Svetlana Ivanova
Accountant-Consultant
The procedure for handing over responsibilities from the current chief accountant to a new one is not covered in the Russian legislation. A company should make every effort to organise this process with maximum care to minimize potential negative implications. Below is the list of priority tasks.
1. Issue an internal regulation
You should elaborate an internal regulation to ensure that nothing important is missing, where it is recommended to specify how to hand over the responsibilities when dismissing or employing the chief accountant. Ensure that all the involved employees sign this regulation.2. Initiate an audit procedure
This will take no more than 10 business days. Although you incur additional costs, in return you will receive an external conclusion regarding the correct maintenance of accounting and tax records. Based on the auditors’ recommendations, you will be able to adjust your records to avoid possible claims from the tax office and, consequently, additional fines.3. Conduct an inventory count
Before a chief accountant leaves the company, it is common practice to make an inventory count of all goods, materials, fixed assets, cash, and accounts receivables and payables. You should check if accounting records correspond to the company’s actual balances of inventory, materials and fixed assets. At the end of the inspection, you should make acts and inventory lists in three copies: one copy remains in the company, the remaining two copies are given to both leaving and new accountants.If the company is sizeable, the inventory count may take quite a lot of time, so you can collate selected data, e.g. whether the accounts payables and receivables correspond to the actual situation. This information affects financial accounting, so if the latter is incorrect, you may incur punitive penalties.
4. Check outstanding debts
You shall request reports from the inspection authorities: the Federal Tax Service, the Pension Fund and others. If you request a statement of account with the help of Electronic Reports service provided by the Electronic Express company, you can get a reconciliation statement with electronic digital signature within one or two days. The tax office can give you a statement of debt with its seal in 10 business days (this statement is required if you are planning to request a loan or participate in a tendering process).You must be sure that the company doesn’t have any debts, and all the necessary documents (tax statements and other reports) have been submitted to the regulatory authorities. Check if the mandatory audit has been conducted. Note that the audit shall be mandatory subject to the following:
the amount of balance sheet assets as at the end of the previous year is over RUB 60 mln;
the amount of balance sheet assets is equal to the sum of current and fixed assets (Article 5 of Federal Law No. 307-FZ dated 30 December 2008 “On Auditing”).
Audit conclusions shall also be published in the national registry. As of 1 October 2016, the audit data shall be included into the national registry within three business days from the date of the audit conclusion receipt by a legal entity or an individual entrepreneur.
5. Check the payroll
The “Settlements with employees” account shall normally be closed. However, it may contain an outstanding balance if you make payroll calculations at the end of the month, but pay the wages at the beginning of the next month.You should also check the “Settlements with accountable persons” account. This account is used to record imprest accounts and entered advance reports. For instance, an employee went on a business trip, and you gave him/her business trip expenses in advance. Please, pay special attention to the following: if an employee hasn’t reported on the sum received in advance, it is recommended not to give him/her another sum in advance, though as of 19 August 2017 the Bank of Russia amended the current regulation on settlements by issuing its Directive No. 4416-U dated 19 June 2017, which allows giving an employee another sum in advance at any moment. Earlier it was prohibited to give another sum in advance, until an employee presents a report on the previous advance. For the violation of this rule you could get a fine up to RUB 50,000. (Article 15.1 of the Administrative Code). But it is still very risky to accumulate debts of accountable employees. Tax inspectors may demand them to pay an income tax, so you will have to defend your opinion in court (see the Ruling of the Central District Commercial Court No. F10-2385/2016 dated July 19, 2016). You should pay special attention to settlements in foreign currency: failure to adhere to foreign exchange differences can lead to incorrect reporting.
6. Check the status of all documents
Make a registry of the recognised suppliers’ documents from the accounting database and compare them with the existing documents list covering three previous years, because the field tax inspection may inspect only the period of three years preceding the year of issuing the decision for tax audit. If the corporate archive system is not in order, and you can’t find the necessary documents, you will have to request your counterparts to reissue them.7. Eliminate small errors
A sub-account analysis report enables to check data for selected sub-account: opening and closing balance, account turnovers for the selected period. This serves as an express analysis allowing to identify various human errors, because they are always possible. You can also use other built-in functions of your accounting software, for example, run an express diagnostic of the profit tax. The application allows you to check the quality of keeping records according to the Accounting Rule 18/02 (Profit Tax Accounting of Entities).8. Notify your tax office
Neither the Tax Code, nor other laws require to notify tax officers about the change of the company’s chief accountant (except for the situation, when according to the company’s constituent documents a chief accountant may act with full authority on behalf of the company). According to the rules, this notification is required only in case of the General Director change. However, the company’s registration file maintained by the Federal Tax Service contains the name of the company’s chief accountant, that is why many inspectors ask to notify them in case of the chief accountant change. There is no specified period for such notification. Thus, the company where the chief accountant has changed can send such notification at any time. But we don’t recommend to postpone this procedure. The notification concerning the chief accountant change can be made in optional form. You can use general recommendations for preparing any optional documents for the tax office. As a rule, inspectors also request a copy of the order of appointment, passport details of the new chief accountant and his/her contacts.Additionally, you will have to make new sample signatures for all the banks where you hold corporate accounts. Together with the new banking sample signatures, you should submit the documents proving the authority of the persons included in the signature card (paragraph 7.11 of Regulation of the Bank of Russia No. 153-I dated 30 May 2014 “On opening and closing bank and deposit accounts”).
9.Remember about liability
Chief accountants bear disciplinary, administrative and criminal liability, if their actions do not correspond to Part 8 of Article 7 of Federal Law No. 402-FZ dated 6 December 2011 “On Accounting”.According to Part 1 of Article 4.5 of the Code of Administrative Offences, the total period of limitation for the imposition of administrative sanctions for violating accounting rules is extended to 2 years. However, this period of limitation regarding Part 2 of Article 15.11 of the Administrative Code is only one year. Moreover, according to Part 3 of Article 4.5 of the Code of Administrative Offences, a person may be liable for offences leading to disqualification not later than a year after committing or uncovering an offence. Thus, the time limit for prosecuting a company official under Article 15.11 (Part 2) of the Administrative Code is one year according to the special provision of Article 4.5 (Part 3) of the Code.
This year the regulators adopted some amendments to give tax officials the possibility to recover debts at the expense of a chief accountant‘s personal assets (Federal Law No. 266-FZ dated 29 July 2017 “On amendments to the Federal Law “On Bankruptcy” and to the Code of Administrative Offences of the Russian Federation”).
Now not only directors can be held liable with their personal assets, but chief accountants as well. Earlier, the law on bankruptcy was not clear as to who can have subsidiary responsibility. Now the risks for chief accountants are greater: the responsible persons are both a chief accountant and a financial director.
After leaving the company, a chief accountant may only bear criminal liability for corporate tax evasion on a large scale (Article 199 of the Criminal Code). A chief accountant may only be condemned if he/she acted intentionally and knowing that his/her actions will cause damage to the national budget. However, the dismissed chief accountant cannot be held liable for disciplinary or administrative offences. Source:
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