Reconstruction of accounts
Reсonstruction of accounts means carrying out a whole complex of measures aimed at recovery of the lost (fully or partially for any reason) analytical data, synthetic cash accounting (tax) registers, or company’s reports for the past periods. Also it includes the recovery work that needs to be performed due to negligent or improper accounting by employees of accounting department of the company.
Impact of improper accounting
Any manager is unable to effectively run the company, if he/she does not have reliable data on assets and operations with them.Revealing of improper cash accounting can result in the following adverse effects from contractors, banks, investors and state supervisory bodies, etc.:
- inability of reconciliation with the partners;
- probable seizure of the encumbered assets, suspension of bank operations;-withdrawal of capital;
- charging of fines and penalties, interest charges (upon audit by the tax inspection and other governmental bodies);
- personal responsibility of the manager for non-competent accounting, underpayment of taxes and contributions to the budget, etc.
To avoid this you need to engage third-party auditors for the review of company’s business records and if deviations from the standard procedure are revealed, to remove those deviations.
It is a challenging and labor-intensive assignment which requires high professionalism, ample experience, and good faith.
Reconstruction of accounts: typical cases
Reconstruction of accounts may be required by any company, regardless of its size or form of incorporation. Both legal entities and physical persons need such services.
The most common cases when you may need to reconstruct the accounts are:
- physical absence of documents due to loss, late registration, theft, or force majeure situations;
- computer failure, loss of the database;
- gaps in cash accounting during change of management, Accounting Department, or Chief Accountant;
- incorrect records keeping;
- deviations found during inspections (by auditors or Tax Inspectorate);
- start date of business activity was different from the date of proper legal registration, etc.
Critical information for company manager
Procedure in case of loss of documentation
The procedure is set out in Regulations № 88 (Article 6.10).
According to the above Regulations, in case of loss (destruction of documents, accounting registers or reports), the company head must notify investigatory bodies of this fact in writing. According to the company order, a Commission shall be established to compile a list of missing documentation and to investigate the reasons for their loss (destruction).
Representatives of law enforcement agencies, security service, etc. can be invited to join a Commission (depending on the reasons for the destruction of primary documents).
Commission produces a Statement that contains the results of the investigation and shall be approved by the head of the company. A copy of the Statement is submitted to the parent structure, to which the company is subordinated, as well as into local State Fiscal Service (GFSU) authority at the place of registration within 10-day period.
Notification of the tax inspection of the fact of loss, damage or premature destruction of documentation related to taxes and fees is mandatory according to the Article 44.5 of the Tax Code of Ukraine.
According to this Article, the taxpayer shall notify local GFSU office at the place of registration in writing within 5 days from the date of such incident and reconstruct the lost documents within 90 calendar days from the date of notice receipt by the supervisory authority.
Only timely notification of the tax inspection about the incident and ordering documents recovery services may help you avoid trouble.
It is recommended that you periodically make external audits, to prevent urgent reconstruction of accounts later. Much more effective would be to carefully review current records in the Accounting Department and find any mistakes on a regular basis. This procedure allows organization of quick reconstruction of all accounts based on the review results without significant adverse effects.
A common advice is to perform an audit by the competent company which has long-term experience and specializes in provision of quality services to the clients.
We, an international FChain company, are the leaders among the accounting services providers.
Availability of highly skilled team of certified professionals (accountants, auditors, lawyers), effective experience in complex case studies, and extensive clientele allows to profile ourselves as a responsible and trustworthy contractor, capable of undertaking serious commitments. We know our work from cover to cover and guarantee quality reconstruction of accounting in the shortest possible time on confidentiality basis.
What benefits you can get in cooperation with our company? They are as follows:
- comprehensive consulting support and actual assistance in the reconstruction of full accounts;
- quick and effective decisions in emergency situations;
- our employees can swing into action at any moment;
- possibility to have a specific supervisor dedicated to your company, who will help resolve current issues in cash accounting;
- reasonable cost of services.
Action plan for reconstruction of accounts
- Conclusion of a formal contract on the complex of measures aimed at full reconstruction of accounts;
- Analysis of client’s documents and reporting that are subject to reconstruction;
- Checking company’s compliance with the existing accounting rules and provisions of Tax Code of Ukraine in each period of its activity;
- Reconstruction of primary documentation (if needed);
- If necessary, taking inventory of assets, financial resources, and settlements (reconciliation with counterparts);
- Reconstruction of necessary accounting registers and compilation of the corrected balance sheet;
- Generation of database (if it is used);
- Reconciliation with tax inspection and budget with regard to taxes, charges and a unified social tax;
- Drafting and submission of declarations and adjustment calculations to the tax office, submission of reports to other governmental bodies;
- Reporting to the company head on the work done.
If necessary, consultative meetings on the proper account keeping can be organized in the company after provision of services (under the contract).
Cost estimate for reconstruction of accounts services is made on case-by-case basis and directly relates to the complexity, number of missing documents, expected scope of work, and their duration. After setting objectives and familiarization with the current state of company accounts, we offer an action plan to reconstruct accounts and the final cost estimate for this work.
To find out all the details and get qualified answers to any questions, please contact our consultants in any way convenient for you. They will help you understand the problems and answer all organizational matters.
If you need to reconstruct accounts, we are here to help you! Please contact the phone number on our web-site. We can handle any problem together!