We have already mentioned Latvian tax accounting in one of our previous articles. There are some reports that have to be submitted during the activity of any company in Latvia. We would also like to give some ideas of the certified external audit of the annual report.
The external audit of the annual report is an additional procedure, which is not obligatory for all Latvian tax payers, but if your company suits some criteria you will need the audit to be done.
When should the audit be done?
- When the annual statement exceeds 400.000 Euro
- When the annual turnover exceeds 800.000 Euro
- When the company has more than 25 employees
The auditor’s report is required when at least two of the three points take place.
Who are certified auditors?
They are independent professionals or companies who are licensed to audit your financial statements.
Their official report should be attached to the annual report. Their task is to make sure that your company has correct record of accounting and all Latvian taxes have been calculated correctly during the previous year. They should also make sure that the earnings and expenses you show are real.
Audit is an additional burden for your company and here are some reasons why:
- Audit is not a free service i.e. your will have additional expenses.
- Additional time should be planned to prepare all paperwork for audit.
- Audit’s report and checks take some time i.e. you have to start it as soon as possible to submit all reports.
BBCRiga’s specialists will tell you in advance if you need an external audit during the preparation of the tax report. You have to submit the annual report in April next year and in October of current year, we will send you the preliminary balance to review. We will inform you if your company meets the criteria for audit so it will not be a surprise for you.
How can you optimize your company’s activity to avoid the audit of the annual report?
Judging from our practice, the two first criteria are the most common that our clients meet to require the audit of the the annual report.
Some companies, which have a big number of creditors and debtors often exceed the critical balance limit. When they receive from us a warning in October, they have three more months to fix this situation. In most cases, we are able to balance the statement not to overstep 400.000 Euro and to avoid the audit or to hire an auditing company to get the audit report.
You should take into account that auditors check reports from the first half of the year until the end of this year and from the second half of the year – after the year is finished. Thus you will have the full report to be submitted with the annual report in April, which is an acceptable regime for auditor’s check without any rush or misunderstandings.
If you have questions about tax rates, reports or taxes in Latvia, please contact our consultants.