015 23:14

Clarification?
Could you clarify your position in the company where these "errors" arise?
From all your previous posts you appear to be the bookkeeper who has an ongoing problem with accountants and their role.

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By Ken Howard
25th Sep 2015 08:12

The blame lies with the book-keeper

At the end of the day, the accountants have been presented with the book-keeping which presumably was prepared and completed by a competent book-keeper, and the accountants have probably been given the general remit to prepare the "proper" accounts and tax returns etc.  I presume the client didn't ask for the accountant to check everything that the book-keeper had done as they wouldn't want the high cost of all that extra time, especially when they've already paid the book-keeper to do it.

Accruals and prepayments are a matter of discretion.  Few accountants will bother with minor reversals that don't really affect the full picture of the accounts.  Who had the prime responsibility for preparing them in the first place.  If the book-keeper didn't do any reversals, then, yes, the accountant should at least talk to the client about them, but if the book-keeper did most other required reversals and simply forgot the insurance, then unless it was material, I wouldn't have expected the accountant to do it - after all, there may have been a reason for the book-keeper not to have done it.

Fixed assets, again, discretion.  Accountants will all have differing views as to level over which capitalisation should occur, and also the useful life of tech assets.  Many businesses regard them as consumables with short lives, especially if they are in the tech sector.  Again, if the book-keeper has capitalised some things but not others, the accountant may well regard them has having made a conscious decision to do so and just go with the flow, especially if there is no difference in tax treatment.

The tax treatment side of things is interesting, as the matters you highlight won't make much difference over the life of the business anyway, i.e. the prepayment reverses itself year after year, so the only tax effect is if different marginal rates are in play each year and as most accountants know, HMRC don't really seem too bothered by minor timing adjustments these days.  The assets probably would qualify for AIA anyway, so tax probably unchanged.

What really matters is whether the accounts, as a whole, showed a materially different picture of the business's affairs as they were submitted, compared with how they'd have looked if these so-called "errors" had been corrected.  If the profit one way was £20k and the other way was £23k, then I'd say they were materially correct anyway, so a lot of fuss over nothing.  But if one way showed a £10k profit and the other way a £10k loss, then yes, materially different and questions need to be asked of both the accountant and the competence of the book-keeper!

The final fundamental point is whether the business has suffered as a result of these errors, whoever was responsible.  If the accounts showed a wrong poor result which caused a reduction or refusal of loans or credit facilities, then yes, suffering has occurred, but if not, then has it really mattered that the accounts may not have been quite 100% correct.  A lot of accounting is subjective and discretionary - it's long been said that you can give the same core data to a dozen accountants and get a dozen different sets of accounts because each will have their own ways of presentation, analysis, materiality, etc.

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By User deleted
25th Sep 2015 10:09

The blames lies with the accountant

@runningmate I don’t think it’s correct to leave them in computer expenses, no matter how much they cost….it’s fixed asset!

runningmate wrote:
If you are unhappy with your accountants then change to another accountant.

Perhaps it’s the accountant that should change job if he’s lazy and incompetent to check such basic accounting figures!

 

@anne robinson

I worked in various practices for over 5 years, for some accounts preparation we used to go through the major ledgers and made any required adjustments, I believe this is our job… however I’m now seeing a set of accounts prepared by other firm which apart from depreciation journals, nothing else was posted, they took the accounts as they are from the client and charged way more than the others, who actually did some work. If I was the client of these accounts I wouldn’t be very happy with their service

@Ken Howard

Ken Howard wrote:
At the end of the day, the accountants have been presented with the book-keeping which presumably was prepared and completed by a competent book-keeper

 Have you even worked in practice? Not always small companies can afford a bookkeeper and nowdays with cloud software such as Xero, it’s usually the business owner or an admin person that maintain the books, the bookkeeper role is pretty dead. You can’t expect that every client has accounting knowledge, and here comes the role of the accountant that can actually give advice and prepare correct accounts. Otherwise why bother using an accountant if they submit the figures given, may as well invest in IRIS and submit the final accounts yourself.

What if for example the accounts are in loss but actually it could have shown a profit, if the accountant would have made the right adjustments?

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Replying to JD:
By Tim Vane
25th Sep 2015 10:42

Judgement

Regina wrote:

@runningmate I don’t think it’s correct to leave them in computer expenses, no matter how much they cost….it’s fixed asset!

That's daft. Would you capitalise a mouse mat or a pencil sharpener?

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Stepurhan
By stepurhan
25th Sep 2015 10:14

Related to cost

If the company is doing their own book-keeping, then the price of accountancy services will reflect that. The whole point is that the accountant is supposed to be able to rely on the book-keeping, and they would only do limited checks to see if that is reasonable.

If you are expecting the accountant to thoroughly review every figure (and despite your protestations to the contrary, that does appear to be your view) then the accountant should be charging more for the extra work involved. The more the directors want to place reliance on the accountants for the accuracy of the accounts, the more those accounts will cost to prepare. You can't have it both ways.

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Replying to Tax Dragon:
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By User deleted
25th Sep 2015 10:22

Not competent

stepurhan wrote:

If you are expecting the accountant to thoroughly review every figure then the accountant should be charging more for the extra work involved.

Please read again my previous comments, I never said that. As the accountant prepares the tax computations, he should check disallowable expenses for example, or any capital items in the P&L, or any personal expenses.

I'm not saying that he should check the bank charges, electricity, advertising accounts etc....

Most accountants charge fixed rate and if you think that the accountant has zero responsibilities for preparing the final accounts, it means that their role is pretty useless and I wouldn't bother using one.

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By ShirleyM
25th Sep 2015 10:28

Passing the buck

The mention of personal expenses caught my interest.

It isn't always possible to spot personal expenses unless the sums are significant enough to distort the figures. The client should always inform the accountant of any personal expenses included in the business expenses, otherwise you are giving them free rein to 'try it on' and then blame the accountant when caught.

Example: a builder buying materials for improvements to their own home, or someone buying a desk & PC for their offspring rather than for the business.

An accountant does need to rely on the clients honesty, and for them to provide enough information to allow for preparation of accurate accounts. If just one of these is missing, then it's the clients responsibility.

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Out of my mind
By runningmate
25th Sep 2015 10:30

Fixed asset

I heard of a case in which an accountant capitalised the cost of a first aid kit on the grounds that it would be around for more than one year.

But 99.9% of accountants would say that materiality is a factor in deciding what to capitalise & what to write off as an expense.  Especially when 100% first year capital allowance would be available there seems little point in capitalising lower value items.

So it's a case of where do you draw the line?

RM

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By Vaughan Blake1
25th Sep 2015 10:30

Engagement letter and good old common sense

If the bookkeeper is supplying a balanced TB then the adjustments to make it into a set of accounts are the accountants responsibility. The engagement letter should cover this point.  I would however, expect the accountant to do an analytical check and a DIMs test (does it make sense) enquiring into unexplained major fluctuations or oddities.  This is where having a good understanding of the client's business pays off.  Check on cut off procedures as the bookkeper often doesn't get involved with the stocktake and there can be left and right hand issues!

If the purportedly competent bookeeper posts the proprietor's personal expenditure to the P&L, then provided it does not stick out like a sore thumb, the fault lies with the bookkeeper.

If the accountant is also dealing with the tax, then he should be looking at fixed asset additions, large repair bills, professional charges etc and looking at the explanations for the major fluctuations if this was dealt with by a colleague/different department, thus pre-empting an HMRC query with a bit of extra analyis or a white space note.

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Replying to carnmores:
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By User deleted
25th Sep 2015 10:35

Exactly my point

Vaughan Blake1 wrote:

If the bookkeeper is supplying a balanced TB then the adjustments to make it into a set of accounts are the accountants responsibility.

If the accountant is also dealing with the tax, then he should be looking at fixed asset additions, large repair bills, professional charges etc and looking at the explanations for the major fluctuations if this was dealt with by a colleague/different department, thus pre-empting an HMRC query with a bit of extra analyis or a white space note.

Well said Vaughan, exactly what I meant! For these reasons there is a share of responsibility with the accountant, if he doesn't do these checks.

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Replying to the_drookit_dug:
Stepurhan
By stepurhan
25th Sep 2015 10:46

Missed a bit

Regina wrote:

Vaughan Blake1 wrote:

If the bookkeeper is supplying a balanced TB then the adjustments to make it into a set of accounts are the accountants responsibility.

If the accountant is also dealing with the tax, then he should be looking at fixed asset additions, large repair bills, professional charges etc and looking at the explanations for the major fluctuations if this was dealt with by a colleague/different department, thus pre-empting an HMRC query with a bit of extra analyis or a white space note.

Well said Vaughan, exactly what I meant! For these reasons there is a share of responsibility with the accountant, if he doesn't do these checks.

You missed an important bit when quoting. Let me help.

Vaughan Blake1 wrote:
If the purportedly competent bookeeper posts the proprietor's personal expenditure to the P&L, then provided it does not stick out like a sore thumb, the fault lies with the bookkeeper.
No-one is saying the accountant won't do any checks. But those basic checks won't necessarily pick up book-keeping errors. If the accountant has agreed a reduced fee due to alleged reliable book-keeping, they won't check all the invoices and things like misrecorded private expenses can slip through accordingly.

The problem is you've phrased your question as black and white. It is either all the client's fault or all the accountants. Now you are talking about a share of responsibility, which is more reasonable. The lion's share of that responsibility still rests with the client if they've done their own book-keeping to keep accountancy costs down though.

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Replying to Glennzy:
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By User deleted
25th Sep 2015 11:03

Not impressed

stepurhan wrote:

]No-one is saying the accountant won't do any checks.

Really? By judging previous posts this is not the case, they are all covering their backs..

 

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Replying to Greenslades:
Red Leader
By Red Leader
25th Sep 2015 11:08

Good

I'm glad that's all sorted out, then.

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By User deleted
25th Sep 2015 10:31

Don't use one then!
Nobody is forcing you to use an accountant!

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Replying to SXGuy:
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By User deleted
25th Sep 2015 10:41

Good idea!

BananaMan wrote:
Nobody is forcing you to use an accountant!

I'm starting to believe that! What's the purpose of an accountant in practice eh? In their websites they come out with such slogan "business owners are too busy running their business, we can help you by taking care of your accounts, reducing costs and you can concentrate in growing your company" etc.

And then they said "ah it's not our responsibility if we submitted accounts prepared by us, as you are the owner"?!?

I'm confused!

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By ireallyshouldknowthisbut
25th Sep 2015 10:42

.

Blimey, glad Regina is not my client.

 

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By Anne Robinson
25th Sep 2015 10:43

Let it go, let it go, let it go!
Finally got the answer she wants so lets leave it at that.

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By User deleted
25th Sep 2015 11:04

You still don't get it..

ireallyshouldknowthisbut wrote:

Blimey, glad Regina is not my client.

Glad you’re not my accountant, I wouldn’t pay you for your shoddy work!

 

Tim Vane wrote:

That's daft. Would you capitalise a mouse mat or a pencil sharpener?

That’s daft, I was talking about computers, not stationery??

 

stepurhan wrote:

The problem is you've phrased your question as black and white. It is either all the client's fault or all the accountants. Now you are talking about a share of responsibility, which is more reasonable. The lion's share of that responsibility still rests with the client if they've done their own book-keeping to keep accountancy costs down though.

You are again incorrect, I said in my 2nd comment that I'm talking about share of responsibility, I agreed it’s the client who provides the accounts  but at the end of the day it’s the accountant who posts the adjustments (or none at all in this case) and therefore he should take his part.

Otherwise Stepurhan can you explain what’s the purpose of using an accountancy firm, if you think they are correct 100%?

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Replying to Greenslades:
Stepurhan
By stepurhan
25th Sep 2015 11:11

Imbalanced view

Regina wrote:

You are again incorrect, I said in my 2nd comment that I'm talking about share of responsibility, I agreed it’s the client who provides the accounts  but at the end of the day it’s the accountant who posts the adjustments (or none at all in this case) and therefore he should take his part.

Yes, his part. But, following this second comment you've said things like

Regina wrote:
If the accountant allowed some disallowable expenses in the tax return, the client has the right to complain about his incompetence and ask for compensation/refund of accounting fees.
No grey area. The accountant is incompetent for allowing disallowable expenses on the return, so compensation should be paid. No recognition that the disallowable expenses could have got through because the book-keeper recorded them in a way that, without inspecting the invoices, made them look allowable. No recognition of any responsibility of the client for making sure his records are correct. Just immediate call for compensation from an "incompetent" accountant.

Quote:
Otherwise Stepurhan can you explain what’s the purpose of using an accountancy firm, if you think they are correct 100%?
You are the one acting as if you are 100% correct. Unless someone agrees with you (and you only quote those parts that do) you seem unwilling to take any other view on board. Not a lot of point explaining to someone that won't listen.
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Replying to Justin Bryant:
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By User deleted
25th Sep 2015 11:25

you are not listening

stepurhan wrote:

Quote:
Otherwise Stepurhan can you explain what’s the purpose of using an accountancy firm, if you think they are correct 100%?
You are the one acting as if you are 100% correct. Unless someone agrees with you (and you only quote those parts that do) you seem unwilling to take any other view on board. Not a lot of point explaining to someone that won't listen.

You are the one who seems to not listen (or in this case not read properly). I'm not saying that I'm 100% correct but the issue I don't understand is why you think accountancy firms are 100% right, when they charge to provide a service. As a client I would expect this service to be right, as for any other services you may take with a legal consultant, or business advisor etc...

Your comments can have a negative impact on the roles of accountancy firms, basically you are implying that anyone can set up a practice, get the data from the client, submit those without doing any checks (and maximise their profit by doing the minimum work), as at the end of the day it's the responsibility of the client.

 

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Replying to Wanderer:
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By User deleted
25th Sep 2015 11:45

Again I have to repeat myself as people can't read properly

ShirleyM wrote:

You have unrealistic expectations if you expect an accountant to spot every bookkeeping error.

Please avoid replying if you haven't read previous comments. I never said that, I worked in practice, I know what's involved.

I'm now looking things from a client's point of view and realising that most accoutancy firms are getting away with this issue since they're not taking responsibilities for the accounts which they prepared (and again I'm referring to some basic checks on some specific accounts, not going through every single transactions).

I hope you have now understand and don't have to repeat myself again.

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Replying to Tax Dragon:
By Duggimon
25th Sep 2015 11:51

Have they been asked?

Regina wrote:

ShirleyM wrote:

You have unrealistic expectations if you expect an accountant to spot every bookkeeping error.

Please avoid replying if you haven't read previous comments. I never said that, I worked in practice, I know what's involved.

I'm now looking things from a client's point of view and realising that most accoutancy firms are getting away with this issue since they're not taking responsibilities for the accounts which they prepared (and again I'm referring to some basic checks on some specific accounts, not going through every single transactions).

I hope you have now understand and don't have to repeat myself again.

 

Are you talking about basic checks on specific accounts which the accountants have been asked to check? Because if the client expects a low fee because they're submitting records which they state are correct then the accountant isn't going to spend a lot of time going through specific accounts in detail, particularly if the totals don't appear at all unusual. If there is a stated expectation that the accountant is checking these items and they are not doing so then clearly the accountants are at fault.

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Replying to Sarah Z:
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By User deleted
25th Sep 2015 11:59

Normal work

Duggimon wrote:

Are you talking about basic checks on specific accounts which the accountants have been asked to check?

No normal checks/work you would do when you receive a TB from the client. Would you post it as it is into IRIS?

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Replying to Tax Dragon:
By Duggimon
25th Sep 2015 12:05

Sometimes

Regina wrote:

Duggimon wrote:

Are you talking about basic checks on specific accounts which the accountants have been asked to check?

No normal checks/work you would do when you receive a TB from the client. Would you post it as it is into IRIS?

If that's what I was asked to do, yes. We have a wide range of clients, some with FDs who are qualified CAs themselves, some who drop off a poly bag of receipts every 3 months. It's all about being clear at the outset what level of assurance you provide and that will vary from client to client, as will our fees which are based entirely on how long the work we do takes.

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Replying to Tax Dragon:
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By User deleted
25th Sep 2015 12:12

No way

Duggimon wrote:

Regina wrote:

Duggimon wrote:

Are you talking about basic checks on specific accounts which the accountants have been asked to check?

No normal checks/work you would do when you receive a TB from the client. Would you post it as it is into IRIS?

If that's what I was asked to do, yes. We have a wide range of clients, some with FDs who are qualified CAs themselves, some who drop off a poly bag of receipts every 3 months. It's all about being clear at the outset what level of assurance you provide and that will vary from client to client, as will our fees which are based entirely on how long the work we do takes.

Sorry but I disagree here. As a good accountant I would check some ledger accounts (repairs, fixed assets, etc..) to see if there are some obvious mispostings (in my previous practice we used to that, normal compliance), I don't need to be asked from the client, who most of the time they are not accountants themselves and therefore they don't know what to look for.

 

 

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Replying to Tax Dragon:
By ShirleyM
25th Sep 2015 12:22

Have you read your own comments?

Regina wrote:

ShirleyM wrote:

You have unrealistic expectations if you expect an accountant to spot every bookkeeping error.

Please avoid replying if you haven't read previous comments. I never said that, I worked in practice, I know what's involved.

I'm now looking things from a client's point of view and realising that most accoutancy firms are getting away with this issue since they're not taking responsibilities for the accounts which they prepared (and again I'm referring to some basic checks on some specific accounts, not going through every single transactions).

I hope you have now understand and don't have to repeat myself again.

My first comment .... you are very rude (see above). It will deter anyone from trying to help you at all.

For example if the client's bookkeeper posts capital items into expenses, overheads includes various repair costs,  personal expenses, legal expenses, no prepayments or accruals are posted even if there are items that don't belong in the period.

Your comments (pasted above) certainly implied that you expected the accountant to pick up all bookkeeping errors. If not, those comments are meaningless.

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Replying to wendybradley:
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By User deleted
25th Sep 2015 11:52

This

Duggimon wrote:

If however they hand over records saying these are our records, they are mostly correct but please pay attention to the items in repairs that may be capital, possible disallowed expenses under miscellaneous and a couple of other items we weren't sure about then the accountant will deal with those items as appropriate and it's obviously the accountant's fault if they are then wrong.

Duggimon is this the issue I'm having, nothing else. The people here are misunderstanding (twisting?) my words. There is a split of responsibilities here, for the client and accountant.

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Replying to ireallyshouldknowthisbut:
By Duggimon
25th Sep 2015 12:01

I don't think it's malicious

Regina wrote:

Duggimon wrote:

If however they hand over records saying these are our records, they are mostly correct but please pay attention to the items in repairs that may be capital, possible disallowed expenses under miscellaneous and a couple of other items we weren't sure about then the accountant will deal with those items as appropriate and it's obviously the accountant's fault if they are then wrong.

Duggimon is this the issue I'm having, nothing else. The people here are misunderstanding (twisting?) my words. There is a split of responsibilities here, for the client and accountant.

 

I think the misunderstanding is because you haven't (unless I missed it) stated that the accountant was specifically asked to check these items. There can't be an expectation of the accountant automatically knowing where to check and where to skip over without some level of engagement.

If you're handing over the records and drawing specific attention to problem areas then you are engaging them to ensure everything is correct in those areas but if the expectation has been set that the records will be treated as free of error then the accountant is not to be blamed if there turns out to be mistakes, even if they are in the most common problem areas.

I think to be honest the biggest issue in this regard is that people generally are bad at setting that level of expectation explicitly.

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By jon_griffey
25th Sep 2015 11:16

Expectation gap

The typical reputable firm would be diligent in the preparation of accounts and not want their name associated with rubbish and so would likely go over and above what is strictly required in their letter of engagement.  This doesn't extend to picking up every misposting.  Probably many clients expect precision, but this is not possible.

Here is an extract from the template letter of engagement from ACCA.

...we shall not seek any independent evidence to support the entries in the accounting records, or to prove the existence, ownership or valuation of assets or completeness of income, liabilities or disclosure in the accounts. Nor shall we assess the reasonableness of any estimates or judgements made in the preparation of the accounts. Consequently our work will not provide any assurance that the accounting records are free from material misstatement, irregularities or error.

To be honest I find the wording a bit embarrassing. Like the figures in the accounts somehow fell from the sky into Iris with no input from the accountant.

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By ARP99
25th Sep 2015 12:12

Exactly

You haven't stated what was agreed with the accountant.

 

I initially thought you were saying the accountant filed the wrong document at companies house.

Was there an audit? 

Did they have access to your paperwork and accounts system?

Or did you send them a shoddy TB and are perplexed as to why they couldnt mind read what errors were in there?

You seem to think they should have revisited your entire years work, line by line, how much are you paying them? If thats the case, why is your employer paying you to prepare a TB? He could get by with a PL clerk and a Credit Controller if you think the accountant can pick up every error you've made.

 

My advice is you need to get a proper understanding of the accountants role in respect of your country, this currently reads like you are trying to find someone to blame errors on.

 

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Replying to Tax Dragon:
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By User deleted
25th Sep 2015 12:20

Again read properly

And here we have another person who don't have a clue and hasn't read previous comments.

I re-quote this for you too ARP99

Regina wrote:

Please avoid replying if you haven't read previous comments. I never said that, I worked in practice, I know what's involved.

I'm now looking things from a client's point of view and realising that most accoutancy firms are getting away with this issue since they're not taking responsibilities for the accounts which they prepared (and again I'm referring to some basic checks on some specific accounts, not going through every single transactions).

I hope you have now understand and don't have to repeat myself again.

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By User deleted
25th Sep 2015 12:44

ShirleyM wrote:

ShirleyM wrote:

For example if the client's bookkeeper posts capital items into expenses, overheads includes various repair costs,  personal expenses, legal expenses, no prepayments or accruals are posted even if there are items that don't belong in the period.

Your comments (pasted above) certainly implied that you expected the accountant to pick up all bookkeeping errors. If not, those comments are meaningless.

I don’t need this kind of help if what you do is just deliberately misunderstand my comments and twist them. Please ignore me.

 

Duggimon wrote:

If I did so on every job I do I would be strung up for massive inefficiencies. If I thought from a top level analysis there was something wrong I might ask the client to double check their figures before I submitted but I wouldn't look at underlying records if not engaged to do so and that is not me being lax in my duties.

In my opinion this is a difference between a good and bad accountant. A minimum of check/review of the accounts is required (as I said I’ve seen that in various practices) and if someone is taking the figures as they are and posted them into IRIS because “he wasn’t asked to check” I believe this is not a good practice. Most owners are not accountants and even they do their best to keep the accounts in order, there is a good chance of some obvious errors which an accountant can easily spot.

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Replying to Tax Dragon:
By ShirleyM
25th Sep 2015 12:56

With pleasure :)

Regina wrote:

ShirleyM wrote:

For example if the client's bookkeeper posts capital items into expenses, overheads includes various repair costs,  personal expenses, legal expenses, no prepayments or accruals are posted even if there are items that don't belong in the period.

Your comments (pasted above) certainly implied that you expected the accountant to pick up all bookkeeping errors. If not, those comments are meaningless.

I don’t need this kind of help if what you do is just deliberately misunderstand my comments and twist them. Please ignore me.

There wasn't any 'deliberate' misunderstanding (and that comment of yours is very offensive). I took the trouble to explain why I had come to that conclusion, so you are the one who is twisting words.

Anyway, rest easy, I will follow your request to ignore you.

 

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Replying to Tax Dragon:
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By User deleted
26th Sep 2015 11:39

ps.

ShirleyM wrote:

Regina wrote:

 Please ignore me.

Anyway, rest easy, I will follow your request to ignore you.

I specifically asked you to ignore me (which you agreed) however unbelievable you can't help yourself by commenting again.

We are trying to get this thread back to normal as this has been going on for too long now, and we don't need further diversions.

Thank you.

 

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By Tim Vane
25th Sep 2015 12:48

Honestly, it's like having a conversation with a teenager.

"There's no point in talking to you, you just don't understand what I'm saying".

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Replying to Cardigan:
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By User deleted
25th Sep 2015 14:05

unprofessionals

ireallyshouldknowthisbut wrote:

Do we assume for all of this than Regina is the sloppy bookkeeper?

 

 

 

I'm sorry to disappoint you but I work in practice :-) and now please go to troll somewhere else, if you don't anything constructive to say. The same applies to all the others.

If you can't see my point, you are absolutely unprofessionals

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Quack
By Constantly Confused
25th Sep 2015 13:03

Oh Canada!

 

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Replying to Anonymous.:
Routemaster image
By tom123
26th Sep 2015 09:13

I love Canada

Constantly Confused wrote:

 

 

Sadly I don't get to travel there with work any more.

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Out of my mind
By runningmate
25th Sep 2015 13:11

Repeating myself now

Near the start of this thread I said

Some accountants will look at the figures for the year & then decide if they look about right & only go into more detailed checking in relation to any figures that don't look right.

So whether the accountant is to 'blame' will depend to some extent on how large the errors were & what type of errors they were.

I do not think that anyone, except Regina, has disagreed with that.

RM

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By ARP99
25th Sep 2015 13:24

OK OK, I give up

Regina, you are 100% correct, what has happened is an outrage and the accountant responsible should not only be struck off, but frankly jailed, for life.

 

Happy now? 

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By justsotax
25th Sep 2015 13:53

wow...

definitely get the impression this is the bookkeeper....needs to loosen the tie and lose the attitude...but as with many....until they get the answer they want they don't stop arguing.

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By Ben Lauritson
25th Sep 2015 13:59

Concrete or theoretical?

I've been wondering throughout the entirety of this thread, is there actually a concrete problem here that needs resolving or is this a theoretical discussion? It's a bit difficult to tell between all the virtual stones being thrown about.

Not that I have anything to contribute really. I'm just a casual observer :)

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