Medical practices: Annual accounts preparation

With most medical practices having a March year end, practice managers will soon be collating information to pass to their accountants to enable them to prepare the annual accounts.

There are a number of things that medical practices can do to make sure that the annual accounts preparation runs smoothly and to reduce the number of queries the accountant may ask.

• Carry out a bank reconciliation at the year-end date. Check the list of unreconciled items and make sure that they are going to clear after the year end. If they are not going to clear, they should be written off.

Reconcile the petty cash at the year end to ensure the amount of cash held agrees to the petty cash records.

You should also reconcile any other bank accounts held, including loan accounts and credit card accounts.

• Carry out a thorough review of all debtors/aged receivable to make sure you’ve been paid for everything that’s owed to you.

Run a debtor/aged receivables report in your bookkeeping software and review the list of invoices. The most important column to look at is the oldest invoices as these would have been outstanding for some time. Chase up anything that remains unpaid, and if it’s unlikely you will receive some invoices then they should be written off as bad debts.

• On the other side, you should do the same for creditors/aged payables. Run a creditor/aged payables report and pay any bills that need to be paid and add any invoices that you notice are missing. For example, you may notice that you have no AAH invoices for March.

Make sure that all invoices still outstanding are going to be paid after the year end and are not incorrectly included on the software.

• Carry out a stock take at the year-end date. This can be carried out by your own team or you can use an outside firm. Ensure a copy of the stock take value is provided to your accountant.
• Review the repairs and renewals codes and check for any items that may need to be capitalised, i.e. moved to fixed assets on the balance sheet rather than in repairs and renewals in the profit and loss account. For example, items over £500, and items that are to be used over several years.
• Ensure that all legal and professional costs have an invoice available to provide to the accountant. Where your software allows, attach the invoice to the transaction.
• Carry out a general review of all codes to make sure that items have been posted in the right place, and that unusual amounts have a detailed narrative and documents available to back them up.

You could do this by running an income and expenditure report through your accounting software, as this will identify what codes have changed considerably compared to last year.

• Review transactions that were paid/received after the year end and if any relate to items ordered or used before the year end, you should provide these to the accountants so they can be included in the correct accounting period.
• Throughout the year you should also keep a note of/save the following:

1. Profit shares/sessions carried out by partners throughout the year
2. Detail of income or expenses that need to be charged to a specific partner rather than to the partnership as a whole
3. Dates for when partners join/leave the practice
4. Save payroll reports for every month, particularly for the following staff:
5. Salaried GPs
6. Retainer GPs
7. Nurse practitioners
8. Nursing staff
9. Dispensary staff
10. Save GMS statements every month of the accounts year including the three months after your year end

For more information on annual accounts preparation or any other medical practice or tax issue, please get in touch with your usual contact. You can find contact details on the Our People section of our website. Alternatively, call 0330 024 0888 or email enquiry@larking-gowen.co.uk

Louise Prime