Cicero Ltd has now realized that it needs to improve its financial records and send some accounts to Companies House. So far it has managed with a series of spreadsheets devised by the company accountant, Eric Chopper, who is not a qualified accountant, and simply records revenues, payments and outstanding invoices. There are no ledgers and no double entry system. Eric does, however, reconcile his bank spreadsheets with the bank statements each month. He claims that all the company needs to know to run the business is how much money is in the bank. The business consists of four small supermarkets and two clothes shops. The company has never prepared audited accounts, even though it has traded for three years. Inventory counts are held annually at each of the shops, and when the total figure is calculated the inventory count sheets are thrown away as they are only rough counts.

Discussion

– What does Cicero Ltd need to do to rectify the situation?
– Who is responsible for ensuring this is properly dealt with?
– By improving the position of Cicero Ltd, what advantages will this bring?
– Why might Eric Chopper not be keen to rectify the position?