Reconciliation of accounts

Question

What happens if the Clerk cannot reconcile last year's accounts? Is there an amount below which the auditors don't worry eg less than £100 or percentage of total budget?

Answer 1

Others may disagree (and that's fine by me!) but I would say it is up to the council, not the auditor, to take a view on this.

By way of an example, I once failed to balance my accounts by around £12 on budgeted income of circa £200K.  I never did find it,  My council took the view that it was costing more to look for the £12 than it was worth finding it, and therefore wrote it off as "an administrative error".  That was written into the accounts so that by the time they got to the auditor they balanced.

So if its a piffling amount vis a vis the overall the budget then writing it off is an option.  If it's a significant amount then, sorry, you need to keep looking.

Lets see what others think.

Answer 2

External auditors won't worry about rounding errors of up to £2 but otherwise would expect to see a balance and any non resolved issues would only rebound next year so worth attempting to get it right even if it means putting in an "administrative error" figure, provided that figure was small.  Even for a larger council, I'd worry about £100!    It is really frustrating when it happens as resolving it requires a rather painstaking trawl through the bank and cash book to try to find it but I agree that sometimes if the amount is small, is it really worth it?

Comments

I don't understand why these issues are only brought up at the end of year audit, do councils not reconcile balances at each meeting ?  Granted we are a very small PC but we do balance at every meeting that way no issues or very easily detected and corrected.

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I absolutely agree with this.  I always did a reconciliation every month regardless of the size of council I worked for.  It saved many sleepless nights!!!

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My council does too but I guess some don't.

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If the accounts cant be balanced, can Chair and RFO still sign off the forms but add a note referring to the inconsistency?

Answer 3

Isn't this what accountants are paid for? At the very least the OC should have a suitably qualified accountant to act as their internal auditor who should be available to advise in the event of the appointed RFO being unable to meet the required level of book keeping for the PC. Simple re-conciliation of accounts should be declared at each PC meeting thereby giving early indications of "lost" items. It should never become a matter for the external auditors to "worry about"

The RFO would be an employee of the council and should be suitably adept at reconciling accounts accurately and defined in their job description. If not then their training should be the first step in solving the matter.