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We have bounced back in spite of the problems…

Paul, the president of the limited liability company, who has dealt with business consultancy in the market for two years, is telling us about the problems in the accounting, which came to light after the departure of his partner.

 

Can you tell me what happened to you?

I am the president of the limited liability company. Our previous structure of the company has not been successful and we have parted with one of our partners. The departure took place in a good atmosphere, and a new person has replaced him. When the partner left irregularities in the balance sheet and unlawful VAT settlement came to light, which was a huge surprise for all of us.

 

Didn’t you have any knowledge of the problems associated with the accounts of the company before?

No, I didn’t. I realized that after the departure of the partner and after the change of the accounting office, which has serviced us.

Our former partner, trained as a lawyer, dealt with legal and accountancy issues in the company because of his skills. He was responsible for drawing up and checking of contracts, contacts with the accountant and control over activities related to the company’s finances. He engaged his accountant, who worked with him for a few years, for the settlement of our company.

After the departure of the business partner it turned out that this person was incompetent, at least, when it comes to the service of a limited liability company, which needs to conduct a full bookkeeping. We had no idea that the accountant did not submit the VAT-R declaration, although we had paid the registration fee . When we were not liable for VAT the accountant accounted our business as if we had been liable for VAT so we committed unintentionally a tax fraud. Knowing that we paid the registration fee and seeing the VAT accounts prepared by the accountant we did not suspect any shortcomings. This is just one example because the former accountant made more mistakes, carrying out settlement of our company.

The accountant did not look after the necessary formalities and the partner did not control the results of her work. The result is that after our cooperation there are numerous shortcomings.

Today the former accountant and the former partner are shifting the responsibility. And instead of working, we focus on cleaning up the mess. We are ordering the documents and we are going from one office to the other. We know that we will be fined. We have already suffered due to this because the money for the last project is “frozen” – it will be used to pay these charges. Meanwhile, we do not have any reserves because we are a relatively new company.

 

Did you sign a contract with the accountant, which protects you as a company in the case of error?

We lacked that too. Our former partner entered into all the contracts on behalf of the company. He was precise and meticulous. He was checking every detail but he did not take care of the basic issues i.e., the contract with the accountant that specifies the responsibility for keeping accounts of the company. It did not come to my mind that so meticulous person would not look after so obvious matter.

 

How did you react to this situation?

We changed the accounting office into this one I know, which I was working with for years as a freelancer. And the change of the accountant we started to clean up the mess.

 

What did you learn from this experience?

Being a president of the company, I treated as occupying the position pro forma. I was professional staff; I had a lot of duties related to the development of the company and the acquisition of customers. We even sometimes joked because of this. The position of a president in a new company is not a privilege. Someone just needs to be registered on a board. Someone must be appointed as a president. In view of my experience I know that the position of a president and a vice president of the company is a big responsibility, mainly legal and financial one. Operation of our company was based on trust. Our partner was a meticulous, precise person. I did not expect that he would not look after those fundamental issues. I dulled my vigilance. Maybe, in the future I should follow the principle’ Trust and check’?

 

What advice would you give to the others who are in a similar situation?

I have a dilemma myself, whether I should trust my partners, or check every of them. Cooperation in our company has been based on trust, which created a positive working atmosphere and this atmosphere is very important to us.

However, as the president I want to control more accounting matters, which in the eyes of the law I am accountable for. I have no specialized knowledge but I can see that my direct relation with the new, competent accountant helps me better operate in this area.

 

Despite of a lot of difficult experiences, I can hear strength and energy to take action in your voice.

I had moments when I blamed myself for this whole situation. I sometimes heard from other people that it was my fault; but finally I drew conclusions and I stopped to dwell on that. A new partner, who is very involved in the work, gives us energy to act. We have bounced back in spite of the problems and we go forward.

 

Thank you for the interview and I keep my fingers crossed for the successful end of this issue.

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