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Pre Preparing accounts both to record historic information,
and upon which to base future projections and planning, and the
implementation of robust systems of recording transactions are the bread and
butter of any accountancy practice.
The sections below contain links to
some of the specific services that Peter Brown & Co is able to offer. Clients of the practice can obtain further information by entering the
‘Client ‘ Zone’ and searching the index
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Accounts
preparation |
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The preparation of formal accounts to measure past performance is the core work of any accountancy practice. To be of any value in managing a business and in making future taxation plans; historical results should be produced in final accounts form as soon as possible after an accounting period end. The value of historical accounting
information to a business person diminishes very quickly as time passes, so
we are geared up to producing accounts for clients as quickly as possible. We
use all technological means available to speed up the process of accounts
production, so that our clients can receive their accounts in a readily
understandable format as early as practical. The fees for preparing accounts are always
based on the time spent, and the skills required will determine the level of
staff required, and hence the hourly rate to be charged. It follows that fees will be related to the
quality of the accounting records, the number of transactions and the
complexity of the work required. We will advise a client whenever we become
aware of improvements to the system of record keeping, so that fees can be
controlled. See ‘Bookkeeping Advice’. The number of transactions involved and
the complexity of the work will depend very much on the nature of a client’s
business, and therefore are largely not subject to as much control as the
system of record keeping. This is why fees will differ for different types of
trades, and trades having different legal structures, such as sole traders
and limited companies. With a new client, we will usually be able
to assess the likely fee level, based on our understanding of similar trades,
after we have reviewed the actual system of record keeping adopted. We are
therefore usually willing to give a fee estimate to a new client, and even
agree to cap a fee at a particular agreed level in the first year. In subsequent
years, we would discuss the actual time spent and the actual fee that should
have been charged with the client, so that the client can the fully
understand the future fee levels and the factors that govern them. For more detailed notes on fees, see the ‘Fees Webpage’ Clients of the practice can obtain further
information by entering the ‘Client ‘ Zone’ and searching the index
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The
engagement letter |
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It is both recommended good professional
practice and a requirement of the law relating to the provision of services
to set out in writing a clear explanation of the services we offer. This is
known in professional parlance as an ‘engagement letter’. So that any prospective client can
understand the full details of the basis upon which we undertake professional
work, we have placed a sample of our standard engagement letters on this web
site. To view them, simply click here for our engagement letters. Clients of the practice can obtain further information by entering the ‘Client ‘ Zone’ and searching the index |
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Bookkeeping
and systems advice |
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With any new client we will always review
the systems of recording and bookkeeping that is employed in the entity. It
is often worth investing a little time and effort at the beginning in order
to ensure that future accountancy fees are as low as possible. The requirements will vary from business
to business, both to meet the day to day needs of the business and to meet the
requirements of any regulators or tax authorities. The complexity of the
system of record keeping will depend very much on the size of the business,
and we will always seek to keep the demands of paperwork to the absolute
minimum. Very often, with a small business, it is sensible for us to try and
accommodate the system that the proprietor or director understands and is
used to rather than to try to impose what we consider to be the ideal system. For some businesses, there are
technological solutions to systems, such as EPOS systems in the retail trade,
or computerised stock systems, and we can advise on whether these are
appropriate and cost effective. We will always work closely with the
owners to try and improve the quality of record keeping, and we see it as an
important part of the accounts production process to have feedback to clients
suggesting ways in which improvements can be made. In the long run, this will
mean that accountancy fees can be kept to the lowest level possible. Clients of the practice can obtain further
information by entering the ‘Client ‘ Zone’ and searching the index |
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Accounting
for your income |
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Unless good systems are in place, it is
very easy to under or overstate the level of your income. This is
particularly so if the business has cash sales. The consequences of inadequate record
keeping are that Customs and Excise or the Inland Revenue may impose severe
penalties if they are not satisfied with the quality of the records. It also
means that the proprietor of the business cannot take informed business
decisions, because there may be uncertainty over the levels of trading
income. We will always assist a client in
correctly documenting and recoding his income, and we will institute
accounting controls when we prepare accounts to confirm the validity of the
income levels. We will always advise a client if improvements can be made. Clients of the practice can obtain further
information by entering the ‘Client ‘ Zone’ and searching the index |
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When
should records be written up?
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A distinction should always be made
between the prime records of a business, such as the invoices, till receipts,
supplier’s invoices, cheque book stubs and so on, and the secondary records,
such as invoice day books, cash books and other books of account. When we advise a client on the appropriate
system of record keeping, we will always help him or her distinguish between
the prime records, which must be written up at the time an event occurs or as
soon as possible thereafter, and the secondary records, which can be written
up after the event if the prime records are of sufficient quality. Not only does it make good business sense
to write up the prime records at the time, but the tax authorities will be
unimpressed if there is delay in writing them up. Clients of the practice can obtain further
information by entering the ‘Client ‘ Zone’ and searching the index |
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Our
record keeping and bookkeeping service |
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We cannot assist with the preparation of
prime records. That is the function of the business owner. The prime records must
be of a high quality and relevant to the business needs. We can advise on
what prime records should be kept and how they should be kept, but the onus
is on the proprietor to maintain those records. However, when it comes to secondary
records, not only can we assist in maintaining such records, but there are
many advantages in us doing so. Firstly, the records will be kept in a
structured, orderly way, and will meet the requirements of the tax
authorities. Secondly, if any problems are encountered because of
difficulties with the prime records, these can be tackled much earlier than
would be the case if we simply collected the records at the end of each
accounting year. Thirdly, the task of
preparing accounts could be much simplified, so reducing accountancy fees,
and reducing the time it takes to prepare accounts after the accounting year
end. We offer a fast, efficient, computerised
bookkeeping service, either at the client’s premises or at our premises, on a
very cost effective basis. Clients of the practice can obtain further
information by entering the ‘Client ‘ Zone’ and searching the index |
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What are
proper accounting records? |
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The Companies
Act requires limited companies to keep proper accounting records. The Insolvency
Act and the Statute of Frauds requires individual and partnerships to keep
proper accounting records. There is also a criminal offence of false
accounting if records are very badly maintained. What are proper
records? It all depends on the kind of
business. As explained elsewhere on this website we would always advise our
clients as to the nature of records a business of their type would be
expected to keep. In the context of limited companies there are very specific
guidelines as to what constitutes proper records, and these guidelines can be
usefully used for none limited companies. To be proper
records, the records must be up to date, containing prime records created at
the time of the event, kept in an orderly and structured way, secure from
damage or theft, properly backed up if computer records, and sufficient in
the context of the size and scope of the business to fully explain its
transactions. They should not rely on verbal explanations from the person who
created them. They should stand alone as independent documentation of the
transactions. Clients of the practice can obtain further
information by entering the ‘Client ‘ Zone’ and searching the index |
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Record
and bookkeeping notes for particular trades |
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Every type of trade has quite different requirements
for record keeping. Every type of trade has particular types of problems, and
particular areas that the tax authorities look particularly closely at. So, for example, with taxi drivers, the
cost of fuel in relation to takings and miles travelled is important. For
fish and chip shops, the gross profit margin is important. For pubs the
amount of ullage should be strictly controlled. For this reason,
we have developed specific notes for particular trades, covering the types of
records that should be maintained and the particular areas where attention
should be given. These notes are
available free to clients of our practice, but any non client may request a
copy at a fixed fee of £10. To order a copy
use the order form on the Advice on Line Web page, and instead of entering a
question, enter a request for the particular bookkeeping notes required
(quoting the reference number from below), and the fee, whether NIL or £10.
You can ignore the section of the order form that refers to the normal fixed
fee of £20. The areas
covered are: ·
Newsagents ref BN001 ·
Taxi and private hire operators ref BN002 ·
Fish and Chip Shops ref BN003 ·
Retail trades ref BN004 ·
Public houses and restaurants ref
BN005 ·
Hoteliers ref BN006 ·
Computer consultants ref
BN007 ·
Workers through agencies ref
BN008 ·
Financial advisors and insurance
consultants ref
BN009 ·
Estate agents ref BN010 ·
Solicitors
ref BN011 ·
Manufacturers ref BN012 ·
Wholesalers
ref BN013 ·
Importers and exporters ref
BN014 ·
Builders and workers in the
construction industry ref
BN015 ·
Service industries ref BN016 ·
Other trades and professions Available upon
specific request Clients of the
practice can obtain further information by entering the ‘Client ‘ Zone’ and
searching the index |
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Management
accounts and management information |
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Accounts are not only prepared for the tax
man. Regular monthly or quarterly
accounts, comparing actual performance against pre planned budgets can be a
useful tool in planning and controlling a business and helping it to achieve
its objectives. What matters when preparing management
accounts is timeliness. Management accounts should be prepared as soon after
a period end as possible in order that the maximum benefit can be obtained,
and so that decisions can be based on the up to date position. Management accounts will not only include
accounting information, but also detailed analytical data, and statistical
data so that the causes of events can be explained. Our firm can assist enterprises with
setting up and maintaining management accounting systems so that performance
can be adequately monitored and controlled. Clients of the practice can obtain further
information by entering the ‘Client ‘ Zone’ and searching the index |
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How to
interpret your accounts |
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The accounts produced by an accountant can be a very useful pointer to many aspects of a business. They can highlight the areas of strength and of weakness. They can be pointers as to the dangers of possible future insolvency. They can show how assets might be better utilised, and how the business might be better funded. However, it is
sometimes not easy to interpret a set of accounts, and to know where to look
for particular clues. Sometimes it is very easy to misinterpret a set of
accounts. When we prepare
the first set of accounts for a client, we will always explain what the
figures actually mean. Then in future years we will update that
interpretation with reports highlighting the significant figures and ratios,
to help our client make informed and wise decisions. Clients of the
practice can obtain further information by entering the ‘Client ‘ Zone’ and
searching the index |
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The
accounting SORP for charities |
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Our firm has many clients who are
registered charities. We have a specialism in this area, and supply charity accounting
software to many other firms of Chartered and Certified Accountants, and
offer a consultancy service to other firms. This means we are very familiar with the
workings of the Charity SORP (The Statement of Recommended Practice for
Accounting and Reporting by Charities). The SORP is issued by the Charity
Commissioners, under the auspices of the Accounting Standards Board, and lays
down the basis upon which charities should account for the funds under their
control and report the results of their activities. Because of the way the practice is
organised, having offices in converted stables in a rural location, we have
much lower overheads than many firms, and we are able to offer a very
professional service to charities at a substantially reduced fee compared to
the fees that might be chargeable by other firms. We can advise and assist charities in
obtaining grant aid, help them to institute accounting systems to monitor and
control their activities, and produce accounts in the format required by the
Charity Commissioners. Clients of the practice can obtain further
information by entering the ‘Client ‘ Zone’ and searching the index |
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How long
should accounting records be retained? |
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This is a very confusing subject, as there
are different regulations for different purposes. ·
Vat regulations require retention
of all VAT related records for three years after the last entry ·
Income tax regulations require
retention of all tax related records under a complicated formula which
effectively means approximately seven years after the end of the tax
year to which the records relate ·
Company legislation requires
retention of accounting records for three years after the end of the
accounting year (or six years in the case of a public limited
company). ·
Charity law requires the retention
of records for six years after an accounting period. ·
Prudence says that all records
should be kept for civil legal purposes for six years, or twelve
years for records relating to land, as legal actions can commence during
these periods. ·
There are also a number of other
regulations relating to record retention. Although
specific advice should be taken in individual circumstances, as a general
rule, we would recommend that all records, whether they be paper or
electronic records, be retained for at least seven years after the completion
of the period to which the records relate, or longer if the records relate to
land transactions. This requirement
would include keeping the means (eg computer software and hardware) that
would enable electronic records to be read. Records should
be kept in a dry, secure location, well indexed or referenced with labels,
and sensible precautions should be kept against theft, fire and other events.
Care should be taken to ensure that insurance policies cover the cost that
might arise from the loss of records, and the cost of reinstating the records
if possible. Clients of the practice can obtain further
information by entering the ‘Client ‘ Zone’ and searching the index |
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The
detection and prevention of fraud
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The effect of fraud and false accounting
can be devastating on its victims. It can cause businesses to fail, and
employees to lose their jobs. It can affect even the smallest of businesses.
It only needs a very small amount to be lost on a regular basis, and the
impact on profitability can be enormous. It can happen in any environment,
and the perpetrators can often be the very people who are most trusted in the
business. Fraud can be very simple or very
sophisticated, and prevention is the best measure. Accounting systems of
control should be well designed, and systems of record keeping should be
properly developed and maintained. Our firm can assist in this, as explained
elsewhere on this website. When fraud does occur, or is suspected,
then we can bring our auditing and forensic skills to bear to detect the
fraudster. Clients of the practice can obtain further
information by entering the ‘Client ‘ Zone’ and searching the index |
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