12 June 2008 - IMA offers free comprehensive business review in time for legislative changes

IMA is conducting a free accountancy standards audit for local enterprises, offering a comprehensive, in-person business review followed by a tailored report containing everything a business needs to know to ensure compliancy with changing legislation. With Britain in the middle of a three-year process that represents the most significant change in law governing the way companies operate since 1985, most businesses could benefit from this timely critical review of process. Contact IMA now to schedule a review...

Managing Director Ami Baker is passionate about small business and small business rights, and she supports the less-red-tape agenda being pursued by the BERR. In the past year, her professional activities and public-sector partnering have led to her receiving an invitation to speak to Gordon Brown on the subject at No 10 Downing Street.

There are three aims of the in-person business review on offer:

1. IMA will very quickly check whether a company is meeting the requirements of the new Companies Act legislation;
2. The review will also check that another key element of regular process – that is, VAT and tax filing – is working smoothly, helping insure that a company is not paying too much tax, for example;
3. Given more time, IMA will provide a general review of bookkeeping and accountancy processes, focusing on the practicalities of making sure that day-to-day process works as well as it should.

See Appendix II below for details of the general bookkeeping review, including anecdotal examples of what happens when process goes wrong.

Miss Baker says, “What we’re doing is a brand-building exercise based on what would be valuable and of interest to us and most of our clients. There are no hidden charges, no requirement to buy anything to benefit from the review and report – all we are asking is to add participants to our low-volume mailing list to receive our quarterly newsletters. There’s no sales pitch at the end of the review – we’re interested in more businesses being more familiar with the IMA brand and our conscientious ethos and approach.”

The new legislation directly affecting businesses is being phased in over a three-year period: specific changes have occurred on 6th April of this year, and further changes will come into effect in October. More changes will follow, through October 2009. For specifics of these changes, see Appendix I below.

APPENDIX I

Two points of compliance

Accounting Standards Board (ASB), 191 page document pertaining to accounting reporting requirements. We can just review this by looking at your previous year’s accounting format. And companies Act.

Companies Act 2006 Overview The Companies Act 2006 (formerly the Company Law Reform Bill) received Royal Assent on 8th November 2006. The Act will effectively replace existing companies legislation with the exception of provisions relating to company investigations and community interest companies.

When will the Act come into force?

The Act is being phased in over a period of three years. Final implementation will be 1 October 2009, but there are many provisions that have already been commenced.

Most accounting and audit provisions will apply to accounts and reports for financial years beginning on or after 6 April 2008.

Changes that occurred in April this year include:

• Company Secretary: Private companies will no longer be required to have a company secretary, although they may continue to have one if they wish.
• Execution of documents: Rules on execution of documents are also changing.

Changes to occur in October 2008 will include:

• the general duties of directors in respect of conflicts of interest;
• the new procedure for private companies to make capital reductions supported by a solvency statement instead of by a court order;
• companies will have to have at least one natural person as a director, so a company cannot be a sole director of another company (some existing companies will have more time before the rules change).

APPENDIX II

Broader business reviews will include:

• Checking VAT and wages control accounts to ensure payments are being made – regular late payment could instigate inspections by HMRC;
• Checking how expenses are paid to staff – is NI being deducted as necessary?
• Checking receipts are provided for expenses – otherwise VAT could be claimed incorrectly;
• Considering whether a company currently falling below the threshold for VAT should be thinking about registering based on anticipated trade;
• Checking that a VAT-registered company is taking advantage of cash accounting or other potentially beneficial schemes;
• Checking whether accounts are adjusted to account for prepaid overheads;
• Checking that accounts are adjusted to include accruals for items due but not yet invoiced;
• Asking whether everything is being capitalised that can be;
• Checking that the depreciation policy is sensible and consistent;
• Checking that the bookkeeper always know how to account for items;
• Checking whether there any nominal codes in the trial balance that look like dump categories for costs;
• Checking whether the business ever exceeds the agreed overdraft limit, incurring additional bank charges.

In past work with clients, IMA has encountered the following disturbing examples (just some of many) of process-gone-wrong. The above checks will unearth whether a company may be suffering from these or other business-critical pitfalls.

Anecdote 1

An IMA client had a past customer ring up, furious and threatening never to work with the company again. Historical bookkeeping process had led to this client’s customer receiving an unpleasant letter demanding payment of an outstanding invoice. This invoice had actually been settled a year earlier, but the payment was not properly recorded by the bookkeeper, which led to the letter being wrongly sent out. IMA convinced the angry customer that this would never happen again, with IMA taking over the bookkeeping functions and implementing correct and conscientious processes. The customer calmed down, and has continued to buy services.

Anecdote 2

The owner of a vegetable-box-scheme company suspected the bookkeeper was not up to scratch, but it wasn’t until actually reviewing the files that they realised they had been sending vegetables to someone for a whole year – without billing the customer even once.

Anecdote 3

Another company had a relative preparing their accounts who calculated the VAT wrong. They got unlucky and had a random VAT audit, which can happen to any company – it turned out they owed a fortune, and it nearly put them out of business.