Preparation of Accounts

The 65 Steps to prepare computerised accounts:

1. Establish that the accounts are required by HM Revenue
2. Ensure that the year-end date is still correct.
3. Review databases for any changes of address or partners etc.
4. Review file notes from previous year.
5. Review correspondence file and contact database notes and email history.
6. Ensure Job sheet has been completed.
7. Identify book-keeping software used and restore the data.
8. Backup the data to the client folder on the file server.
9. Extract a trial balance from the bookkeeping package and ensure it balances.
10. Compare client's codes used in current year with previous year to ensure consistent.
11. Run "bring forward" routine on our statutory accounts preparation system.
12. Extract opening balances from our accounts preparation system.
13. Compare our opening balances with opening balances on client's software.
14. Prepare spreadsheet of opening balance differences.
15. Analyse opening balance differences and prepare journals to correct.
16. Post client's trial balance onto our accounts preparation system,
17. For any balance sheet accounts with differences identify the reasons and adjust as necessary.
18. If a bank reconciliation is available from the client, check that this agrees to the trial balance.
19. If a bank reconciliation is not available review the reconciliation within the book-keeping system to ensure all old transactions have cleared the bank.
20. Write up the bank reconciliation in our supporting schedules.
21. If there is a significant problem with the bank balance, contact the client to either arrange for the bank reconciliation to be brought up to date or agree a fee for us to do this on their behalf.
22. Adjust trial balance for any errors arising in bank reconciliation.
23. Prepare list of opening fixed assets with depreciation to date.
24. Calculate depreciation for the current year.
25. Prepare list of additions and disposal proceeds.
26. Calculate profits and losses on disposal and record the journal to remove the original cost and depreciation to date from fixed assets to carry forward.
27. Adjust trial balance for depreciation, disposals etc arising from Assets schedule.
28. Produce a list of debtors from the client's book-keeping system as at the year end date. Ensure the total per this list agrees to the trial balance.
29. Critically review the list of debtors, looking for potential bad debts and unrecorded sales invoices (ie minus balances), which would indicate understated income and VAT. Also review for unusually high amounts or other indications of duplicated invoices. Contact client for clarification as necessary.
30. Adjust trial balance as necessary from debtors' review.
31. Produce a list of creditors from the client's book keeping system as at the year end date. Ensure the total per this list agrees to the trial balance.
32. Critically review the list of creditors, looking for older balances and unusually high balances, which may indicate duplicated entries or payments incorrectly entered in the system. Also look out for minus balances indicating unrecorded invoices (and therefore unrecorded expenses and unclaimed Input VAT). Contact client for clarification as necessary.
33. Adjust trial balance as necessary from creditors' review.
34. Summarise copies of VAT returns as submitted to the VAT office. Extract details of payments made to VAT office from client's book-keeping records and compare to returns submitted.
35. Reconcile the turnover as the accounts to the turnover shown in the VAT records. Ensure that VAT has been accounted for at the correct rate.
36. Prepare a VAT control within our accounts schedules by extracting the VAT outputs and VAT inputs from the book-keeping records as if they were on standard accounting for VAT.
37. Ensure VAT control balance agrees to trial balance.
38. Ensure VAT control balance agrees to the last VAT return (or partial return if the VAT quarters do not coincide with the year end date) plus adjustments arising from debtors, creditors and bank journals. For VAT cash accounting there should be a (further) difference between these figures equal to the VAT on debtors less the VAT on creditors.
39. Reverse last years prepayments.
40. Prepare a schedule of current year prepayments and adjust trial balance.
41. Reverse last year's accruals.
42. Prepare a schedule of current year accruals and adjust trial balance.
43. Prepare summary of PAYE records for the financial year. 44. Prepare PAYE control
44. Ensure the PAYE creditor is equal to the last month or (part) quarters payment due.
45. Adjust trial balance for PAYE as necessary
46. Ensure that PAYE summary agrees to the trial balance. Refer to client if there are any differences.
47. Prepare schedule(s) for Bank Loans and other borrowings. Calculate interest.
48. Adjust trial balance for interest etc as necessary.
49. If stock valuation has not been given, prepare an estimate based on margins, stock figures in prior years and stock turnover. Contact client for their valuation.
50. Adjust trial balance as necessary.
51. If no Work in progress supplied by client review sales invoices raised at beginning of new accounting period and calculate estimate. Contact client for their valuation.
52. Review any remaining accounts from initial critical review (step 14) for any adjustments.
53. Adjust accounts as necessary.
54. Prepare detailed analysis of Repairs, sundry expenses, legal expenses, professional fees, commissions paid, consultancy fees, insurance and any other accounts where tax treatment may be different to accounts treatment or if commonly queried by HM Revenue. Any expenses where the description does not explain the nature of the expense and no invoice is available should be queried with client.
55. Adjust trial balance as necessary, and update any balance sheet schedules (eg Fixed assets, prepayments) affected.
56. Ensure all schedules prepared tie up to the adjusted trial balance.
57. Summarise queries arising, noting points already covered in the process of preparing trial balance.
58. Produce initial draft of accounts and critically review including key performance indicators and trend analysis.
59. Prepare a letter to accompany draft accounts requesting clarification and confirmation where assumptions and estimates have been made or information is missing.
60. Draft accounts and letter to be reviewed internally by manager or principal before sending to client.
61. Meeting with client to discuss draft accounts and agree final amendments.
62. Update notes / queries and supporting accounts schedules from points arising from discussion with client.
63. Prepare and input final journals onto our accounts preparation system.
64. Critically review final accounts.
65. Prepare accompanying letter, bound and unbound copies of accounts and send to client.