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Post Info TOPIC: Dealing with missing Source Documents
MattL


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Dealing with missing Source Documents
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Hi all.

I'm a newbie on here, but so glad I found this forum.

I've recently received confirmation that I've passed my IAB level 3 exams, and now there is nothing preventing me from starting my Bookkeeping business.

However, I am really panicked over the possibility of clients not providing all source documents for the period or dipping into their business accounts for personal use and not recording it, or their not keeping other suitable records (such as income records not matching bank deposits or Petty Cash not reconciling with actual Cash).

I've been told that it's a case of 'rubbish in, rubbish out' and there is nothing a bookkeeper can do if the books are inaccurate because the client cannot provide any evidence of a transaction, and that you just have to do a 'best fit' with the data you have.

Please could anyone put my mind at rest as to proper procedures for this eventuality?

My common sense tells me that any undocumented transactions should be posted to a Suspense Account until a Source Document can be provided. If no document is forthcoming just post the item as Drawings.

Am I barking up the right tree there?

In short, I guess my question is 'how responsible is the Bookkeeper for accuracy'?

Can anyone give me a comprehensive list of Source Documents required from the client at month end.

Is it good practice to recommend clients to use alternate chequebooks / paying-in-books so they still have books to use whilst I am in posession of the others. and to arrange with their bank to receive bank statements that cover the whole month (1st to 31st)?

Aaaarghh!! So many niggling questions I have.

Anyway, thanks in advance for any replies, and sorry for the rambling question!!


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Accountsguy


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Hi Matt,

Welcome to The Book-keepers Forum! 

Firstly a book-keeper can only be as accurate as the information he/she is given. Sounds obvious (not always to the client though), but you really can only go by the info you are given.

If you can't ascertain if an expense relates to the business, either post it to drawings or set up a query account (suspense would be fine, you just need to make sure you clear it down regularly). If your client cannot provide evidence for the expense, but still insists it is a business expense, do as your client says. Your client signs the accounts and their own tax return, not you, and ultimately they take responsibility for any errors.

Do make sure you keep a list of queries and answers (email is best for this if possible) as proof if they come back to you. All clients will lose receipts from time to time and this is no biggy. But at the end of the day, if you have a client who can't consistently prove their activities, are they really a business you want to be associated with? However, 99% of clients will be fine so don't worry too much.

Instead of asking your client for their cheque book each month, ask them to jot down/email you details of all the cheques made out in the month. Do the same for the paying in books. This saves a lot of hassle, and clients seem to appreciate not losing their cheque/paying in books each month!

It doesn't really matter what date your clients bank statements run from. Just reconcile the account up to the last date on the relevant statement. If your client has access to internet banking ask them to print off an up to date statement. The documents/info you will need to ask your clients for are generally the following:

-All sales invoices (or a sales book, even a diary will help)
-All purchase invoices
-Bank statements
-Loan Statements
-Any new HP agreements
-Assets purchased/ disposed of
-Petty cash receipts
-Wages/PAYE details
-Drawings/salary details
-Deferred income

Hope this helps and congratulations on passing your IAB level 3 exams!

Best regards

Guy

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MattL


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Thank you Guy.

That was a very re-assuring answer.

I'll be back with some more queries soon.

Cheers.

Matt

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