5.2 Query
Reconstruction of Accounts following Destruction/ Loss/Damage of Account Books. Some of our clients from Poona inform us that the offices were flooded with water so that their movable assets such as stock, machinery, account books, cash in hand were all destroyed. In some cases ruined machinery is the only asset available. Creditors are pressing or may ask for their dues. Particulars of debtors and creditors are not available as all the books are destroyed. Customers may not come forward to pay of their own accord. The financial year of some of the clients was 31st March, 1961. Trial Balances, List of Debtors, Creditors and all records from which balance sheet and profit and Loss Account could have been drawn, have been destroyed.
Opinion December 18, 1961
If the records are destroyed the following procedure may be followed in order to reconstruct the accounts: The last available Balance Sheet may be obtained from an external source, as for example, the Registrar of Companies or the income-tax Officer with whom it may be filed. Duplicate copies of bank statements may also be obtained from the bankers. Suppliers may be asked to send statements showing the amounts due to them and a similar request may be sent to customers. From the data thus obtained an attempt should be made to reconstruct the accounts based on the personal knowledge of the proprietors, directors and the staff dealing with such matters. The cheques issued on Bank accounts may be obtained, if the required information is not available in the bank statements. It is difficult to make more than a general statement of the methods involved as the procedure would depend on the facts of each case and the extent to which the records have been destroyed. |