Miscellaneous accounts are suspense accounts. A suspense account is an account that should be used to temporarily record items that are unidentified or cannot be recorded to the accounts yet. They should only be used as a short-term holding account and any funds placed therein should be investigated, at least monthly. All businesses will have their own internal policy on how regularly suspense accounts should be cleared down depending on the size and complexity of the business and the volume of entries that are generally recorded in the account. Good practice should see suspense accounts cleared down by month end, if not before. It may be useful to look at the suspense account of your own business to ascertain what entries are usually placed within it and the ‘why’. Large volumes of the same type of entries recorded to the account consistently, could be an indicator of systematic failure, poor systems and controls within the business.
SRA Suspense Accounts
Improper use of a suspense account could lead to your reporting accountant qualifying their report to the SRA. The SRA’s guidance on ‘Planning for and completing an accountants report’ is clear when a suspense account can be used and what’s indicative of above, adequate, and below adequate process and controls.
Above Adequate
- Where suspense accounts are used, items are usually no more than, for example, 5 working days old
Adequate
- Where a suspense account is used, items are usually no more than, for example, 30 working days old
Below Adequate
- Widespread unjustified use of suspense accounts
- No process for clearing suspense accounts or outstanding items not followed up
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SRA Accounts Rules: The Essentials
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SRA Accounts Rules: The Essentials
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SRA Accounts Rules: The Essentials
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