There are cases when an employee of the companycarelessly detrimental to the company. It is explained in the following how the damage can be compensated to the company and reflected in the accounting.
General rules
According to the general rule, guilty employees have limited material responsibility for caused damage to the company when performing job duties in the amount of direct real damage, but no more than his/her average monthly earnings (Art. 132 of the Labor Code, hereinafter − the Labor Code).
However, labor legislation provides for the imposition of the obligation to compensate direct actual damages in full without any restrictions on the employee guilty of causing damage to the company with which he/she is in the employment relationship.
There are three variants for compensation of damages caused by the employee to the employer: voluntary, collection by order of the owner or body authorized by him/her or by the courts.
If the employee agrees with the amount of damage, he/she can voluntarily compensate for the damage caused to the company, in whole or in part. With the consent of the owner, the employee can also transfer an equivalent property to compensate the damage caused or repair the damaged property (para.5, Art.130 of the Labor Code).
Collection by order of the owner or the body authorized by him/her is carried out by deduction of the amount of damage from the employee’s salary (Articles 127, 136 of the Labor Code). In this case, the consent of the latter for the deduction of these amounts should not be obtained. The order must be issued not later than two weeks after the discovery of the damage caused by the employee and is turned to execution not earlier than seven days from the date of report on that issue to the employee (sec.2 of Art. 136 of the Labor Code).
Employees compensate for damage in the amount not exceeding the average monthly earnings (Articles 132, 136 of the Labor Code).
Reflection in the accounting
Prior to the identification of the perpetrators, the value of the shortage or the spoiled fixed assets and stocks (in excess of the natural loss rate) should be referred to Dr 072 “Uncompensated shortages and losses from damage to valuables”, where they are taken into account until determination of perpetrators or until the limitation period expires in three years.
After the determination of perpetrator, their value should be reflected under Dr 375 “Settlements for compensation of losses” and Cr 716 “Compensation of previously written off assets” (for the amount to be compensated by the perpetrator).
The cost of shortage or spoiled goods inventories should be reflected under Cr 20, 22, 28, 10 and:
- Dr 947 “Shortages and losses from damage of values”, if the perpetrator is not determined;
- Dr 977 “Other expenses of activity”, if the perpetrator is determined.
When the writing off the fixed assets, first it should be written off the depreciation by correspondence Dr 13 “Depreciation (amortization) of fixed assets” and Cr 10 “Fixed Assets”.
