Internal Control System - What to Expect from SRS Inspections
Internal Control System - What to Expect from SRS Inspections
Outsourced accountants are subject to the Law on the Prevention of Money Laundering and Terrorism and Proliferation Financing and are supervised by the State Revenue Service. In the national risk assessment, the overall money laundering risk of this sector is classified as moderately high - threats are assessed as moderate, while vulnerability is considered moderately high.
The sector is heterogeneous - according to the State Revenue Service (SRS) sector risk assessment, approximately 43% of outsourced accountants have an annual turnover not exceeding EUR 10,000, while nearly 16% exceed EUR 40,000. The law provides for the principle of proportionality: the scope of the internal control system must be proportionate to the nature and scale of operations. However, proportionality does not mean that small outsourced accountants do not need an internal control system - it may be relatively simple, but it must be implemented and function effectively in practice.
Many companies still view the Internal Control System (ICS) as a formal requirement, but it is one of the first points of focus during State Revenue Service audits.
"The Internal Control System is not just a static set of documents on a shelf. It is the management's 'safety belt' - a tool that allows for the timely identification of process errors before they turn into costly tax assessments. During an SRS audit, a well-organized ICS serves as evidence of the entrepreneur's good faith and transparent business operations," emphasizes Jānis Ciguzis, Head of Legal at BDO Latvia.
Read the full article on iFinanses website (in Latvian) here.
The sector is heterogeneous - according to the State Revenue Service (SRS) sector risk assessment, approximately 43% of outsourced accountants have an annual turnover not exceeding EUR 10,000, while nearly 16% exceed EUR 40,000. The law provides for the principle of proportionality: the scope of the internal control system must be proportionate to the nature and scale of operations. However, proportionality does not mean that small outsourced accountants do not need an internal control system - it may be relatively simple, but it must be implemented and function effectively in practice.
Many companies still view the Internal Control System (ICS) as a formal requirement, but it is one of the first points of focus during State Revenue Service audits.
"The Internal Control System is not just a static set of documents on a shelf. It is the management's 'safety belt' - a tool that allows for the timely identification of process errors before they turn into costly tax assessments. During an SRS audit, a well-organized ICS serves as evidence of the entrepreneur's good faith and transparent business operations," emphasizes Jānis Ciguzis, Head of Legal at BDO Latvia.
Read the full article on iFinanses website (in Latvian) here.