Stock Deficits and Surpluses
Where stock is correctly controlled and accurately taken, a modest surplus will normally arise. This reflects the practical realities of bar trading, including rounding, breakages, wastage allowances and timing differences. Persistent or significant deficits, however, should never be regarded as normal.
Any surplus disclosed by the stock account is the property of the club. The steward or bar manager is entrusted with the club’s stock and cash and acts in a fiduciary capacity. All monies received in connection with the club’s business belong to the club and must be accounted for in full. At no point does a steward or bar manager acquire any personal entitlement to a surplus shown by the stock account.
It is a common misconception that a surplus arising in one period can be offset against a deficiency arising in another. As a general rule, this is not permitted, save in very limited and exceptional circumstances, such as where a specific and identifiable stocktaking error has been conclusively established.
By way of illustration, a club whose stock accounts ordinarily show an average surplus of £200 per month may, on occasion, record a deficiency of £200. The following month might then show a surplus of £400, producing a broadly consistent average across the two periods. While this pattern may point to an error in stocktaking, particularly where controls are otherwise sound, wide fluctuations or unexplained discrepancies should always be treated as a matter of concern. In such cases, additional supervision, tighter controls and, where appropriate, further instruction or retraining of the steward or bar manager may be required.
The legal position is well established: a surplus cannot be used to extinguish or reduce a prior deficiency. The legal position is well established and reflects a settled legal principle. In an unreported case involving a members’ club, Judge Frankland stated:
“It was a fallacy to suggest that, assuming the stock account figures to be honest, a surplus wiped out a previous deficiency. Assume that six stocks are taken between January and June in any year, and that three show a deficiency and three a surplus, it is a complete fallacy to suggest that the surplus can be set off against the previous deficiency. The root of the fallacy is that the surplus can ever be the steward’s money. He is responsible for the deficiency, and he is responsible for the money of the club. He is never entitled to any surplus which may be shown. A steward’s surplus has no relation to any previous deficiency assuming the figures are honest.”
Accordingly, while minor surpluses are a normal feature of bar operations, they must always be treated as club funds. Deficits must be addressed on their own merits, investigated promptly, and dealt with in accordance with the steward’s or bar manager’s contract and the club’s established procedures.