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HMRC internal manual

Enquiry Manual

HM Revenue & Customs
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Examining Accounts: Records Examination - Planning: Purpose

It is vital to be certain why you are examining a set of records, or part of the records and always to bear that in mind when planning and undertaking the examination. You need to know

  • how the business works
  • how the recording system works, and
  • whether that recording system reflects accurately all the transactions of the whole business.

For particular lines of enquiry you will also wish to follow up

  • the high risk areas, and
  • if there are errors or omissions in the recording system, to either

    • quantify them, or
    • to obtain information to compute profits in some other way, perhaps through a business model.

You should bear in mind that some parts of a business’ records might be computerised, while others might not. It is therefore advisable to learn at an early stage, which is which. Failure to know this at the right time might lead to a request for records in a particular format, e.g. electronic, when in fact there are only manual records for that area, e.g. stock control.

If a recognised accounting package has been used, you should ask for a back up from the system at an early stage. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)