16.02.07

Common Mistakes in Russian Accounting
Galina Klimenko
Auditor, Alinga Consulting Group

Auditors often discover many of the same mistakes when conducting an audit. These mistakes are not related to the types of organizational and legal structures, forms of ownership, or types of activity of the businesses; they are general mistakes in accounting and tax reporting. 

The most common of these are:

• lack of a clear and complete accounting and taxation policy, without which it is impossible to have correct and uniformly established accounting practice rules;
• failure to use uniform types of primary accounting documents, which can serve as grounds for rejection of business activity documentation during tax audits;
• incomplete primary accounting documents and a lack of required information;
• untimely recognition of transactions;
• violation of the petty cash policy by way of exceeding the cash balance in the company’s account, as well as a failure to apply a regulatory procedure when making cash settlements;
• incorrect calculation of accrued amortization as a result of failure to use a special reduction factor in the tax accounting process, as well as incorrect determination of the amortization group and the useful life within the amortization group;
• incorrect calculation of the cost of fixed capital and inventory in financial records and when making depreciation allowances;
• records in the accounting and tax journal made solely on the basis of the accounts, without documented proof that the actual business activities were carried out;
• incorrect reflection of account balances in the accounting records, lack of a balance in the control ratios between accounting and tax record forms;
• tax declarations completed incorrectly and incorrect tax calculations, discrepancies between data on the tax declarations and data in the accounting and tax records.

The major factors contributing to these mistakes include insufficient or inadequately qualified staff and attempts to minimize business activity documentation for various reasons. However, these infractions constitute tax and duty law and accounting law violations and should be taken seriously.

To minimize the risks involved in committing these common mistakes it is recommended that companies use an expert recruitment company, which can determine the qualification level of all accounting service employees before the company hires them.

Companies should also take advantage of the benefits of regular audits, which can point out legal violations before they are caught by the authorities and also provide advice in how to avoid repeating old mistakes and making new ones.

Questions?  Ask Alinga's Accounting Experts!