Accounting is kept in such a way that a third party qualified in accounting matters has the opportunity to obtain a reliable and clear idea of the financial condition of the company as of the balance sheet date, its results of operations, cash flow for a certain period, as well as determine the beginning of each business transaction and track its progress.
The accounting information provided must be true, comparable, timely, meaningful, understandable and complete.
A responsibility
The head of the company is responsible for maintaining accounting records and storing originals, copies or images of the data of all documents confirming business transactions.
The head of the enterprise is:
- in a personal society – all members of this society or those members of the society who are authorized to represent the society;
- in a capital society – the board;
- in a cooperative society – the board or a person performing the functions of management in the manner determined by the charter of the company;
- at an individual enterprise, in a peasant or fishing economy – respectively the owner of the enterprise or farm;
- in a branch of a foreign merchant and a permanent establishment of a non-resident (foreign merchant) – a person authorized to represent a foreign merchant (non-resident) in activities related to the branch or permanent establishment;
- in an institution financed from the state or municipal budget, in a state or municipal agency – its head;
- in a society, institution, in a political organization (party), in an association of political organizations (parties) and a trade union – the executive body (governing body);
- in a religious organization – leadership (governing body);
- individual merchants and other natural people engaged in economic activities.
Registers and chart of accounts
Latvian legislation does not impose strict requirements regarding the type of register and chart of accounts. There is no generally accepted form for these documents. There are only a few prescriptions that must be followed. To analyze the company’s activities, information from the balance sheet is used.
With its help, you can analyze the results of work for a certain period or view the activities associated with one partner, supplier, customer. The accountant is maintained by an accountant. Accounts can be split by partners. For example, accounts can be allocated for local partners and companies registered in Latvia or other EU states.
Also, accounts are classified by groups. For example, one group includes office rent, utilities, expenses for ongoing repairs of the premises. Itemized accounts are used to compile a balance sheet and calculate profit and loss.
Trade secret
In accounting, information and data that are included in the company’s reports in accordance with the current regulations are not considered a commercial secret.
All other information contained in the company’s accounting is considered a trade secret and is available exclusively for audits, the tax administration when checking the correctness of tax calculation, as well as for other government departments in cases provided for by legislative acts.
Maintenance of accounting registers
The accounting registers must be kept in the Latvian language and, together with the supporting documents, must be kept in the territory of Latvia. If the records use codes, abbreviations, individual letters or symbols, they must be explained.
Supporting documents of the enterprise, accounting registers, inventory lists, annual reports and documents related to the organization of accounting at the enterprise must be systematically ordered and stored in the archive of the enterprise.
Storage periods:
- annual reports – until the reorganization or termination of the enterprise, insofar as other regulatory enactments do not specify a different period;
- inventory lists, accounting registers and documents related to the organization of accounting – 10 years;
- supporting documents on the monthly wages (wages) accrued to employees, broken down by years and months – 75 years;
- other supporting documents – 5 years.
- If records are kept in electronic format, the data storage period must be ensured.
In case of reorganization or termination of the enterprise, the further procedure for keeping the archive of the enterprise is determined by the liquidation commission in agreement with the General Directorate of State Archives.
The head of the enterprise is responsible for the preservation of the archive.
The company has the right to convert documents into an electronic format for storage in an electronic environment, observing the procedure for converting public documents into an electronic format for storage in an electronic environment established by regulatory enactments governing the activities of archives, technical requirements for conversion, as well as the procedure for storing received documents and the procedure destruction of converted public documents.
Company reports in Latvia
The reporting year is 12 months and usually coincides with the calendar year. A different beginning and end of the reporting year can be only if it is determined by the charter, statute or constitution of the relevant company, or by the contract of a partnership.
The reporting year is subject to change. The change in the reporting year must be justified, and appropriate explanations regarding this must be given in the annex to the annual report.
The first reporting year of the newly formed enterprise may cover a shorter or longer period, but not more than 18 months.
When the beginning of the reporting year of an existing enterprise is changed, the reporting year cannot exceed 12 months.
The reporting year in which the company is reorganized or it ceases to operate, as well as the reporting year in which its beginning is changed, may be shorter than 12 months.
Responsibility for violation of the Accounting Law
Heads of enterprises who have committed violations of the Accounting Law and other current regulations related to accounting, malicious distortion of accounting data, who have not submitted officially established reports or who have committed the loss of accounting documents, are held accountable in the manner prescribed by laws.
The head of the company is liable for damage caused to the company, the state (municipalities) or a third party as a result of violation of the provisions of this law through the fault of the head of the company. Individuals and legal entities who have suffered such damage have the right to demand compensation in accordance with the procedure established by legislative acts.