Financial authorities ineffective when imposing fines on the bases of the Accounting Act
Press Release – February 11, 2013
The Supreme Audit Office (SAO) performed an audit of the State income from fines that are imposed by territorial financial authorities according to Act on Accounting and by courts in relation to the management of the Collection of Documents. Among the audited bodies were the Central Financial and Tax Directorate and 17 selected financial directorates. Auditors also scrutinized whether the courts appeal to entrepreneurial subjects for supplementing the Collection of Documents with annual reports and final accounts and whether fines are imposed in case the entrepreneurial subjects fail to do so. The audited period included years 2009–2011.
Financial authorities prefer tax proceedings and rarely apply the right to impose fines. At the financial directorates, the SAO auditors scrutinized 482 reports on tax controls. Out of the number, the Accounting Act was violated in 144 cases. Only in 66 cases the financial authorities initiated the fine proceedings.
Even when a fine was imposed, the collection process was hardly effective. Within the period 2009–2011, 225 fines in the total amount of CZK 12.6 million were imposed but by the end of April 2012, less than a half of the amount was collected as only 156 fines were settled.
Collection Courts manage the Collection of Documents but they are not obliged to perform periodical controls of the records’ completeness – i. e. scrutinize whether entrepreneurial subjects supplemented all necessary documents (including annual reports and final accounts) into the Collection. In case some of the documents are not available, the courts are authorized to appeal to the subjects to complete the Collection. Only in case the subject is not responding, the court may impose a fine for disobeying the appeal. Auditors concluded that the courts had not been successful when collecting the fines as the unpaid fines amounted to CZK 11.5 million by the end of 2011, which represent nearly 60 % of the total amount of fines imposed within the period 2009–2011.
Most entrepreneurial subjects do not comply with the duty to deposit certain documents in the Collection of Documents. According to the trial version of the software, which is operated by the Central Financial and Tax Directorate, as much as 70 % of entrepreneurial subjects failed to submit their final accounts or annual reports in 2008, while in 2009 it was 73 % of entrepreneurial subjects and 81 % of entrepreneurial subjects in 2010.
The applicable regulations for imposing fines on the bases of the Accounting Act fail to be effective. The audit conclusion clearly shows that it is necessary to determine who should be responsible for supervising the completeness of the Collection and how the supervision processes should be organized. The SAO suggests that the entrepreneurial subjects submit their final accounts or annual reports during the tax proceedings, which would authorize the financial directorates to submit the documents to the Collection. In this way, financial authorities would get to know whether the entrepreneurial subjects fulfilled their duties and could proceed more efficiently.
For further details about the auditing operation No. 12/01 (in Czech only), see the following link: http://www.nku.cz/assets/media/informace-12-01.pdf (pdf 228 kB).
Communication Department
Supreme Audit Office