Accounting & Bookkeeping & Small Business Forum

[Ford]

Hello
I have a customer who is new to the whole accounting process and makes loads of mistakes on their computer accounting software system.

They are using Cash Book and Accounts payable. When a payment is made against a supplier invoice the payment moves into cashbook so this can be reconciled with the bank statement.

What the customer has done has made supplier payments through the system at the wrong date for example - Accounts payable module was in May and because the customer was behind in the processing, the cheques that were physically written out in July, the customer dated them in the system at the 31st May!

Customer didn't understand that the payment would affect the total owing for the supplier in the computer system and when the system didn't match to the suppliers statement what was owing at the end of May, they did a journal entry to try and balance it.

Accounts payable is now in June, I could reverse the May payment which would come through in June, then I could reverse the journal. Or I could just leave the payment to reconcile in July and hope the customer doesn't enter another payment in July. Then I suppose I will still need to reverse that balancing Journal in June or July.

Not sure which is the best way to fix it.

Thanks
Ford

[asnider]

i am confused....could you provide more info?

///*** I replied to wrong post accidentally, please disregard ***///

[Ingmar]

I think you should present the to options to your client, and let the client decide what the best way of fixing it is. This way, your client will also see the effect of the error, and will pay better attention to this stuff in the future. If you send him a bill for the hours you spend on the acocunt, he will have a better view of what is being done too.

[dp1903]

Quote: I have a customer who is new to the whole accounting process and makes loads of mistakes on their computer accounting software system

From what you describe, it sounds to me like these people have no business entering transactions into computerized accounting software. I would recommend that they hire someone as a bookkeeper who knows basic accounting. I suspect that correction of problems will cost them just as much if not more in the long run.

I worked as an employee for a company which had been in business 2.5 years before I was hired. They never consulted a CPA or non-certified accountant to help them with their books. What I uncovered was a nightmare. Over 2 years their Cost of Goods Sold was overstated in excess of $200,000 on revenues of only $380,000. Their accounts payable was overstated in excess of $40,000 and Owner's Equity was understated by at least $180,000. All as a result of the company and its management never having the books reviewed by a competent person, CPA or non-certified accountant, on a monthly or quarterly basis.

I would use my own judgment on how to correct their errors. They obviously don't understand the proper method to, nor the consequences of different ways of correcting the errors. Why would you ask them how to do it when they have no understanding of accounting? You are the accounting professional. Just my 2 cents worth.

I'm not familiar with the software you speak of. If the problem is the date the checks were written, I'd modify the computer accounting so that it agrees with when the checks [source documents] were actually written. That way your bank account will reconcile with the computer monthly and you won't have to remember that "a special situation" occurred at year end and won't have to remember just exactly what transpired. An audit will verify that the computer accounting agrees with the source documents [checks in this case].

[Ford]

Hello
Thanks for your suggestions
The accounting system is modular accounting - Modules they have are Acounts receivable, Accounts Payable and Cashbook and General Ledger. Sorry if I didn't explain that fully.

Customer had already purchased the software before I came on the scene. My job is to install and support users of a computer accounting software package - not teach users accounting procedures, but in this instance client has an office person who has no idea of accounting procedures. I certainly would not have recommended the package to them. But they have it.

Thanks
Ford

[dp1903]

As long as you have someone incompetent in performing the accounting function you will have problems, some of them very serious. In my opinion, you will constantly be coming across things done wrong, very simple things as well as more complex. It's like Ray Romano's Dad [Everybody Loves Raymond TV show] trying to fix heat/A/C in Ray's house. Ray's wife wound up calling a professional in the end. Depending upon the frustration level, I might consider dropping this client. It could be too much trouble for what it's worth.

[Accountant101010]

does anyone know where i can find some good accounting articles?

david

[Ahshucks]

Have that person that made the error fix it. Explain how it should be handled in the future.