Quite often in economic activity the business uses advance reports. Its full name is the Report on the use of funds issued for business trips or for reporting. Its approximate form was approved by the order of the Ministry of Finance of Ukraine № 841 dated 28.09.2015.
So, why is it necessary to compile an advance report, in which cases, what are the main mistakes in filling it out and the consequences of non-compliance with the law? Let’s deal with these issues in this article.
Completion of the Report is carried out in cases of issuance by the business entity (its responsible person) and, accordingly, receipt of funds by an individual when:
- Business trip;
- Performing a significant civil action on behalf of an entity in the performance of official or other duties.
It should be noted that the advance report is filled out not only in cases of issuance (receipt) of cash, but also when paying with a corporate card (usually called “Account Access Key”), travel, bank or personal checks or other payment documents. The advance report is prepared and submitted to the responsible person of the business entity (manager, accountant) as a general rule within five banking days following the end of the business trip or civil action. However, there are some exceptions:
- If funds were withdrawn from the corporate card during the business trip, the Report is submitted within three days;
- If during the business trip the payment was made in non-cash form, the Report is submitted within 10 days (can be extended by the employer for up to 20 days).
The Report shall fill in the following information on:
- Reporting employee (position, RNOKPP, full name);
- The employer;
- Checks of the report by the head;
- Assignment of funds;
- Balance, expenses, overspending;
- List of supporting documents;
- Taxation of non-refundable amount of overspent funds.
When taxing the non-refundable amount of overspent funds, a tax rate of 18% is applied to the personal income tax and 1.5% of the military tax. Such taxation is carried out by the accountant after accrual of all payments for a month.
An advance report is also required to confirm the costs of the entity’s business activities. This is important when tax authorities audit financial statements.
The Report on certain business trips has certain features. The only peculiarity is that since the settlements in this case are made in foreign currency (as evidenced by receipts or other supporting documents), the amounts in the Report must be indicated in such currency, and the conversion in national currency.
Thus, the advance report is an important accounting document that can entail significant financial aspects.
If you have additional questions – please contact, lawyers and accountants of the Law Firm “Prikhodko and Partners” will be happy to help you and provide qualified advice.