Directors Account - slightly out

[Ticktock]

Hoping for some advice please, and not just to be told I should learn to run a company...

I just got MyCo's first company accounts in from the accountant to sign off on, and wasn't sure on one tiny point.
MyCo has 2 shares (1 each for my wife and I) at £1 each, and 1 director (me).

In the Company Accounts it details "Transactions with director", showing the Directors' current account as having paid (x + £2), where it appears that both shares are being counted, instead of (x + £1) as I only hold one share.
When raised with the accountant he said not to worry, it's something pointless that accounting standards want us to do and is just a balancing figure.

While it may only be £1, I'm a little reluctant to sign off on accounts that I know are incorrect. Am I being overly cautious, or is this truly something inconsequential that I can ignore?

Thanks

[ASB]

I haven't seen your accounts but the keyword is wife. Is this transaction with directors? It appears so. Grandmother clock is included because of her association with you. It's an accounting standard.

Probably don't need to tell you to run things properly because you are obviously making the effort to try and understand what you are signing off.

edit: I think your accountant could probably have explained it a bit better. If you are hugely bored Google it and follow the zillions of links that will result.

[TheCyclingProgrammer]

If you have a good accountant, then it's probably reasonable to trust what they are doing but you are right to question anything you aren't sure about. If you feel like it hasn't been explained very well to you, I would go back and ask them again. They should be happy to try and explain it.

[Ticktock]

I haven't seen your accounts but the keyword is wife. Is this transaction with directors? It appears so. Grandmother clock is included because of her association with you. It's an accounting standard.

Thanks ASB. The "x" above refers only to the dividends paid to me, so it is half of the total dividends paid, plus the value of both shares. That's what's confusing me - I'd have thought it should be total divs + £2, or just my divs + £1.

So yes, the "x" is solely transactions with the director, but then why count the value of the share held by a non-director?

[ASB]

Dunno ticktock. I agree it seems odd on the face of it as you have described it.

[Contreras]

While it may only be £1, I'm a little reluctant to sign off on accounts that I know are incorrect. Am I being overly cautious, or is this truly something inconsequential that I can ignore?

Thanks

Not overly cautious IMO. If it's an inconsequential balancing figure then your accountant needs to explain it better to your satisfaction. If it's wrong and that bothers you then he should fix it - you're paying the bill after all.

Kudos to you for spotting it.

I had something similar and if my accountant had tried to fob me off with "it's something pointless that accounting standards want us to do" then I'd be looking for a new accountant.

[doodab]

My guess would be the £2 represents the payment for the shares which had gone into the loan account as no actual money changed hands.

[Ticktock]

My guess would be the £2 represents the payment for the shares which had gone into the loan account as no actual money changed hands.

That is a very good point doodab - these are the first end of year accounts since the company was set up, so that makes sense.

[Martin at NixonWilliams]

The explanation given by your accountant is not quite correct however it is normal to include the transactions associated with your spouse if they are non-director as the transactions are seen to be in the beneficial interests of the director.

I have seen different accounting software approach this in different ways however the 'transactions with directors' note in the accounts will usually look to show the control the director and their non-director spouse have in the company represented by their combined shareholding & combined dividends.

[Ticktock]

I have seen different accounting software approach this in different ways however the 'transactions with directors' note in the accounts will usually look to show the control the director and their non-director spouse have in the company represented by their combined shareholding & combined dividends.

Thanks Martin. Again, this is the bit confusing me though - it is showing the combined shareholding, but it is only showing the dividends for me, not the combined dividends.