Re: Setting up Limited company

To inject a note of reality as opposed to non-accountants playing at
accountancy.

Around 1980 I was the audit senior on the audit of the UK company with
the biggest asset value and the biggest turnover value at the time. We
had a trial balance that balanced to the penny. We received schedules
that supported various groups of figures in the trial balance ready
for us to audit. Some were precise to the penny and others were to the
pound. We didn't care which it was. We performed our audit work on
them. We then prepared the accounts to the nearest million pounds. If
we rounded up or rounded down nobody questioned it. These figures were
put into slots in the accounts based on last years accounts subject to
any change in regulation. All subtotalling and totalling was done
using the figures in the slots on the final accounts. There were two
particular issues that sprung to mind. One was a Sundry Debtors item
of £50m that nobody knew what it related to. There was a detailed note
brought forward from previous years and management didn't want to
write it off. Because the amount was immaterial it was allowed to
remain in the accounts. There had been a share issue in the year when
a large US company had been taken over. The company secretary wasn't
able to reconcile the list of shareholders with the shares issued in
the accounts. The amount was in the low millions as I recall. This was
judged immaterial.

This may be a shock to non-accountants quibbling over pennies but in
the real world there are deadlines and commonsense. Users of the
accounts wanted the accounts in a timely manner and £50 million pounds
wasn't going to affect their judgement because both turnover and
assets were in billions of pounds. There was more concern about
estimates of oil reserves than how rounding was done in the accounts.

I don't think any sensible user of accounts has raised issues about
rounding in accounts.

I suspect if Nick and Tim had any responsibility for these kinds of
audits they would never get finished.
.

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