Inaccuracy and insufficient controls of the accounting!

14.2.2014

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Taking over the company structure is the solution.

Introduction

Company A had annual revenues in the order of tens of millions of crowns, numerous important clients and commercially attractive contracts in both the public and private sector.

As a result of insufficient controls and inaccurate accounting, however, critical control mechanisms within the company failed when a section of the management decided to enrich themselves at the company’s expense. In consequence, the company found itself not only in financial problems, but it also aroused the suspicion of the tax authority, who reacted by opening an inspection both in terms of corporation tax and VAT payment. As soon as the tax authority began making enquiries, the key individuals in the management abandoned ship, leaving the company to its fate.

Progress of the job

APOGEO with the client (i.e. the owner) agreed upon a rehabilitation project and to remedy the company’s situation, which was carried out successfully in the following stages:

  • Financial, accounting, tax and legal audits that would identify the principal shortcomings and problems.
  • Taking over the complete accounting, tax and payroll functions of the company and correcting the methodological faults in the accounting.
  • Appointing a professional executive director who, in co-operation with the team of accountants, tax advisers and legal specialists, would effectively resolve the ongoing tax inspections and correction of the accounting.
  • Reporting the managerial accounting to the current management.
  • Regularly representing the client during negotiations with the tax authority.
  • Regular preparation of documentation for potential legal action and proceedings against the company’s former management.

Conclusion

Today, company A is entering into new contracts and operation-wise is functioning normally. The consultant service of the APOGEO Group is continuing to resolve the negative impacts on the company of the previous management’s malpractice. In the event that some of this damage is irreparable or too costly to mitigate, APOGEO is considering transferring part of the factory. This would preserve the commercial and legal continuity of the healthy part of the business. This project was worked on by experts from the tax and accounting section as well as a team of experts from SMART Companies.

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