Accounting certificate: form and when to use it

Published 17 February 2017. Some rules have changed since; ask us for the current position.

In this article you will learn:

• when it makes sense to prepare an accounting certificate (бухгалтерська довідка);
• which form to use for this document.

The form of an accounting certificate

The form of this document can be found in the Methodological Recommendations on the use of accounting registers approved by Ministry of Finance Order No. 356 of 29 December 2000 (the "Recommendations No. 356"), and in the Methodological Recommendations on the use of journal-order accounting registers for agricultural enterprises approved by Ministry of Agrarian Policy Order No. 390 of 4 June 2009 (the "Recommendations No. 390").

However, the approved forms lack one of the mandatory details: the name of the enterprise on whose behalf the certificate is issued. The accountant should therefore make sure that the certificate meets all the requirements for a primary document under Part 2 of Article 9 of Law No. 996-XIV of 16 July 1999.

When an accounting certificate is used

1. Correcting errors. In particular, an accounting certificate is needed when errors in the accounts and financial statements of the current and prior reporting periods are corrected by the "red reversal" method and/or by additional entries.

Example

In February 2017, the Zhuravushka farm charged additional 2016 depreciation on a piece of equipment, a Ррd-2563 thermal printer, on the basis of an accounting certificate, thereby correcting an error made in its 2016 financial statements.

To correct such an error, you need to prepare an accounting certificate.

2. Documenting business transactions for which no primary document form has been established. Many business transactions can be documented with an accounting certificate, including:

• calculating the revaluation index for non-current assets and the amount of the write-down (revaluation) (paragraphs 16–20 of Accounting Standard (P(S)BO) 7 "Fixed Assets", paragraphs 19–23 of P(S)BO 8 "Intangible Assets");
• calculating the allocation of revaluation surplus on disposal of previously revalued non-current assets (paragraph 21 of P(S)BO 7 "Fixed Assets", paragraph 24 of P(S)BO 8 "Intangible Assets");
• calculating transport and procurement costs and trade mark-up under P(S)BO 9 "Inventories";
• calculating the cost of inventories disposed of using the weighted average cost, standard cost or retail price methods (paragraphs 16, 18, 19, 21, 22 of P(S)BO 9 "Inventories");
• allocating production overheads under P(S)BO 16 "Expenses";
• calculating the allowance for doubtful debts and provisions for future expenses and payments (P(S)BO 10 "Accounts Receivable");
• calculating interest on loan and deposit transactions;
• calculating deferred expenses and deferred income;
• closing the balances of operating accounts in classes 7, 8 and 9 and transferring the financial result to account 44 "Retained Earnings (Uncovered Losses)";
• offsetting advances on sub-accounts 371 "Settlements for Advances Issued" and 681 "Settlements for Advances Received";
• reclassifying long-term liabilities as short-term, and so on.

In all these cases the method and rules for preparing the certificate are the same. The document will contain, in particular, the following information:

• characteristics of the item (volume, value, useful life or settlement terms, etc.);
• the calculation method;
• the calculation algorithm;
• the account entries used to record the transaction;
• the signatures of the employee who prepared the certificate and of the chief accountant who checked it.

3. Recognising expenses in the period in which the related income is earned, or in which they are actually incurred, if the necessary primary documents have not been received from the counterparty by the time the financial statements are prepared (Ministry of Finance letter No. 31-11410-06-5/11705 of 22 April 2016).

4. VAT accounting. In particular, under paragraph 201.11 of the Tax Code (the "TC"), one of the grounds for recognising input VAT without a tax invoice is an accounting certificate prepared in line with paragraph 36 of subsection 2 of section XX of the TC.

Two important points highlighted by the tax authority in letter No. 26974/10/28-10-06-11 of 14 December 2015 from the Inter-regional Main Office of the State Fiscal Service (МГУ ДФС) deserve attention:

• the accounting certificate must be based on tax invoices, customs declarations and other documents listed in paragraph 201.11 of the TC that serve as grounds for recognising input VAT, and must contain an exhaustive list of them;
• if a taxpayer did not include VAT from received tax invoices registered in the Unified Register of Tax Invoices (ЄРПН) in its input VAT for the relevant reporting period, it keeps this right for 365 calendar days from the date the tax invoice was issued (paragraph 198.6 of the TC).

Frequently asked questions:

• What is an accounting certificate?

An accounting certificate is usually a primary document used for various purposes: confirming business transactions; supporting calculations for assets, liabilities and inventories; charging depreciation; and correcting errors in the accounts of prior periods. Its mandatory details are set out in Part 2 of Article 9 of the Law "On Accounting and Financial Reporting in Ukraine".