A guidance for the company executives and owners
Since the majority of company executives and owners have no clear idea of accounting, most accountants work instinctively. And the mistakes in accounting are often discovered on getting an on-site or desk audit, or after a security hold, when the company activity has already been damaged.
To avoid such unpleasant surprises as unregistered bills, mistakes in taxes reckoning and other trifles, you have to monitor your accountant. Moreover, the check must be made regularly. The only drawback here is that you will be making this check without having sufficient knowledge on accounting, but, believe, it's quite a realistic task!
Here is a step by step guidance we prepared for chief officers and owners of companies. With the support of this guidance, every heading person could easily get an understanding on how good or bad the job of the accountant was done.
ATTENTION! Unfortunately, we have no English version of “1C”, so the screenshots will be from the Russian version of this software. Of course, we will be leaving the comments on every
Step 1. Get the access to the basis of accounting and run an express check
In most of cases the accounting is done in “1C: ERP” (the last version of the program is 8.3)
If you need to check the accountant, you have to open the basis of accounting and run an express check. Just click the “Reports” (see the Russian word “Отчеты” in the screenshot below) and choose the “Express check” (“Экспресспроверка” on the screenshot) — do as it shown on the picture below.
Then choose the period you need to have the report of and click “Do a check”. The program will show you every mistake, if there are any. The fact is such mistakes may lead to errors in tax calculation, which, therefore, may become the reasons for further additional charges and fines. Ask the accountant to correct all the mistakes.
On the screenshot below you may see how the report on mistakes looks
ATTENTION! If your accountant refuses to show the basis, it's a warning sign, meaning that the report is being done incorrectly or not being done at all. This is a risk of failure in tax inspection. Moreover, it would lead to problems with the business handover to a new accountant, if the current one had been fired.
How to check full and timely report delivery of the accountant?
Step 2. Check the receipts with the proof of timely handover
Usually the accounts are filed in digital form. The verification here is always a receipt, received from a tax agency or funds. Check if all the accounts are saved in digital form.
Look at the example of the receipt below. The most important fields are highlighted in colour. The first field denotes the number of the Tax Documentation Classifier, the quarter and the year. The second field denotes when the receipt was handed over and received.
How to control the accountant`s tracking of tax arrears?
Step 3. Check the fiscal compliance
For this purpose you should ask your accountant to request a reference of current fiscal compliance from the Federal Tax Service Inspectorate. This reference will be sent in digital in 3 days on average.
How to check the accountant and the situation in primary documentation?
Step 4. Check for documentation on the major contractors
Always remember that the order in the primary documentation is important, because this is the primary document to check for every contractor.
You should find the original primary documentation on the major suppliers. These documents are consignment notes, reports of completion, invoices etc and they must be signed from both sides and be saved in folders.
The documentation must be kept in an easily accessible place. Because if the Federal Tax Service Inspectorate sends a request for the production of documents, everything must be handed over in time.
Then you should know how you may control the accountant on the issue of declarations.
Step 5. Express method to check the tax reporting
And now everything regarding the accountant`s declaration check. All chief executives may rely upon the method we will describe here. This is the express method discovering the inspection points, and for inspection service they are always your gravest flaw.
a. Compare the annual revenues from VAT declaration, profit declaration and statement of financial results.
— Look at the VAT declaration per 1, 2, 3 and 4 quarters. Then add the revenue numbers in section 3 of the declaration. The numbers of section 3 are highlighted in the screenshot, in English this section will be denoted as “Taxable income”
— Then you`ll need the income tax declaration. You have to look through the revenue numbers specified in the sheet #2 — they are highlighted in the screenshot below (in English the needed field will be denoted as “Receipts from total sales”)
— Then view the statement of financial results and find how much the profit makes up (the needed line of the statement is highlighted in the screenshot below, in English version it will be denoted as “Receipts”)
If any data gaps are found, the Federal Tax Service Inspectorate will ask for explanations.
b. You have to compare the data between the income tax declaration and the statement on financial results.
Open the enclosure of the sheet #2 of the declaration — you`ll see all the outgoes stated in the tax accounting.
Regarding all the possible gaps, you have to require explanations from your accountant.
c. Check outgoes in the income declaration
If an outgo is found, this is an outright reason for explanations to the loss investigation board. Your accountant must find an opportunity for not showing the outgo in the declaration at all or find convincing reasons for outgo occurrence.
d. VAT offset share. How to calculate it
In section 3 of the declaration we have to find the total sum of the assessed VAT and the total sum of the tax subject for deduction.
Then we divide the total deductions by the total sum of the assessed tax and multiply the result by 100%. After it's done, we have to see the total sum and check if it measurably declines from the permissible deduction share for your region. If it measurably declines, we require our accountant to reduce it to aggregate figures.
As you see, this series of steps doesn`t require deep studying of accounting. It just says which main 1C sections and which parts of documentation you have to keep always available. But in fact, you are at liberty to forget even all the instructions we gave in this article, because this is the job of our consulting service “IAS” – you may just outsource all the accounting work to us and remain involved only in the issues of your business.