You may have received e-mail (especially from Chinese and Hong Kong companies relating to .cn domains bearing your name if you didn’t register in China, but now more commonly in East Europe also) which says that if you use these people’s services they can prevent your name’s domain in that country from getting blocked.
Now this email gets sent out all over the world to addresses harvested from the internet page and chats and from usenet fora by robots, and of course the people behind the email cannot really afford to block every single domain that they are fishing for. The one sure fire way of making sure that they do block your domain is if you respond to them, whether with threats or with asking for the help, even in terms of “what it would cost”. I suggest you only do this if you don’t want the domain really and have no intention of buying it, as if you are lucky it will lead the scammers into real cash outlay which they’ll never see any return on. I highly encourage that! Maybe some of these pests will stop it if they see that enough internet users are wise to them and don’t mind leading them up a garden path…
You can always search here on EuroDNS (in the interests of transparency that affiliate link earns 10% of anything you buy after you go there, but it shouldn’t cost you more and it’s the service I use myself) and see what the status is of all of your possible combinations of your name and the country endings or generic endings, as well as check the Whois status of all these countries, both Europe and Asia, all in one place. You will probably find that nobody has blocked your domain at all, and if you are interested in owning the domain you can block it there and then. They are ethical and I never had a problem with them that the owner didn’t solve within a week. If they are not contactable one day you can usually get them the next day. Continue reading “Domain names scam – what to do if affected”→
For businesses which have never been audited but which are growing up quickly to meet the audit thresholds in a year or two, you may wish to consider having your first audit done while it is still voluntary to do so, and the results, if less positive than expected, can at least be kept private.
Once your business has exceeded the audit thresholds (very typically in Europe this means for a private company about 50 employees, 5 million Euros turnover and 2.5 million Euros of gross assets, and it means 2 out of those three conditions – we just stated actually the Polish ones verbatim, (with the proviso that they also state a set PLN amount to avoid subjectivity for businesses that are on the cusp), but most countries are not far off that – even the Czech Republic which really needs much smaller thresholds)
Clearly this doesn’t apply at all to public limited companies, ie. the “S.A.”, “a.s.”, UK plc or German AG style companies which must be audited regardless of size – in some jurisdictions even if they are dormant – but for private limited liability companies most jurisdictions have size criteria like the ones just given – for Slovakia about 60% of the sizes given, so please note that this is divergent from the Czech ones, which are far too high for that country and result in proportionally fewer audits, which is a bad thing for corporate governance in that country.
While you are under the limits audit is voluntary. And you can have an unofficial audit whereby the audit comes and does for you all the normal work he would do if officially appointed, but it is only pro-forma. “Pro-forma” is Latin for something like the idea of “as if” so the auditor will work and report as if they had been properly appointed, but it is really a dry run for you. You do not appoint them as statutory auditors in the minuted general meeting, you do not have to file the report as the audit was voluntary, and you get all the benefit of the audit without the risk, and on top of all of that, I can get you these pro-forma audits for only 75% of the cost of a statutory audit, because the Firms we associate with want to promote good voluntary governance practice in the economy.
If you wait for your first audit until it is an obligatory one because you’ve outgrown the size criteria – and as we come out of the recession that will happen to some of you next year hopefully sooner than you dare hope for now – then if the auditor finds something wrong then the report of the auditor could be “modified” – I’ll do a separate article on what sorts of “modifications” exist and what they mean in accountancy speak, but it’s not good if you get one.
It will not help if you need a loan, and it will probably trigger a lot of interest on the part of the tax inspector. But you’ll have to publish it anyway, if there isn’t time to do the remedial work a good auditor should outline to you in time for your statutory deadline.
Now auditors get cajoled, encouraged in a friendly way or even outright threatened by desparate managers and owners to overlook things or change to an opinion that doesn’t match the facts, and there is nothing that can be done in those circumstances. Auditors are not generally anywhere near as afraid of their client as they are of their regulator, but more than that we are educated throughout our professional lives to be independent in our outlook, and so the only way to get out of some modified opinions is to do the remedial work the auditor recommends or make the adjustments that they recommend.
There’s no point in changing to another auditor you think will be more pliable – they must write to the old auditor and ask if there are any reasons why they cannot act. The best thing to do, if you are not sure how well your company will stand up to an audit is to have your first one a year or so before you need to. Then if the audit shows up a lot to be desired, you have a whole year to put it right and nobody will ever know because auditors are bound by confidentiality – it isn’t us who even publish our reports, it’s the responsibility of the client. The report is given to its addressee, which is always the shareholder, and some other corporate governance boards if they are in existence.
So it’s well worth thinking about, especially if your business has been growing fast and maybe has outgrown its systems.
There are a few articles here on one large page, one of them dealing with what an audit report is and what it’s supposed to contain. This is anodyne and will be what you would expect from your own country, if it is in line with IFAC standards.
Another article talks about what the audit thresholds are. I’m going to write a separate article on audit thresholds comparing different countries in our region, but Poland has the fairly sensible levels of any SA, and for an Sp. z o.o. it’s 2/3 of the following: 1) Turnover 5 million Euros in the preceding year, 2) gross assets of 2.5 million Euros in the preceding year and 3) 50 employees on average in the year. The article offers a PLN interpretation of these levels for this calendar year end. I do not really want to reproduce that as not every company has calendar year and it is also not hard to work it out whether your Company in Poland has mandatory audit or not, and if you’re not sure, ask me and I’ll tell you for free.
The most interesting article in this audit related supplement, though, is probably the one which states that in line with article 64 paragraph 1 part 4 of the Act on Accounting, if the management needs to appoint an auditor it should be in time so that he/she can observe any material inventory counts.
So what that means in practice is that you’re probably OK if you have no stock or fixed assets. If on the other hand you do have these and they were due for a count, the auditor is risking big trouble if they come in and give an opinion on the figures not having attended the count. If this is of interest in your case, please look up the much larger on that subject below.
In the worst case there will be Companies who did their stock-counts without the observance of an auditor and they later discover they need to appoint one. Three alternative things can then happen. The first is that you chance on an ethical but unhelpful auditor, who refuses to take on an audit if the stocktake is already done. If you only meet such auditors, then you won’t be able to get the audit done and you’ll be in breach of the Act if you were over the size criterion or are a joint-stock company.
The second option is where the auditor says I can do this, but later pulls a qualification on you because of not having been able to attend the counts. You then have to file an audit report which isn’t 100% clean, and then live with the fact that you may not be able to declare a dividend and that the tax office will come breathing down you necks wondering what is going in. I don’t think it’s ethical for an auditor to lead the client into taking them by not being clear that they intend from the moment they are hired to give a modified audit report, but some people seriously justify it to themselves that it’s the client’s fault for not coming early enough.
Then there is the option where the auditor is both helpful and ethical, in that they take part in other procedures designed to make good the absence of an actual attendance at the time of the stocktake. Some auditors can use their business understanding and imagination to gain the assurance they need professionally without needing to do the whole stocktake over again. You may need to shop around to find these ones. I can certainly help you find people who approach their work in that more constructive period though.
In the very worst case, you may need to do the stock take again, but beware, you cannot do that officially after one month from year end anyway, and it involves extra work on the reconciliation afterwards, which will be on the shoulders of your chief accountant.
If you’re late appointing, don’t delay it any more – that’s the moral of the story!