The annual inventory is in full play. Financial services workers verify the accounting records of assets and liabilities with the real state of things, wasting a lot of effort for this hard and not very interesting work. What are the important features of the annual inventory that you need to keep in mind?
Annual inventory is obligatory
In accordance with the law, to ensure the accuracy of accounting data and financial statements the enterprises must make an inventory, the periodicity of which is determined by the owner (manager) of the enterprise, except when it is required by law.
A list of such cases is given in i. 7 of the c. I of Regulation on assets and liabilities inventory approved by Order of the Ministry of Finance No. 879 of September 2, 2014 (hereinafter – Regulation No. 879). These include holding the obligatory inventory at the enterprise before the annual financial statements are prepared, i.e., at the end of the year.
Disciplinary and administrative liability is required for not conducting the obligatory inventory. Disciplinary is applied by the head of the enterprise or authorized body to the offending employee in the form of reprimand or dismissal (Article 147 of the Labor Code of Ukraine; hereinafter – LCU). Administrative responsibility will fall on the shoulders of the head of the enterprise in the form of a fine in the amount of 136 to 255 UAH (for the first violation) or from 170 to 340 UAH (for the second violation during the year) (Article 1642 of the Code of Administrative Offenses, hereinafter – CAO).
In addition, there is a likelihood of imposing a fine under Art. 1863 of the CAO. It is not the inventory that casts doubt on the accuracy of accounting and financial reporting. According to this norm, the amount of the fine will reach from 170 to 255 UAH (for the first violation) or 255 to 425 UAH (for the second violation during the year).
Now, only those enterprises whose assets are located in the temporarily occupied territories and territories of the Joint Forces Operation (hereinafter – JFO) can avoid responsibility, and only until such time as safe and unimpeded access to them for authorized persons will be available (i. 8, c. I Regulation No. 879).
Obligingness, therefore, is the first feature of the annual inventory.
The annual inventory is continuous
The second feature of the inventory is its continuity (i. 6 and i. 7, c. I of Regulation No. 879). That is, this inventory covers all types of liabilities and all assets of the enterprise, regardless of their location, including items that are rented, leased, or that are in the process of being restored, upgraded, preserved, repaired, in stock or in reserve, regardless of technical condition.
Moreover, the assets and liabilities that are recorded in off-balance sheet accounts, in particular, values that do not belong to the enterprise, but are temporarily in its use, disposal or storage (objects of operational (operating) lease of fixed assets, tangible assets values under custody, processed, commissioned, installed), contingent assets and liabilities (contingent assets and liabilities) of the enterprise (pledges, guarantees, liabilities, etc.), forms of strict reporting documents, other assets are subject to inventory.
Therefore, the list of objects to be inventoried is too large. It may not be possible to do this all in one moment (or even a day). To facilitate the work, the inventory of each item should be made, subject to the special time limits set forth in i.10, c. I of Regulation No. 879, but no later than December 31.
Here are the timeframes for inventorying different objects presented in the Table.
Table. The time limints for the inventory of objects
|
№ |
List of inventory items |
Time limits |
|
1 |
Non-current assets (except for unfinished capital investments, fixed assets that will be out of the enterprise at the time of the inventory, including cars, sea and river vessels, which will depart for long voyages, etc.) |
Not earlier than three months before the balance sheet date, i.e. not earlier than October 01 |
|
2 |
Reserves (except work in progress and semi-finished products, other tangible assets that will be outside the enterprise at the time of inventory) |
|
|
3 |
Current biological assets |
|
|
4 |
Accounts receivable and payable |
|
|
5 |
Expenses and income of future periods |
|
|
6 |
Liabilities (except for unused allowances, budget calculations, and obligatory state social security contributions) |
|
|
7 |
Incomplete capital investment |
Not earlier than two months before the balance sheet date, i.e. not earlier than November 01 |
|
8 |
Work in progress and semi-finished products |
|
|
9 |
Financial investments |
|
|
10 |
Cash |
|
|
11 |
Targeted funding |
|
|
12 |
Liabilities including unused allowances, budget calculations, and obligatory state social security contributions |
|
|
13 |
Fixed assets, including cars, sea and river vessels, that will depart for long voyages |
Until the date of temporary retirement |
|
14 |
Other tangible assets that will be outside the enterprise at the date of the inventory |
Please note that the Table does not provide a general timeframe for the annual inventory of each item. Specific time limits for the beginning and ending of the inventory are set by the manager in the inventory order.
The annual inventory is periodic
Item 10 of chapter I of Regulation No. 879 permits an ordinary enterprise to make the inventory of:
1) land, buildings, structures and other real estate (assets accounted for in subaccounts 100, 101, 102, 103, 108) once every three years. All other fixed assets accounted for in Account 10 should be inventoried annually;
2) tools, appliances, equipment (furniture) at the discretion of the head of the enterprise can be subject to annual inventory, but not in full – not less than 30% and with obligatory coverage of the inventory of all such assets within three years. In other words, only one third of all tools, appliances, equipment (furniture) is subject to inventory once every three years;
3) library funds according to the schedule established by the decision of the head of the enterprise, during the year. In this case, if the volume of library funds is from 100 to 500 thousand units, then the inventory can be carried out within five years with coverage of at least 20% of units annually, and more than 500 thousand units – over 10 years with coverage of at least 10% of units annually.
