Should I sign off these accounts?

[mr_spock]

Hi all,

Earlier in 2015 I was made a director of our UK LTD company. I have been asked to sign off our accounts for 2013/14, but as I wasn't a director at the time I have no way of verifying that they're accurate.

I'm not sure what to do - I assume I have some liability if I sign off accounts which later turn out to be erroneous in some way.

Thanks for any advice...

[sidicks]

mr_spock said:

Hi all,

Earlier in 2015 I was made a director of our UK LTD company. I have been asked to sign off our accounts for 2013/14, but as I wasn't a director at the time I have no way of verifying that they're accurate.

I'm not sure what to do - I assume I have some liability if I sign off accounts which later turn out to be erroneous in some way.

Thanks for any advice...

Absolutely no way (IMO)!

[BS30]

If you weren't a director of the company during the period the accounts cover then absolutely not.

[mr_spock]

That's what I figured. I think this may get complicated - our (then) CEO left the business at the end of the period, our CFO resigned as a director so I'm not actually sure anyone who was a director then is one now. Shouldn't be my problem though...

[Eric Mc]

Have the accounts been "audited" formally?

In other words, have the accountants signed a proper "audit report" as opposed to the much lower grade "accountant's report"?

[Ean218]

Your signature is merely confirming that the board have reviewed the accounts and agreed that they are true and fair.

You need to have a board meeting and get it minuted. If you are that bothered you can ask someone else who possibly was involved previously, such as the company secretary to sign for the board.

You would not be liable for any actions prior to your appointment, however you must make sure, going forward, that everything is kosher.

[mr_spock]

Thanks all. They're properly audited, and look fine. Turns out my period as a Director did start at the end of the period in question, and the previous year were consolidated from already signed-off accounts and were included for info.

[Eric Mc]

The fact that they were formally audited provides an extra level of assurance (in theory anyway) that the accounts are indeed, "true and fair".

[the_g_ster]

To be fair, if there is an issue with the accounts through the lack of stewardship of a prior director, then you shouldn't really be signing, however....

You took on your responsibilities to become a director, so it is for you, and the rest of the directors to act to ensure that at any one point in time, you have control of the company and its' affairs.

If you have some concerns, voice them with your board. How is the company performing now? Have there been an issues with solvency, or accounting issues that are complex and give you some level of concern.

[cailean]

You would be signing on behalf of the board and not as sole responsibility. The company secretary could sign the directors' report but a director must sign the balance sheet.

As they are audited I suggest you have a good chat with the audit partner and make sure he/she is happy with the figures, pick his/her brains on the figures, trends, key balances and ask them about the audit risks that they identified and how they have been adequately mitigated/resolved during the audit.

Ask to see their 'management letter' which should set out any recommendations for improvements and it should discuss the risks identified and how audited and resolved - this is a formal requirement of audit standards for them to communicate in writing to the directors both at the beginning and end of the audit.

Review their proposed representation letter which they will ask you to sign along with the accounts.

I'm one of these 'audit signing people...' so feel free to ask me for more info if you want you can PM me.

[drdel]

I'd have a look at the previous 2 years accounts and see if any of the entries/trends are radically different. I'd also be looking to see if there were any unusual payments or arrangements involving staff and directors no longer with the company.

If your auditors have checked the numbers for their legality then, with the above caveat, you'd probably be OK.