Current partners can be seen on the liabilities side of the balance sheet of some private companies

current partners
The headline can be seen on the liabilities side of the balance sheet of some private companies, and their amounts are in most cases very high and sometimes incomparable with other balance sheet items.

I have personally told my staff to look at this heading as “unrecorded sales or revenue”. Of course, it is possible that this is not the case, but in most cases that I have come across, the main title of this heading is “unrecorded sales and income”.

Therefore, the auditor must first look at this account heading with this view and perform his investigations according to its correct title. Of course, we cannot make a general conclusion that wherever there is a current account of the partners, sales or incomes have not been recorded in the “income” heading.

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It is possible that the name of the heading “current partners” is really consistent with the cases registered under that heading, but in the proceedings, the principle and basis should be set such that this heading represents unregistered income, unless the opposite of this matter is proven.

In dealing with this account heading, each case should be carefully considered. Why do partners regularly inject cash into the company? Is the company really facing a shortage of cash?

Why should partners (owners of capital) regularly deposit money from their pockets to the company every year? In some companies, it is observed that this account heading becomes more inflated every year compared to the previous year. An auditor should ask himself how the company’s capital owners benefit from the company’s continued operation. A company may face liquidity problems in the first or second years after its establishment and may even be unprofitable, but how long can this practice continue?

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Don’t the capital owners of such companies realize that if they put their money in the form of long-term fixed deposits with banks, they could without any problem get a profit on their investment more than the possible profit or loss of the company in which they invested? bring

Therefore, the inflation of the creditor balance of this account heading from year to year should be questionable for the auditor. It is here that the auditor should look at the income and sales account with professional skepticism and perform his investigations under the assumption that no income or sales are recorded in the unit under review.

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For this purpose, other accounts such as the cost of goods sold, and other documents and documents such as production reports, the amount of overtime worked by employees, outgoing remittances that are filed with the security guard, etc., must be carefully considered and every accounting record whose debtors are “Fund” or “Bank” accounts and whose creditor is “Jari Sarka”, look and handle with professional skepticism.

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In other words, he should look for unrecorded incomes and believe that the high amount of the creditor balance of the partners’ current account and the increase in the balance in the following years are most likely due to the non-recording of all incomes and sales.

Conclusion and Final Word: For me, this account will always be considered the equivalent of “unrecorded income” and I will look at this account with this view and increase my side proceedings in relation to other accounts. This account should be handled with a lot of analysis, of course, in parallel with other related accounts.

Garo Hovhansianfar – continuous member of the Association of Certified Management Accountants of England

This post is written by Saeid13691226