First-year statements after another accountant
Preparing a new client's first statements after another firm: what to request, reading last year's PDF into comparatives, and agreeing opening balances.
By Achekam · · 4 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
Taking over a client from another accountant is mostly good news: a new relationship, new fees, sometimes a client who left for reasons that reflect well on you. The first set of statements is where the risk sits. Last year's figures were prepared by someone else, under their judgement, from records you have never seen, and your set will show those figures as comparatives and start from their closing balances.
This article covers what to ask for, how to bring last year's figures in, how to prove the opening balances, and what to do when the previous firm hands over nothing at all.
What to ask the client and the previous accountant for
Start with the professional courtesies. Most professional bodies expect an incoming accountant to contact the predecessor before accepting, to ask whether there is any professional reason not to take the appointment. The ethical framework behind that comes from the IESBA Code, which the IESBA's page on the International Code of Ethics introduces, including its fundamental principles and its conceptual framework for addressing threats. The letter itself is covered in the professional clearance letter.
Once you have accepted, ask for:
- the signed financial statements for last year, and the year before if available;
- the final trial balance those statements were built from;
- any adjusting journals the previous firm made, and whether they were ever posted in the client's ledger;
- the fixed asset register and depreciation schedule;
- loan agreements, including the terms of any shareholder or director loans;
- the last tax computation, the assessment and any open correspondence with the revenue authority;
- details of provisions, contingencies and anything else the notes disclosed from outside the ledger.
The client can usually supply most of this. Achekam lets staff create, send and track requests for documents and answers in one RFI console, which leaves a record of what was asked, what arrived and what is still outstanding.
Reading last year's PDF into comparatives a person approves
Most incoming firms receive last year's statements as a PDF. In Achekam, staff can upload that PDF, and Achekam reads it into figures that a person reviews and approves for use as comparatives. Where AI is available, it fills in details such as the entity name, never numbers.
That review is not a formality. Check the extracted figures against the PDF statement by statement, and against the note totals. Pay attention to lines the previous firm grouped differently from the way you will, because they drive the last step below.
Comparatives can come from a person's own figures, from last year's issued statements or from a prior-year set a person reviews; for a new client the PDF route is usually the practical one. The options are compared in comparatives and the cash flow column.
Agreeing opening balances to last year's closing figures
Your opening balances must equal last year's closing balances as presented in the signed statements. That sounds automatic and often is not. The usual reasons they differ:
- The previous firm posted year-end adjustments in its own working papers but never in the client's ledger, so the books carry pre-adjustment balances into the new year.
- The client kept posting to last year after the statements were finalised.
- Accounts were grouped differently, so individual balances do not map one to one.
Reconcile account by account before any current-year work starts. Where the difference is an unposted adjustment, post it in the client's books if you have access, so this year's ledger starts from the right place.
If the client's ledger is coming into Achekam at the same time, a firm can bring it in from the client's exported CSV or Excel files, or read opening figures from the client's own books on Achekam. Where the client already keeps its books on Achekam, the business invites the firm, and on accepting the firm links those books to one of its client records.
When there is no handover pack
Sometimes the previous accountant does not respond, or the relationship ended badly. Achekam has no managed handover pack between an outgoing and an incoming firm; a business changes accountant by ending one appointment and inviting the new firm. So whatever is missing has to come from the client and from your own procedures:
- Rebuild the opening position from the signed statements and the client's ledger, and document every difference.
- Ask the client for the source documents behind significant balances: loan statements, bank letters, the asset register, stock sheets.
- Treat balances you cannot support as a risk to the current year, and tell the client so in writing.
- For an audit, ISA 510 on opening balances in initial engagements sets out the extra work needed.
Reclassifying comparatives to match your presentation
Your layout will rarely match the previous firm's. When you present an item differently, the comparatives must be reclassified so the two years are comparable, and the notes should disclose the nature of the reclassification, the amount and the reason.
Keep reclassification apart from correction. Moving rental income from "Other income" into revenue is a reclassification. Finding that last year's depreciation was wrong is an error, dealt with by restatement, a different process with its own disclosures, covered in correcting a prior period error.
Most of the risk in a first year is at the front. Agree the opening position before the current-year work starts, explain any surprises to the client in writing, and the rest of the set becomes ordinary work.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
