Restoration of Accounting

Restoration of Accounting is required for the companies where the head and/or the owner think that due to some circumstances the accounting was kept improperly or was absent at all. Restoration of Accounting is usually a long-term (from some days to some months) and complex challenge addressed within an Agreement on Restoration of Accounting. The following experts shall be usually involved in addressing this challenge:

• Auditors responsible for identifying tasks, their implementation control, finalizing of the works and analyzing the possibilities to minimize the tax burden
• Accounting experts directly responsible for preparing, processing and executing of accounting documents
• Programmers responsible for developing of particular accounting restoration software

What problems can a company encounter due to the lack of accounting?

The lack of accounting (or misleading accounting) disables management, founders and other interested parties (creditors, business partners, investors) to get complete and reliable information on company’s activities and its property status. If a company does not keep accounting or the basic documents are absent a tax audit will result in additional taxes, penalty fees and fines.
The absence of registers or primary documents does not allow to control security and integrity of company’s inventory, funds and assets as well as to get a timely access to information on payment settlements with creditors and debtors. But what is more important, the lack of integral accounting does not allow to argue reasonably against tax audit claims.

The problems arising in the process of restoration of accounting

The list of possible problems arising in the process of restoration of accounting is rather long and it is necessary to be ready to address them. During restoration of accounting you might need to recover the absent documents (e.g. to receive bank account statements or to have invoices and bills signed by contractors), it might be necessary to create or update the e-database of accounting, some accounting components or transactions unknown to the company management before might be revealed. Such aspects might be time-consuming. 
Also it’s necessary to be ready that after restoration of accounting you will have to pay taxes which could be small but it’s difficult to estimate them beforehand (besides, it depends on availability of the primary documents).

What is the procedure of restoration of accounting?

1. After visual examination of the available documents and 1C e-databases, the auditors of our company will define the actual need to restore accounting.

2. Then we will make a preliminary analysis of the current state of company’s accounting. The preliminary analysis will result in a written report stating all drawbacks, mistakes and inaccuracies of accounting, approximate volume of works to be done and the cost of accounting restoration.

3. While signing an Agreement on Restoration of Accounting we will prepare and agree with the Customer the terms of reference for restoration of accounting.

4. On the basis of the terms of reference we will make up an action plan of restoration of accounting and start up.

5. After all works have been completed we will prepare a report on all procedures undertaken to restore the accounting. Then we will deliver the work results and hand over the documents with the restored (corrected) e-database of accounting.

Also we have elaborated a method of restoration of accounting combined with an audit. Its main point is that restoration of accounting will be preceded by an audit of company’s accounting with a detailed report. This detailed report will contain all accounting mistakes and recommendations on how to correct them. During the next stage of work our specialists will follow this detailed report while restoring the accounting. After the accounting restoration works have been completed our auditors will perform another audit resulting in a positive audit conclusion.

In this case the probability of skipping any mistakes during the audit will be very low and the auditor conclusion will officially confirm the compliance of your company’s accounting with its economic and financial activities after restoration of accounting. Another advantage of restoration of accounting combined with audit components is that its cost doesn’t significantly exceed the cost of a usual restoration of accounting alone.

Restoration Stages