Book Keeping detective ( part 2)

Here I am once again, I was cut up in another messy case and I have had sleepless nights trying to unravel the mystery of the dreaded opening balances. This case was so challenging, that I handed in my towels, back to the previous accountant to sort out his mess!

Anyhow back to my last case with Ms Lia Bility

Evidence 1 Opening Balances

Findings

The accountants Messrs No Discount & Co had sent the adjusted trial balance for Ms Lia Bility to enter into sage, but this was buried under the paper work on her desk!

Possible Verdict

Ms Lia Bility with the help of the bookkeeping detective will enter the details into sage

Evidence 2 Sales Ledger balances

Findings

Ms Lia Bility had entered some of the receipts from the customers as bank receipts instead of customer receipts. So the sales figure were overstated and the debtors figures high as the receipts were not allocated against the customer accounts.

Possible Verdict

The bank receipts are to be reversed, and the receipts re allocated against the correct customer accounts

Evidence 3 – Purchase Ledger Balances

Findings

Ms Lia Bilty said that the previous temp had entered these transactions (really I thought, – a case of shifting the blame!) Again it was clear that the payments had been entered as bank payments which meant the purchases were overstated, and creditor’s figures remain high.

Possible Verdict

The bank payments are to be reversed and the payments reallocated correctly against the supplier’s accounts.

Bank Reconcilliation

Findings

Yes, Yes, I was correct a case of “cooking the figures”

Possible verdict

Using the error correction in Sage Ms Lia Bility could untick all the reconciled transactions and re do the bank reconciliation again and amend the adjustments in the suspence account.

Petty Cash

Findings

Well, on closer inspection, their were some transactions with the details “ I O U” Ms Lia Bility confessed.. wait for it!!!!! At times she gave staff members small loan from petty cash, and sometimes they did not pay back!!! She also said that at times she paid for items but lost the receipts and could not record them in the system

Possible Verdict

Well I am not sure here! The company has a set procedure for petty cash which Ms Lia Bility failed to operate. She would have to recover the money back from the staff involved – although the main person had left the company. The directors of the business had to be informed, but they were also guilty of requesting petty cash and not giving receipts!

Salaries

Findings
This was a case of the salary journals not posted correctly.

Possible Verdict

To record the salary journals so that the true Gross salaries and employers NIC are recorded in the Profit and loss and the PAYE and NIC recorded in the balance sheet, and everything being equal once the payments have been made the balance sheet accounts should return to zero!

Trial Balance

Findings

This was a case of transactions being posted under the wrong nominal code! So some purchases had income codes, whilst income codes had purchase codes!

Possible verdict

The transactions involved could be amended with the right codes.

Management Account

Findings
With all the mistakes above no wonder the accounts did not make sense,

Possible Verdict

The directors to have an overview of how Sage works, they will attend a course on how to understand management accounts

With all this intact, I decided to have a cup of strong coffee, I noticed I had to ask Ms Lia Bility for this, when she came back looking a bit suspicious, I was not sure whether to drink it as I thought it may be laced with something to get rid of me!

I told her my findings and possible verdict..Oh my, the tears started flowing and she was worried she would loose her job! What could I do, but listen, reassured her that she will learn by her mistake and this would make her a better bookkeeper. I also sneakily told her to have a sip of my coffee (I had not drank it) she did not want any! I wonder why?

Conclusion

Anyhow I had a meeting with the main director and the accountants. The director was not very pleased and they decided to discipline Ms Lia Bility, put also give her the opportunity to attend some training courses, and be supervised closely. The accountants Messers No Discount & Co recommend that instead of making all the adjustments, the bookkeeping was to be redone again. So the Sage data was restored to when the accountants had completed their accounts, the adjustments to the trial balance entered, and MS Lia Bility will work with another experienced bookkeeper Mr Asset.

I hope you have enjoyed this case, please let me have your comments! I am of now for a short break before I take on the next case of Payroll year end!

Genny Jones is a Fellow member of the Association of Accounting Technicians. She has over 15 years experience of delivering training courses in manual/computerised accounting and payroll. She specialises in Sage Accounts, Sage Payroll, and Quick books Accounts and Payroll.