We are a small/medium size broker which currently accounts on a received basis. I disagree that there is any conflict between FSA and IR rules brought about by this (Compliance Zone, 9 October, Insurance Times).
How you report your accounts is a matter of opinion within standard accounting rules. Therefore, the IR cannot and does not force anyone to account on an earned basis.
We have remained on a received basis for many years because it is a more conservative way of accounting. In effect, we count revenue only when we receive it, as opposed to counting invoices that may never be paid. The effect of most brokers working on an earned basis is that they will lose turnover within their accounts in the first year they switch to a received basis. This means lower dividends or wages for the boss for year 2005-06. I suggest you start considering switching earlier and you should discuss this with your accountant.
The second point is made about software and account reconciliation. I suggest Mr Woodroffe does what most small businesses do in the UK and that is use Sage accounts software to reconcile weekly with minimum disruption.
Monica Boyd
Director
St Giles Insurance and Finance
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