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How to find risks in your business accounting, or how to recognize mistakes fast

Every modern manager has to possess the true information, what is going on in business accounting of his company. For understandable reasons, it is not possible to recognize a problem situation when you do not know refinements of the business accounting.  

         For staying quiet for a financial part of the business you can use easy methods of inspections of your business accounting.


Checking of an electronic database 1C.

         Most of business owners are using “1C: Business accounting” for an accounting. Tax calculation and creation of tax reports are making in the same program. Very often employees of the business accounting department are making mistakes in the information addition and reports creation, which can influence badly on the business.

         Ask your office accountant to create and print a document “trial balance” for any period. Best of all – for the last quarter, in which all reports were done. This operation will take 3 minutes.

         What is really important:

  1. “Red” or “negative remainder” in accounts.

         First of all, these accounts are 01, 10 and 41.

         In these accounts assets of a company are shown, specifically main funds, materials, articles. Negative remained is a sign that it was written off more from the accounting than come to the balance.

         Negatives in 20, 25, 26 and 44 accounts are a sign of an incorrect formation of the prime cost.

         Negative remainders in 50 and 51 accounts show the overrun of money funds: there is a negative «remainder” on the operating account and in the cash desk.

         Ask your office accountant how it is possible and how it influence on tax reports. Most likely such mistakes will cause an incorrect calculation of a consumed part in tax reports and mistakes in a business accounting balance and reports about gains and losses.

  1. Outstanding balance in 84 and 90 accounts means that business and tax accounting gain was not closed fully by the end of the reporting period.

         This means that some losses were not distributed and some part of costs is still open. That fact is reflected on taxes – they will be bigger. It applies to a profit tax and to a united tax on the simplified tax system.

  1. Another case – outstanding balance in a “zero” account

         If there is an outstanding balance in “00” account, it means that accounting was done with rough mistakes.

         Remember: zero accounts are used only in one case: in transferring of outstanding balances during program changes (for example, from version 1C7.7 to 1C8.1).

         If an office accountant made such operation in other cases, it was a rough violation.

  1. Business accounting operations, made by hand.

         There is an opportunity to make operations by hand if there are untypical operations or updating in programs 1C.

         Anyway presence of such operations is a reason for anxiety. May be employees made such operation to hide the mistake.

         Every such operation should be proved by some documents – source documents, reference-calculations, contracts, etc.

         Pay attention: business accounting reference is a special document. It should be mentioned in it, why such untypical operation is formed, also link to concrete circumstances or concrete calculations should be shown. Such reference should contain date of creation and signature of the responsible person. An absence of sustaining documents for a proof of business accounting reference is a danger for tax recharges during tax inspections.


Analyzing source documents

         Requirements for source documents are shown in the Regulation for making of a business accounting and business reports in the Russian Federation (Approved by an order of the Ministry of Finance from 29th July, 1998, #34n).

Source documents need to have obligatory properties:

  • The name and the date of creation of the document
  • The name of organization, from which name the document is created
  • Inclusion of an economic operation an it’s indexes in natural and money terms
  • A list of responsible persons
  • Personal signatures of mentioned persons

         Invoices, acts of made works, sale and cash desk receipts, arrival and consumed orders, payrolls on employees salary – these are source documents.

         They are source documents, because on their base different operations are doing in the business accounting.

         Incorrectly made source documents or an absence of requisites in them can bring disagreements of tax inspectors. 

                Ask employees from the business accounting department folders with invoices, expense reports, cashier reports and make a selective inspection.

         Pay attention on the fact that all documents should contain the date and the number. Corrections in such documents are impossible. It is necessary to have all signatures of all responsible persons.

         For example, in a cash voucher during the getting money from a cash desk it is necessary to be a signature of the getter and also his passport information. All employees should put their signature in payrolls after getting a salary.

         Mistakes in source documents can cause tax recharges during the tax inspection. Most attentively should be looked at documents which prove company’s losses and at invoices.


Checking the correspondence with a tax inspection

                 Every company very often gets letters from inspections, but their presence is not the reason for an anxiety. But there are some letters, on which should be paid attention:

  1. Requests about tax, charge, penalty payments.

         Ask your employee about the reason of this “arrearage”.

         For example, taxes were paid but there were erroneous requisites, what brought a “suspension” of these sums as unexplained payments.

         Also it can be unpaid taxes. All reports were made in time, but taxes were paid later.

         Such letter, for example, can cause a blocking of the business account, after what the activity of the company will be paralyzed for some time.

  1. Requirements of explanations (information)

         If an inspector asks to explain the discrepancy in tax reports, ask him, what caused this discrepancy.

         Such discrepancy can be caused by sending of the declaration “as it is”, and later some changes in this declaration.

         Such variant can make inspectors to check your activity more detailed.

         By this means every manager or a business owner even without business accounting education or outside auditors, can make primary analysis of business and tax accounting of his company. This will help you to save money and time and find undesirable situations in time.

                                                                        Yana Kurochkina

                                               Managerial partner