Regulation Regarding the Conduct and Organisation of Accounting
Issued pursuant to
I. Recording of Economic Transactions and Maintaining of Accounting Registers
1. This Regulation determines the requirements for the conduct and organisation of accounting for a merchant, co-operative society, foreign merchant branch and non-resident (foreign merchant) permanent representation, association and foundation, political organisation (party) and the association of political organisations (parties), religious organisation, trade union, institution, which is financed from the State budget or local government budgets, State or local government agency, and for a legal person and natural person performing economic activity (hereinafter - undertaking).
[5 December 2006]
2. All economic transactions of an undertaking shall be supported by documents regarding the existence of economic transactions of an undertaking (hereinafter - source document), assessed in monetary terms and, observing chronology, systematically recorded in the accounting registers of the undertaking.
3. In the cases specified in regulatory enactments, movable and immovable property may be registered and accounted for in kind.
4. A source document may be of external or internal origin and, depending on the significance of the document, such document may be prepared in writing (in one or more copies) or electronically.
5. A source document shall be prepared in such a manner that the information contained therein is not lost and the legal effect thereof is ensured during the whole period of keeping the document, and that it is possible to make a copy of such a document. A source document shall not be prepared using a pencil for entries or making them in any other technically easy to correct or physically unstable manner.
6. If a source document is prepared and stored electronically, the possibility to issue a copy, duplicate or extract in a hardcopy of such a document shall be ensured.
7. The manager of an undertaking, taking into account the requirements for source documents prescribed by regulatory enactments, shall independently select the form of such documents and the manner of the drawing up thereof, except for cases where the drawing up or the content of a relevant source document is regulated by a specific regulatory enactment.
7.1 In drawing up a source document in relation to goods and other material values (hereinafter - goods), and services, the following information shall be indicated in the description and basis of the economic transaction:
7.1 1. name of the goods or service; and
7.1 2. the corresponding type of the relevant transaction or activity (supply (sale) of goods, delivery of goods to another undertaking, other permanent place of operation of the undertaking (structural unit) or a place where in accordance with the procedures specified by the manager of the undertaking the storage and accounting of goods is performed, or to another financially responsible person in the undertaking (hereinafter - issue of goods) or provision of the service).
[22 December 2009]
7.2 In drawing up a source document, the following information shall be indicated in the quantifiers of the economic transaction:
7.2 1. the unit of measurement and volume;
7.2 2. the price for one unit;
7.2 3. the evaluation of the economic transaction in monetary terms;
7.2 4. the granted discounts, if such exist;
7.2 5. the taxes calculated from the evaluation of the economic transaction in monetary terms (value added tax, excise duty, natural resource tax), if such exist; and
7.2 6. the evaluation of the economic transaction in monetary terms with taxes.
[22 December 2009]
7.3 In drawing up a source document regarding transactions or activities with excise goods, the regulatory enactments regulating the movement of excise goods shall be observed in addition to this Regulation.
[22 December 2009]
7.4 A source document may be used as a value added tax invoice, observing the requirements specified for a value added tax invoice in the Law On Value Added Tax.
[22 December 2009]
7.5 Producers of agricultural produce shall not draw up a source document for issue of goods to another permanent place of operation of the undertaking (structural unit) or a place where in accordance with the procedures specified by the manager of the undertaking the storage and accounting of goods is performed, or to another financially responsible person in the undertaking.
[22 December 2009]
8. Documents which comply with the requirements specified for source documents shall be used to make entries in accounting registers in order to systematise the information contained in such documents in respect of economic transactions of the undertaking. Following the examination of a source document, the record (posting) shall be indicated thereon or decoding of such a record (posting) shall be ensured, if recording is performed electronically. In order to prevent the possibility of making a repeated entry, following the entering of a source document in the relevant accounting register, the entry sequence number shall be indicated in the document.
9. In maintaining accounting registers, the measure of value used in entries shall be the currency of the Republic of Latvia - lat. If the measure of value in a source document is in a foreign currency, for the purpose of recording the amounts indicated therein shall be recalculated to lats in accordance with the relevant foreign exchange rate determined by the Bank of Latvia effective on the day of the economic transaction (on the day of receipt or payment of money, day of purchase or sale of goods and services respectively, as well as any other day on which changes in the property status of the undertaking have actually occurred). A credit institution and savings and loan association may record the amounts, which are indicated in a foreign currency in the source document regarding a financial service provided to a client, in the relevant currency in the accounting register, if such a register is maintained electronically using a computer program, and economic transactions in lats and foreign currencies (according to their types) are accounted separately, as well as if the recalculation of the sums (total sums) recorded in foreign currencies in accordance with the relevant foreign exchange rate determined by the Bank of Latvia is ensured at least once a working day.
[5 December 2006]
10. All entries in accounting registers shall be made on the day of the economic transaction or as soon as possible thereafter, but not later than within 15 days following the end of the month in which the economic transaction took place. Entries shall be made in the double entry accounting system, on the basis of source documents or summary data of uniform documents. In cases determined by law entries may be made in the single entry system.
11. When using the double entry system, one and the same sum for one and the same economic transaction shall be entered in the debit and credit of the accounts, observing the chart of accounts used in the undertaking and the mutual connection between the accounts in conformity with the nature of the economic transaction (correspondence of accounts).
12. A chart of accounts is a systematised list of accounts with correspondingly assigned account codes, approved by the manager of the undertaking, intended for long-term use.
13. Each account shall store information in monetary terms, necessary for the preparation of financial reports in respect of assets, liabilities, own capital items and income or expenditure in a specified period of time corresponding to the heading of the account.
14. If two accounts are used for recording of economic transactions, a simplified correspondence of accounts shall be used, but if three or more accounts are used for this purpose, the complex correspondence of accounts shall be used.
15. An indication regarding the account in whose credit and the account in whose debit the sum of the economic transaction (record) is to be entered shall be made in writing on the source document or the summary of uniform documents or decoding of such a record shall be ensured, if the record is made electronically, and in conformity with the record the entries in the relevant accounts shall be made.
16. The general ledger shall indicate the account codes and headings thereof in the sequence provided for in the chart of accounts. When making records in source documents and making entries in accounting registers, the account codes shall be specified.
17. Accounting registers shall be classified into chronological registers and systematic registers. Entries on each economic transaction in such registers shall be made in chronological sequence (chronological entry) or according to the economic content (systematic entry) respectively. If economic transactions of certain type repeat frequently, a separate chronological register for each such type of economic transactions may be set up.
18. In chronological registers all economic transactions shall be registered in chronological sequence and for each economic transaction the following information shall be indicated:
18.1. the date of entry;
18.2. the entry sequence number;
18.3. a reference to the source document: author of the document (name of the legal person or the given name and surname of a natural person), name of the document or description of the economic transaction, the date on which the document was prepared and the registration number); If accounting is conducted using an accounting computer program (computer-based accounting information systems software), a unique feature of the relevant source document (for example, a number by which a source document has been registered in the accounting computer program) may be specified instead of the information referred to in this sub-paragraph what allows to identify such source document unequivocally.
18.4. value of the economic transaction in monetary terms; and
18.5. heading or code of the accounting position of the economic transaction and indication, or the entry is to be done in the debit or credit of such an account (if the double entry accounting system is used in accounting - the codes of those accounts in the debit and credit of which the economic transaction is to be recorded).
19. In systematic registers economic transactions shall be grouped into uniform groups according to the economic content. Systematic registers are the general ledger and analytical accounting registers. In the general ledger economic transactions shall be registered in monetary terms according to the accounting positions. In the analytical accounting registers economic transactions shall be registered according to the analytical accounts in monetary terms, but in respect of fixed asset and stock accounting items - also in kind.
20. A journal-ledger may be used in undertakings. In such a case, in addition to the journal-ledger, chronological registers shall be created for separate types of economic transactions, and analytical accounting registers shall be created for recording of fixed assets, stock, settlement balance and turnover or for analytical recording of other accounting positions.
21. For detailed classification of types of stock and components of expenditure items or of other accounting objects, special code systems (number or letter codes), symbols or abbreviation may be introduced. The instructions for use of a relevant code system, symbols and abbreviations shall be approved by the manager of the undertaking.
22. [5 December 2006].
23. If a religious organisation, the turnover (income) from economic transactions of which does not exceed LVL 25 000 in the accounting year, conducts accounting in the single entry system, it shall create a cash flow recording journal where cash and non-cash income and expenditures shall be registered, or two separate journals - a cash book and a book of credit institution accounts. In the cash book, cash income and expenditures shall be recorded, but in the book of credit institution accounts, non-cash income and expenditure in the religious organisation's current and deposit accounts in credit institutions shall be recorded. In order to record data required for preparation of an annual report and tax calculation, as well as to perform control of the property and settlement of accounts of the religious organisation, additional corresponding analytical accounting registers (for example, an accounting register of fixed assets and non-material investments, material accounting register, debtor accounting register and creditor accounting register) shall be created.
[5 December 2006]
24. [5 December 2006].
25. At the end of each month the total sum of economic transactions shall be calculated in the chronological registers (also in the recording journal of income and expenditure of economic activity), but in the general ledger, journal-ledger, cash flow recording journals and analytical accounting registers - debit and credit turnover of accounting records or analytical accounts respectively and also the balances of such accounts shall be calculated, and the referred to sums shall be mutually adjusted.
26. At the end of each accounting year, accounts and accounting registers shall be closed by recording account-closing entries and forwarding balance of accounts to new accounting registers for the next accounting year.
27. The manager of an undertaking may independently choose the type, content, number and mode of preparation of accounting registers (the form for conducting of accounting), taking into account the structure of the particular undertaking, the nature of economic activity and the amount of information to be processed. Cases where the type, content or mode of preparation of a relevant accounting register are regulated by a specific regulatory enactment shall be exceptions.
28. If corrections are introduced in source documents or accounting registers, corrections shall be made with a new entry which corrects or withdraws a previous entry. Accounting registers may be corrected using negative figures (reversing entry). Accounting documents and registers may not be deleted. The content thereof may be changed (corrected, supplemented) only in accordance with the procedures specified in this Regulation.
29. If corrections are introduced in source documents and accounting registers prepared in a hard copy, each correction shall be justified, indicating by whom, when and why the correction was made, and confirmed with the signature of the person who made the correction.
30. An accounting statement containing information on the relevant accounting register or source document to be corrected may be used as a source document for a correction. The accounting statement shall indicate the date when the correction was made, the reason, the person who authorised the correction and the sequence number of the (initial) entry to be corrected in the chronological register. A note regarding preparation of the accounting statement shall be made on the (initial) source document to be corrected and the date of the statement shall be indicated.
31. In undertakings where accounting is conducted using accounting computer programs (computer-based accounting information systems software) keeping of all accounting information in the archive information media of the undertaking shall be ensured or it shall be systematically conducted and the printouts of source documents and accounting registers shall be stored in the archive of the undertaking. The undertaking shall retain also the data which allow to determine the origin or destination of an electronic document, as well as the time of sending or receipt thereof, together with a source document prepared or received electronically.
32. Before being placed in the archives of the undertaking, source documents, accounting registers and other accounting documents shall be kept in the accounting department in the care of the responsible persons. Source documents of the current month which refer to a specific accounting register and are prepared in a hard copy shall be compiled in the order of entry numbers and shall be stored bound or sewn together in folders in storage places intended for such a purpose. Source documents related to entries made using accounting computer programs shall be compiled by grouping them according to the date of making the relevant entry.
33. Natural persons and legal persons may use the accounting documents stored in the accounting department and archives of the undertaking only with the permission of the manager of the undertaking. Such documents may be removed from the undertaking only in cases and in accordance with the procedures set out in special laws or other regulatory enactments.
34. If an undertaking is being liquidated or re-organised, after co-ordination with the Office of the Director General of the State Archives, further storage procedures of the archive of the undertaking shall be determined by the liquidation commission (liquidator). The liquidation commission (liquidator) shall arrange the documents and transfer them for further storage in the State Archives or the archives of the undertaking established as a result of the re-organisation.
35. The manager of the undertaking shall be responsible for the keeping and protection against destruction or loss of source documents, accounting registers, accounting organisation documents, and other accounting information of the undertaking.
I1.Special Requirements for Drawing up of Source Documents and Conducting of Accounting Registers in Transactions with Goods
[22 December 2009]
35.1 A source document regarding supply (sale) of goods and delivery of goods shall be drawn up on the day of transaction of performance of activity prior to commencement of the transaction or activity.
35.2 An undertaking, which is performing a transaction continuously within a continued period of time, if it is not otherwise specified in other regulatory enactments, may draw up an external source document for a time period not exceeding a calendar month, if a recipient of goods does not perform further supply (sale) of goods or does not commence the use thereof in the production process or processing of goods or in supply of services until the receipt of the source document.
35.3 An undertaking, which confirms the payment received for transactinions with a source document which has been drawn up in accordance with regulatory enactments regarding electronic devices and equipment for the registration of taxes and other payments, shall draw up a source document upon request of a partner of the transaction.
35.4 In drawing up a source document regarding supply (sale) or dilivery to another undertaking of timber referred to in Section 13.2, Paragraph two of the Law On Value Added Tax (except for the case specified in Paragraph 35.2 of this Regulation):
35.4 1. the number and date of the felling confirmation shall be indicated, if round timer or sawn timber is supplied (sold) or delivered by a person who has acquired them during timber cutting on the basis of felling confirmation;
35.4 2. clarified quantifiers of the economic transaction which are referred to in Paragraph 7.2 of this Regulation shall be specified immediately after evaluation, if after evaluation the quantity and (or) price of timber accepted at the place of receipt of timber differ from the information indicated in the source document.
35.5 A manager of the undertaking shall determine the number of copies of a source document attesting supply (sale) of goods or delivery of goods observing the requirements referred to in Paragraph 35.7 of this Regulation in respect of location of the source document and indications of a recipient of goods.
35.6 A source document regarding supply (sale) of goods and regarding delivery of goods shall be registered in a document register or in analogue recording register in a chronological order on the day of drawing up or receipt thereof and prior to further supply (sale) of goods or performance of other activities with them. At least the following information shall be specified in the register:
35.6 1. the date of entry and a sequence number;
35.6 2. the date of preparation of a document and its number; and
35.6 3. a partner of the transaction specified in the document (name of a legal person or the given name, surname of a natural person).
35.7 The document register referred to in Paragraph 35.6 of this Regulation togehter with one copy of a document shall be present in each address of delivery and receipt of goods until closing inventory for the accounting year.
35.8 If the place of delivery and receipt of goods is not a permanent place of operation of the undertaking (structural unit), the document register referred to in Paragraph 35.6 of this Regulation (except for trade) may be located at the legal address of the undertaking or a structural unit registered at the State Revenue Service (for a natural person - at the declared place of residence) .
35.9 If the document register referred to in Paragraph 35.6 of this Regulation is prepared and stored only electronically, the possibility to issue a printout of the document register referred to in Paragraph 35.6 of this Regulation in a hard copy upon request of controlling institutions shall be ensured.
35.10 Other requirements for the document register referred to in Paragraph 35.6 of this Regulation may be specified in regulatory enactments regulating the movement of excise goods.
II. Accounting Computer Programs
36. If the accounting registers are conducted only electronically, an accounting computer program (computer-based accounting information systems software) shall be such as to ensure:
36.1. keeping of information of entry register (system log) regarding each record or correction of a record, its type, date and time, system entry number, as well as the performer of the record;
36.2. recording of accounting (computer-based accounting information systems) data in MS Excel, dBase/FoxPro, Text Report files, Flat files or ODBC data sources formats for the performance of audit (examination) or inspection - in order that it would be possible to select entries and records according to different criteria, to trace economic transactions and ascertain whether the information provided by the accounting is true;
36.3. the possibility to select electronically prepared source documents and accounting registers for continued or permanent storage, to record them in the relevant information media and store in accordance with the procedures specified in the provisions for storage of electronic documents specified in the Electronic Documents Law and other regulatory enactments, maintaining the authenticity of their content and legibility during the time period of storage specified in the Law On Accounting;
36.4. data image and printout of electronically prepared source document or accounting register; and
36.5. backup copy of electronically prepared source documents and accounting registers.
37. Only an accounting computer program the rights of use of which are confirmed by the relevant licence or licence agreement in accordance with the Copyright Law shall be used for the conduct of accounting registers.
38. A manager of the undertaking may select an accounting computer program (computer-based accounting information systems software) independently taking into account the functional, technical and data security requirements recommended or necessary for the operation of the undertaking, except for the cases when the use of a particular computer program or the requirements to be put forward are regulated by a certain regulatory enactment.
39. If it is not specified otherwise in special laws or other regulatory enactments, a manager of the undertaking shall determine general provisions for the security of computer-based accounting information systems and mandatory techical and organisation requirements for the protection of accounting data in the undertaking, as well as shall ensure the control of observance of the referred to regulations and requirements.
40. A person, who performs the audit (examination) or inspection provided for in regulatory enactments, has the right to get acquainted with the documentation of the the user of the accounting computer program used, which is at the disposal of the undertaking, as well as with the information regarding codes, abbreviations, designations or other signs which are used for the conduct of the accounting registers in the accounting computer program.
III. Accounting Organisation Documents
41. Accounting organisation documents shall prescribe the procedures for documenting, evaluating and recording economic transactions, property and liabilities of an undertaking, for performance of inventory, provision of reports regarding cash and non-cash advance payments, as well as utilisation of raw materials and other stocks, for documenting and recording expenditures of use of vehicles of the undertaking, including expenditures of use of vehicles related to economic activity of the undertaking, as well as expenditures related to use of passenger automobiles of the undertaking as an employer for personal needs and which shall be specified taking into account the requirements of regulatory enactments regulating the taxes, for organising the circulation of documents and conducting the accounting registers. An accounting organisation document shall also be the chart of accounts of an undertaking, the instructions for use of such chart and codes and symbols, criteria for classification of long-term investments, current assets, liabilities and equity capital instruments, instructions for the accounting policy, storage of accounting entries, documents and registers, and instructions for the preparation of the annual accounts and other accounting reports.
[5 December 2006; 2 February 2010]
42. If not specified otherwise in special laws or other regulatory enactments in respect of some certain accounting organisation documents, the manager of an undertaking shall develop and approve accounting organisation documents and be responsible for the contents thereof.
42.1 In developing accounting organisation documents in an institution which is financed from the State budget or local government budget, as well as in a State or local government agency, the nature of operation of the relevant institution or agency and the requirements specified in regulatory enactments regulating the field of accounting and budget shall be taken into account.
[5 December 2006]
42.2 An individual merchant, individual undertaking, farm and fishing undertaking, if the turnover (income) of such a person from economic activities does not exceed LVL 200 000 during the previous accounting year and such a person conducts accounting in the single entry system, and another natural person who performs economic activity shall be released from development and approval of accounting organisation documents (Paragraphs 41, 42, 43 and 60 shall not apply to the referred to person).
[5 December 2006]
43. Preparation of source documents related to economic transactions of an undertaking, registration and circulation thereof and other record-keeping matters in accounting shall be determined by a description or chart of document circulation. Such a description or chart shall include the flow of source documents in systems of economic transactions, the sequence of control and processing of such documents, performance deadlines, performers, the number of copies of source documents prepared in the undertaking, the place and time of storage and other information.
44. The systems of economic transactions referred to in Paragraph 43 of this Regulation shall be the division (classification) of economic transactions of an undertaking in the following directions which, in respect of the economic content and essence thereof, are mutually related:
44.1. purchase of goods and services;
44.2. settlement of accounts with suppliers of goods, providers of services and employees of the undertaking;
44.3. manufacture of products, provision of services and recording of the relevant costs;
44.4. storage of raw materials, materials, non-finished and finished products and goods;
44.5. sale of finished products, goods and services;
44.6. settlement of accounts with purchasers and commissioning parties for goods sold and services provided;
44.7. financing of operation of the undertaking;
44.8. financial investments; and
44.9. other directions of economic transactions of the undertaking, the number and structure of which depend on the particular normal activities of the undertaking in the formation of income and financial resources.
45. When preparing source documents and accounting registers, as well as when conducting accounting records, Chapter Three and Chapter Four of Cabinet Regulation No. 154 of 23 April 1996, Regulation Regarding Development and Drawing up of Documents, shall be applied respectively.
46. In order to ensure registration of all source documents prepared in accounting, documents shall be numbered according to the type thereof and the sequence number shall normally be assigned to the document during the process of its preparation.
47. In order to prevent the possibility of intentional or unintentional error when assigning a sequence number to a document prepared in accounting, previously numbered forms of source documents shall be used for documenting separate types of economic transactions.
[5 December 2006; 22 December 2009]
IV. Inventory Procedures
48. Inventory shall be performed by determining the actual quantity of objects owned by or in use by an undertaking, and by comparing the amounts of claims and debts with debtors and creditors. Credit institutions may, according to the principle of materiality, perform random comparison of creditor debts arising from accepted investments.
49. Determination of the actual quantity of objects owned by or in use by an undertaking shall involve evaluation of the quantity, duration of use and worth (quality, usefulness) of such objects by generally applicable methods (by examining, counting, weighing, measuring) or, if necessary, by special methods (for example, by geodesic measurements, making technical calculations, chemical analysis of samples in laboratories, evaluations by invited experts, updated data of the relevant State registers, also the State Forest Register). The evaluation referred to is applicable to material assets owned, possessed, held or stored by the undertaking (long-term investments and current assets, as well as off-balance-sheet assets), including that which has been placed in secure storage, or is undergoing processing or repair within the undertaking.
[5 December 2006]
50. Inventory of the amounts of intangible investments and other intangible property, as well claim and debt (including off-balance-sheet items) shall be taken by checking the amount thereof in accordance with the relevant documents.
51. The manager of an undertaking shall be responsible for taking inventory in the undertaking. The manager of the undertaking shall set up inventory commissions for taking inventory in separate objects. The owner of an individual undertaking, farm or fishing undertaking, another natural person who performs economic activity and individual merchant, as well as the manager of a capital company who is the only owner of the capital company - the only member of the board, may take inventory himself or herself.
[5 December 2006; 2 February 2010]
52. Personnel of the inventory commission and the date of inventory commencement and completion shall be determined by the manager of the undertaking by means of a written instruction. The manager of the undertaking may also include in such an instruction the date of documentation of the inventory.
53. Inventory shall be taken in the presence of a person who is liable for keeping a particular material asset, including cash, (hereinafter - responsible person) if such exists. In exceptional cases, if the presence of a responsible person is not possible (for example, because such a person is ill, missing or has deceased), the manager of the undertaking shall take a decision to take inventory without the presence of the responsible person.
[5 December 2006]
54. The manager of the undertaking shall invite the auditing commission (auditor) of the undertaking, or an employee of the internal examination (audit) service (public controller), or a certified auditor to observe the course of the closing inventory for the accounting year.
55. Until the day of inventory, processing of all source documents (on receipt and transfer of material assets) shall be completed, relevant entries shall be made in the analytical accounting registers and balances shall be calculated.
[5 December 2006]
56. Prior to commencement of checking the actual condition of the material assets the inventory commission shall:
56.1. become acquainted with the object of inventory and inventory instruction, and draw up an inventory plan;
56.2. verify that all weighing and measuring devices are accurate and ready for use; and
56.3. check whether all the documents, also recent documents on receipt, alienation or liquidation of material assets, are registered in the appropriate registers. If it has not been done, a time period for the performance of the said activities shall be provided and inventory shall be commenced only after such activities have been completed.
[5 December 2006]
57. If the inventory of material assets is not completed in one day, the premises where the material assets are kept shall be sealed in the presence of the inventory commission after the completion of the work of the commission on the relevant day. The premises may be left unsealed if it is not advisable and it is provided for in the inventory instructions approved by the manager of the undertaking.
[5 December 2006]
58. The results of the inventory shall be entered into inventory lists. If there is a responsible person in the undertaking, such lists shall be drawn up in at least two copies, one copy of which shall be intended for the responsible person and the other - for the manager of the undertaking.
[5 December 2006]
59. An inventory list shall be drawn up observing the following requirements:
59.1. mandatory requisites of the document to be drawn up shall be indicated - name of the undertaking and the organisational unit subject to inventory, name and number of the document, the date of drawing up thereof, justification, data regarding persons participating in the inventory, name of the accounting units of the material assets and, if applicable, the accounting code (number) thereof, units of measurement, quantity and other requisites (prices, sums), taking into account the type of the object subject to inventory and procedures specified in the inventory instructions of the undertaking;
59.2. the inventory list shall be drawn up in a clear and understandable manner by using a computer or by making entries by hand in a previously prepared inventory list form;
59.3. the inventory list shall be signed by members of the inventory commission and the responsible person, if any. If any of members of the inventory commission cannot participate in the inventory and if it is provided for in the inventory instructions approved by the manager of the undertaking, the inventory list may be signed only by a part of the members of the inventory commission;
59.4. if inventory is taken because another person has been appointed as a responsible person, the inventory list shall be drawn up in three copies. The person who accepts material assets or cash shall sign the inventory list for receipt thereof, but the person transferring them - for the transfer thereof (except for the situation, if due to extraordinary situation the inventory is performed in the absence of such a person);
59.5. if an entry in the inventory list is corrected, provisions regarding correction of accounting entries shall be observed;
59.6. an error in all copies of the inventory list shall be corrected as follows: the incorrect entry shall be struck out, the correct entry shall be made and a notation shall be made as to who and when made the correction and why the correction was made;
59.7. a correction shall be signed by all the members of the inventory commission and the responsible persons; and
59.8. when making entries by hand in a previously prepared inventory list form, no empty lines shall remain. On the last page of the inventory list empty lines shall be crossed out.
[5 December 2006]
60. Inventory in an undertaking shall be performed in accordance with the inventory instructions approved by the manager of the undertaking. Inventory instructions shall specify the deadlines and procedures for preparation, performance and documentation of the closing inventory for the accounting year. Additional inventories, periodic inventories, extraordinary inventories (if theft, damage of material values, fire, flood or other natural disaster has been determined, or if inventory is performed in conformity with the provisions of the employment contract or collective agreement regarding financial liability of an employee) may be provided for in an undertaking by preparing relevant inventory instructions.
61. After completion of the inventory of the relevant objects, the inventory commission shall submit to the manager of the undertaking the prepared inventory lists together with the relevant explanations, proposals and other documents obtained or prepared in the course of the inventory.
62. The manager of the undertaking or another person (in accordance with official duties in the undertaking) shall examine the submitted inventory documents and verify whether:
62.1. inventory lists in respect of all objects to be inventoried, as specified in the instructions, have been submitted;
62.2. inventory lists have been completed in conformity with the specified procedures;
62.3. inventory results have been obtained in conformity with the inventory instructions;
62.4. the submitted explanations and proposals are justified; and
62.5. all the calculations indicated in the inventory lists are correct.
63. Errors determined in prices and calculations shall be corrected in accordance with the procedures set out in Paragraphs 28, 29 and 30 of this Regulation. A note regarding verification of price and final result calculations shall be made on the last page of each inventory list. The referred to note shall be signed by the persons who carried out the examination.
64. The manager of the undertaking may organise control examinations in respect of inventory results and, if necessary, require a repeated taking of inventory.
65. The accounting department of the undertaking shall draw up comparison lists where the difference between the data in accounting books and the inventory lists determined during inventory is shown so that, in accordance with the inventory results, entries in the balance accounts can be adjusted.
66. Assessment differences determined during the inventory, the difference in the number of units of material assets or losses thereof due to damage, wear and tear or some other reason shall be recorded in accordance with the instructions of the manager of the undertaking.
[5 December 2006]
67. If the inventory has actually taken place or the results of the inventory have been obtained after the last day of the accounting year, the results of the closing inventory of the accounting year shall be recorded in such a manner that the relevant accounting entry would be included in the financial reports of the relevant accounting year.
IV1. Organising of Accounting Work in an Undertaking
[5 December 2006]
67.1 The manager of an undertaking may organise the accounting work by:
67.1 1. delegating the conduct of accounting to one or several employees of the undertaking (hereinafter - accountant);
67.1 2. using services of another undertaking for the conduct of accounting (hereinafter - provider of accounting services);
67.1 3. undertaking the conduct of accounting himself or herself, if the manager of the undertaking is the only owner of a capital company - the only member of the board - or a natural person (also an owner of an individual undertaking or farm or fishing undertaking) who is responsible for the commitments arising from economic activity (commercial activity) with all the property thereof.
67.2 A manager of an undertaking, who does not conduct the accounting himself or herself but delegates the conduct thereof to an accountant or a provider of accounting services, shall enter into an employment contract regarding the conduct of accounting or contract for work performance regarding provision of accounting services with such a person respectively. Obligations, rights and responsibilities of boths parties in matters related to the conduct of accounting shall be determined in the contract referred to.
V. Control of Accounting
68. Control of accounting shall include methods and strategies used for controlling the holding of the resources of the undertaking, registration of economic transactions in the accounting system in compliance with the requirements of regulatory enactments and the internal regulations, as well as for ensuring timeliness and correctness of the information provided by the accounting department. Within the framework of control of accounting, calculations and postings contained in calculations, annexes and summaries shall be examined, and it shall be clarified whether each economic transaction has been recorded in the appropriate account and in due time, and whether the sums indicated are correct, and whether all the economic transactions which refer to the accounting period are shown in the accounting registers and financial reports for the accounting period.
69. In order to ensure effective functioning of accounting control, the manager of the undertaking shall observe the following preconditions in organising the accounting work:
69.1. work duties shall be fulfilled by qualified employees;
69.2. work duties shall be divided, specifying the specific task of each employee and his or her degree of liability;
69.3. duties of the employees shall be divided so as the course of each economic transaction is controlled by several employees;
69.4. qualitative work organisation documents shall have been prepared and the condition observed that in all cases where it is necessary to take action different from that specified in the documents referred to, permission of the manager of the undertaking shall be required; and
69.5. the accounting function shall have been separated from other economic activity functions of the undertaking.
70. A manager of an undertaking shall ensure the development of the accounting control system of the undertaking and the introduction and maintenance thereof. The inspection of efficiency of the accounting control system shall be performed in the undertaking on the regular basis. The manager of the undertaking shall be responsible for the performance of the inspection of efficiency of the accounting control system and ensuring of the efficiency of the accounting control system. The manager of the undertaking may determine that in accordance with the internal control system of the undertaking the inspection of the efficiency of the accounting control system shall be performed by the employees of the internal examination (audit) service (public controllers) of the undertaking.
70.1 The requirements of accounting control specified in Paragraphs 68, 69 and 70 of this Regulation shall not apply to the manager of the undertaking who is conducting the accounting himself or herself.
[5 December 2006]
VI. Accounting Cycle
71. An accounting cycle shall include several sequential stages of accounting work, as a result of which financial reports for the relevant accounting period (month, quarter or year) shall be obtained. A full accounting cycle shall refer to the accounting year and it shall consist of the following stages of the accounting cycle:
71.1. opening of accounts;
71.2. analysis and recording of the economic transactions of the undertaking;
71.3. calculation of the balances of the accounts;
71.4. drawing up of a report on the turnover and balances of the accounts;
71.5. recording of correcting entries;
71.6. recording of closing entries; and
71.7. preparation of financial reports.
72. At the beginning of the accounting year, accounting registers shall be created and accounts in the general ledger or journal-ledger shall be opened, and the balances of accounts at the beginning of the accounting year shall be entered:
72.1. an undertaking commencing operations - on the basis of information contained in inventory lists, articles of association, agreements, or any other documents (data of opening balance); and
72.2. an undertaking continuing operations - on the basis of data from the closing balance of the previous accounting year.
73. During the accounting year, on the basis of source documents, entries shall be made in the accounting registers, total sums of the account data shall be calculated, and at least once a month such sums shall be entered in the general ledger or journal-ledger.
74. A report on the turnover and balances of accounts shall be drawn up in the form of a working table. The headings or codes of accounts shall be entered in the rows of a working table in sequence of the chart of accounts of the undertaking in accordance with the general ledger or journal-ledger, whereas columns shall be arranged according to the purpose of preparation of the report.
75. A report on the turnover and balances of accounts shall be completed in the following sequence: entries shall begin with the balances of accounts in accordance with the state on the final day of the accounting year, sums of additional entries and adjustments shall be entered, as well as sums of account closing entries, and the new balances of accounts shall be calculated. By using the data referred to, the columns designed for profit and loss calculation or income and expenditure account and account balance shall be completed respectively, as well as the profit or losses of the accounting year or the difference between the income and expenditures shall be calculated respectively.
76. By using data from the report on the turnover and balances of accounts, the following accounting activities shall be performed:
76.1. accounting statements shall be prepared and correcting entries shall be made in the chronological and systematic registers (also in the general ledger or journal-ledger);
76.2. account closing entries shall be recorded; and
76.3. financial reports shall be prepared.
VII. Closing Provisions
77. If by the day of coming into force of this Regulation an accounting computer programme (computer-based accounting information systems software) is purchased which fails to comply with the requirements referred to in Paragraph 36 of this Regulation, an undertaking is entitled to use it until 31 December 2004.
78. Cabinet Regulation No. 243 of 25 July 2000, Regulations on the Conduct and Organisation of Accounting (Latvijas Vēstnesis, 2000, No. 272/274), is repealed.
79. Until making of the relevant amendments in other regulatory enactments the words "waybill with a number granted by the State Revenue Service" shall be considered to be the words "source document".
[22 December 2009]
Prime Minister E. Repše
Minister for Finance V.Dombrovskis
Translation © 2011 Valsts valodas centrs (State Language Centre)
Title: Noteikumi par grāmatvedības kārtošanu un organizāciju Status: