Dealing with clearing down unreconciled bank transactions (from 2014/15 accounts) in SAGE 50

Hi,

I wonder if anyone could advise me,

I have recently taken over a small companies bookkeeping since late August.
at which point 2015's accounts year end was Dec but the accounts were only finalised and submitted in September.

Now there had been some kaos prior to me joining the company in terms of the way in which the bookkeeping was being done from 2014 - early 2016 and it turns out our Accountants had to do a great deal of work to unravel the issues, however the long and short of it is that although I started in August, I have recorded (most of) this years transactions and I have reconciled ALL of this years transactions (to todays date) from the 1st January as 70 % of the years entries weren't in and no bank reconciliations had been done.

The situation at present is that my bank is reconciled up to date, but there remain some unreconciled items (about 30 transactions) dated 2014 and 2015still sitting on the bank rec and unreconciled items report.

I was told when i began the role that the accountants would deal with these transactions prior to the year end, but they weren't dealt with so I have now been told I have to deal with them.

Our accountant advised that given that the 2014, 2015 accounts are all dealt with and considering the banks were obviously all reconciled, these unreconciled items now remaining are to be 'assumed' erroneous or to be assumed to be duplicates or mistakes (which is likely the case, given the disarray from my predessesors)

I've been advised to clear down any figures less than £500, anything above this amount the accountant can deal with at our 2016 year end as some individual amounts are around 2.5K and this will make a significant difference to the accounts.

So essentially this is what i understand i need to do:
I have to reverse any Bank Payments, by posting Bank Receipts,
Reverse Purchase Payments by posting Purchase receipts to the ledger and the same with Sales Receipts, I would need to post Customer Refunds to reverse this.

Journal debits need a Journal credit to reverse and vice versa

My question is, is the above what i have explained the correct way to clear down the unredconciled items, (pressuming the entries are all duplicates or errors?)

I feel like there have been misallocations in the past hence why some of the entries remain unreconciled, as the wrong entry was probably reconciled in 2014, but theres nothing i can do about that now and the accounts are been and gone. So i just want to make sure that giventhe situation, this sounds like the right course of action.

I also need to run the Quarterly VAT return for October and hence I want to post the reversal of the unreconciled items asap in order to do that.

Please advise if you think there is anything else i may be missing or if i have explained the right way to erase these unreconciled transactions off the 'unreconciled transactions report'/ Bank Rec?

Also can i have a brief explanation of how it effects the Vat returns?
I assume i do need to 'include all unreconciled ites'
and I assume that if im reversing a transaction which was never Vat returned the contra will net off the figure, whilst if it has beeen reconciled in a previous return, it will just be captured in the current return.

Sorry for the essay, any advice would be appreciated!

Comments

  • JayneyJayney Just Joined KentAAT Student, AATQB Posts: 21
    Hi Ladybird85 - I have just accepted a job and have exactly the same problem - did you find your answer as I see that no-one replied to your post. If so, could you give me a few pointers about what to do? Many thanks
  • Ladybird85Ladybird85 Registered Posts: 3
    Hi Jayney,

    Well I didn't get any advice with this so in the end i just did the following:

    I just decided to reverse all of the transactions below £500, with the corresponding journal entry as mentioned above ie: reversed Purchase Payments by posting Purchase receipts to the ledger and the same with Sales Receipts, I would post Customer Refunds to reverse this.

    I just referenced each journal 'Correction Jan 2016' all dated 1st Jan 16 and I offset the amounts against each other in the bank rec to a zero balance.

    It cleared off a good 20 + transactions and now i am leaving the larger amounts for the accountant to deal with at year end.

    It is a nightmare because It even means that since doing that there are now a couple of balances for instance showing up on a customers account as outstanding (when they have in reality paid) Its just a case of me being unable to trace the allocation because it was probably misallocated (against a different debtor) in the previous year, however client would have proof of payment and its reflected on the bank... so i can't dispute it so i have to be mindful of this when carrying out credit control.

    I'm going to get the accountant to write/ off all those balances when he does the 2016 Year end... The accountants said they would make a decision as to what to do.

    They said i need to do more forensic work, as I have all the files which they don't have to hand as well as the system access etc, but I have done as much as I can in my view, they have been handling our accounts for years and I only started in August so i'm not doing any more as i dont want to mess with things.

    I cant understand what has gone on, and neither can they by the sounds of it... but they will have to sort it out when they close of 2016 accounts.

    I would advise you do the same, speak to the accountants ask them if you should reverse the entries if you have external accountants, but check with them first what they advise is best?

  • scribesscribes Just Joined Registered Posts: 4
    Hello
    Just happen to come across this and thought I would try and help.
    The first problem we have is our terminology or probably mine.
    If I have posted a bank entry twice by accident then I would go to corrections in Sage and delete the incorrect transaction.

    Then it will disappear from the bank req screen and you do not have to do any journals.

    It will not affect vat unless your cash accounting.

    In order to decide if an outstanding transaction should be deleted you would begin by looking at how it will affect your Debtors/Creditors.

    For example will deleting a purchase payment mean you now owe a supplier.

    With regard to leaving it for the accountants;

    1 This will cost the Co money.

    2 They will know less than you as its not there business.

    Go through the transactions with the directors or whoever is in charge, they should know the customers/suppliers better than anyone else.

    Hope that helps

    Dave
  • TrishHyTrishHy Registered Posts: 1
    Hi Dave,

    I need to clear down transactions from previous years and I'm worried in case if I delete transactions this will affect the year end accounts that have been signed off. Do you know if it is ok to delete/reverse unreconcilled transactions without affecting the year end figures?

    Thanks
    Trish
  • Ladybird85Ladybird85 Registered Posts: 3
    Hi Trish
    You can't delete them but you can reverse the transactions with journals dated in this current financial year.
    If you delete anything from last year's accounts you will cause changes to the year end reported figures so don't do this.
    Ask your accountants for assistance with the necessary journals you need to post in order to make reversal entries

    Best
    LB85
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