Beware of suspense accounts, especially big ones!

Sounds boring but ignore at your peril otherwise you could be mightly embarrassed. Suspense accounts are a sort of cop out. If your book-keeper doesn't know what to do with the input then it could well end up in a 'temporary' suspense which means it's not reported properly.

The problem with a suspense is that it hides the true story and almost certainly distorts the accounts. We've just reviewed some company accounts from a prospective client. Right down at the bottom was a suspense account of some £352,781 and guess what, neither the owner nor the bookkeeper knew it was there. They didn't have the foggiest idea what it was and why it was there. Ignorance may be bliss but it doesn't help with producing quality information. It just might affect the year end accountancy bills as well...

The moral of the story is - don't let amateurs get in the way of quality otherwise there'll be consequences. It's not difficult to deal with, the starting point is to speak to someone who knows what they are talking about, like everything else in life or business.

By the way, in the accounts just described, the Balance Sheet didn't balance and not by the suspense account - another embarrassment.

Anthony Pilkington, Managing Director, BookCheck Ltd


This entry was posted in Business Development and tagged in Bookkeeping, Suspense Accounts, Balance Sheet by bookchadmin