Case Study Number Three

D & K Accounting Services have been asked to visit a potential client as the owner has been doing his own accounts and is spending a lot of time with them and struggling to keep them correct.

This is what we found:

The Business did not have a bookkeeper as the owner/managing director was doing the accounts. He found it difficult to apply the time needed and wasn't 100% sure as to how the system worked. There was also lot of paperwork passing through the business.

  • The owner had a good computer knowledge but had "guessed" somewhat as to how things should be entered.
  • The owner was not aware of how the chart of accounts worked and how the system could give him the information he wanted
  • The owner had made numerous mistakes in the vat reporting
  • The owner had not addressed the banks and had entered the payments to holding accounts.
  • The owner did not know how to use his debtors and creditors properly and did not understand how to differently enter invoices and receipts and had used a "Sundry" system. He did not know how much he owed or was owed.
  • The owner was not aware of the rules of "Cash Accounting" and how it should affect his entries.
  • The owner had finally got to a point where the accounts were no use to him at all and it was pointless for him to try to use them for his accounting needs. The mistakes out-weighed the correct.

The Result:

D & K Accounting Services took some time with the owner in analysis of the accounts. We suggested that the accounts were in such a complicated state that a full rebuild of them would be the best option - basically to start from the beginning again. The owner did not wish to take this route so we began to correct the accounts. We had a huge volume of paperwork to contend with and had to set up a simple but efficient filing system. We had to address the current paperwork to ensure records were correct going forwards whilst also correcting the historical and the volume of paperwork did present problems. We had to speak to one or two suppliers for extended statements and using this basis and the records from the bank statements we were able to present a set of accounts in time for the year end. We explained the working of the chart of accounts and set up the profit and loss reporting to give the owner specific detail where he required. We managed to get all the reconciliations completed and advised how the systems could be used going forwards. The correcting of these accounts took many months and was a difficult task. We assisted in reducing the debtors that had mounted up by doing credit control work and we are still looking after the full financial side of his business, enabling him to concentrate on the other aspects of his rapidly expanding company.

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