This guide includes the checklist and special steps involved in the preparation of financial accounts for the client. It is very useful for professionals in their early stage of career in the field of accountancy and want to learn how to produce accounts as quick as possible.
- Review the last year’s working file to get familiarised yourself with the specific issues involved in the
business and financial matters. Review notes to the partners and queries to get more information.
- Review Correspondence and Statutory files to gain the information about any changes in the
ownership or directorship of the company during the year. This will also help you to get information
about any Tax and compliance issues.
- Import Trial balance from Client’s bookkeeping software if the bookkeeping is done on regular basis
(mostly relevant with VAT registered businesses). If you are not provided with the trial balance and
have to do the bookkeeping at your end then you will have to just bring forward the balances from
last year in your accounts production software.
- Once Trial balance is imported to the accounts production software, the first step to be performed
is to check that the opening balances in client’s bookkeeping software match with the closing
balances in the accounts submitted to the companies house last year. You can start by matching the
previous year’s retained earning balance in client’s software with that of retained earnings in the
final accounts submitted. If the retained earnings’ balances match, then most likely the other
balances will also reconcile. If they don’t match then you will have to perform line by line matching
comparing both Client’s trial balance and trial balance in accounts production software for previous
year.
- Once the opening balances are matched, produce the accounts and check that the balance sheet for
both previous and current years is balanced.
Accounts workings and procedures:
Fixed Assets:
- Download a lead schedule from the Accounts production software and check that the brought
forward figures of Cost, Acc. Depreciation and NBV are all matching with the closing balances of last
year accounts.
- Download the nominal ledger of Fixed Assets Additions from client’s software and match the
balance with the balance on lead schedule. Check that the additions have been posted to the
correct account as sometimes they are posted to the cost b/f by mistake. If this is the case then all
additions for the current year need to be reclassified to the additions account.
, - Analyse the additions nominal ledger to check the items capitalised are all correctly treated. Some
items may be of revenue expenditure and have been wrongly capitalised. For larger amounts, check
the invoices to get more clarity. Attach the invoices to the additions’ nominal ledger for the ease of
reviewing the file.
- Check transactions in ledgers like repairs and maintenance and computer and software costs in
profit and loss account to find any items which should have been capitalised but wrongly
categorised as revenue expenditure. Invoices for large balances should be checked and matched
with the transactions.
- Calculate and post depreciation based on the depreciation policy if it has not been provided
already.
- For larger clients with number of fixed assets being added every year, a Fixed Assets Register should
be maintained.
- If an asset has been disposed off during the year, check that the profit/loss on disposal has been
calculated and included in the profit/loss account. The cost and accumulated depreciation of the
asset disposed off has to be written off from fixed assets. Seek for the sale documents of the asset
to verify the sale.
- If the assets have been revalued, then request a revaluation report from the client to confirm the
valuation in the accounts. Any revaluation surplus needs to be credited to profit and loss account
(not taxable). Make sure the date of the valuartion, property details and the valuer’s details have
been included in the notes to the accounts.
- Finally, check that the Net book Value of the assets for both current and last years on your lead
schedule is matching with the balances in the balance sheet.
Stock:
- Download a lead schedule from the accounts production software and check that both current and
last years’ figures are matching with the accounts.
- If the no figure has been provided for the current year, then you will have to transfer the last year’s
closing stock balance to opening stock in profit and loss account. The entry will be
Dr Opening stock (P/L)
Cr Finished stock (B/S)
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