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Thread: Director remuneration - Correction

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    Director remuneration - Correction

    Hi, we have been declaring directors remuneration from 2010 on the financial statements. It has never been paid out to the directors and it should have been journaled to their loan accounts. But that has not been done and I want to make a correction for it this year. I am happy that this will show as an expense on the 2017 statements, but I also know that it has been allocated as an expense in my previous statements. However, the loan accounts of the directors have not been corrected. Can I still make the correction this year? What is the complications and must the IRP5's be resubmitted via Easyfile for all these years in order for to make this correction in their loan accounts? Also, if I credit the applicable loan account, what do I debit since directors remuneration has already been shown as an expense in the previous years (but only on financials)?

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    Your first action should be to ensure that your books agree with the financials. That is usually standard practice.
    If directors remuneration is out, then something else must be missing a credit. If this is for closed years, then you would be debiting retained income and crediting something? My guess is the loan accounts.

    If it turns out that the financials are incorrect, then they should be reissued. If the company's tax returns have already been submitted then you should get whoever draws up the financials to make the call.

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    Quote Originally Posted by ConstructionAccounting View Post
    Hi, we have been declaring directors remuneration from 2010 on the financial statements. It has never been paid out to the directors and it should have been journaled to their loan accounts. But that has not been done and I want to make a correction for it this year.
    So what has the expense entry been posted against?
    (You can't raise the debit entry without reflecting a credit somewhere, otherwise the books won't balance).

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    Impossible for me to see - i can only see the remuneration. It is possible like Andromeda said that they used the retained income account. Because of this and some other issues we had to let the auditors go so i think I will work through each account and try to find the other entry. That will be best - to tackle this thing from the very beginning.

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