Financial Compliance & Controlling

Every day, we see how new regulations challenge our customers and give rise to doubt about the interpretation and practical implementation of existing regulations.

No doubt you recognise yourself in several of these scenarios that either involve new regulations or a greater degree of complexity as regards the regulations you already know: new business activities, geographical scope, new circle of owners, or new lenders, fall in earnings, selection for tax control, or your auditor's increasing the documentation requirements for your financial reporting.

The truth of the matter is that the legislation and your stakeholders' expectations are continuously developing, and it may be difficult to navigate this landscape.

Often Finance considers the year-end closing the culmination of the annual wheel. You probably take the same view. 

Apart from the satisfaction of terminating the closed year, the annual report means the completion of a wide number of tasks that you have been working on during the year, such as assessments of complicated transactions and agreements, conclusion of inter-group as well as third-party agreements, re-assessments of accounting estimates, adjustment of the annual reporting template to the most recent amendments to legislative requirements, or the world's expectations for information about and decision-making on ESG and CSR requirements.

… finally, you must decide how to best present the message and assess whether your company complies with all relevant legislation. It may be hard work executing the annual reporting process, and we can step in if you need extra resources.

They may be sales agreements with customers, co-operation agreements on development and/or use of immaterial assets, development of the company's ERP system, incl. moving systems from 'on-premise' to 'cloud-hosting', share-based remuneration, call/put options on investments, financing agreements, as well as agreements on the uncovering of fluctuations in currency, interest, and/or raw material prices - the list may be long.

We can help you analyse and document the accounting impact and handling - and creating streamlined business procedures, guidelines, and solid internal controls, thereby making it possible to handle future agreements internally should you want this.

Correct registration of business transactions is an often overlooked or neglected area, presumably because the management takes for granted that it is 'under control'.

However, the truth of it is that especially internal reporting is often characterised by a lack of efficiency and accuracy, for which reason the issue should be solved by focusing on the area before launching more complex initiatives.

The validity of the decision base is - irrespective of the perspective from which the business performance is considered - crucial for having an efficient management process when making decisions based on financial reporting. In other words, it is decisive to have 'one set of numbers'.

If, on the other hand, there is disagreement about the interpretation of the figures, it may mean that decisions taken in various parts of the organisation do not effectively support the strategy due to different perceptions of reality. Furthermore, financial reporting becomes time-consuming and easily prone to errors in case of an unnecessary need for correction and analysis of sources of error arisen during the registration of transactions.

There may be many sources of error, and perhaps your controls have been designed in a way that is inappropriate for the risks identified or are inefficient if they aren't performed according to plan.

No matter the situation, we can help your business increase the transaction quality by eliminating sources of error based on a risk assessment tailored for your business, standardising and perhaps automating routine transactions, designing and implementing efficient controls, implementing task manager systems, and drafting an action plan to close the gap between competences, roles, and responsibilities in Finance.

Accounting manuals should cater for many lookup scenarios. This may give rise to doubt about the overall purpose of the manual - and not least about its level of detail considering the users' competence level and the complexity of your business transactions and agreements. 

Unfortunately, this will often result in the accounting manual living a quiet, unnoticed life in many companies. And if the formal guidelines are not observed in everyday work, inconsistent accounting practices and inefficiency will often be the outcome since more resources need to be allocated for controlling and correction of errors.

.. and this is almost unbearable for our bleeding optimisation hearts. So, don't hesitate if your accounting manual needs updating. We would be pleased to help you turn your accounting manual into an operational and value-creating tool that is used in everyday work.

The greatest risk factors for a true and fair annual report are often the accounting estimates that inevitably depend on some unknown, future outcomes that are often based on subjective and undocumented presumptions and are rarely based on data or facts.

Accounting estimates is a wide category covering, i.a.: write-downs of fixed assets and debtors, provisioning for court cases and liabilities, unexpected use of extension and termination options in leasing agreements, date for exercising share options, future notices of termination, meeting performance goals, etc.

Because subjectivity affects accounting estimates, the documentation requirements have become stricter as have the auditing requirements, which often has a spill-over impact on the company's documentation.

Therefore, it may also be an area where it makes sense to draw on specialist assistance. At Basico, we have many years' experience making exact accounting estimates, and we would be more than pleased to make our competences available to you.

Is your business considering changing your accounting practice? No matter the reason for the changes, a need usually arises to know the impact on the budgeted and, possibly, the historic main figures so that you can work out a usable trend.

The need may arise as a consequence of an M&A activity where you are to make a financial due diligence based on the buyer's accounting practice. Or maybe the change of practice may create challenges in connection with compliance with financing, customer, or vendor contracts - which you will have to handling before making the final decision about a change or engaging in dialogue with the counterpart.

We can, i.a., help your business identify where the current accounting practice differs from the new set of regulations. Furthermore, we can identify and collect the information needed, establish the impact on current and historic accounting figures, describe the effects in the annual report, and implement new regulations in your accounting manual, internal controls, etc.

Does your company prepare its annual report and/or group report according to IFRS? Or do you merely want to use new possibilities of the annual financial statements act based on the IFRS provisions?

In that case, you may have experienced how difficult it can be to interpret the provisions on recognition, measurement, and information related to the company's activity - and subsequently you have the task of ensuring that the interpretation decided on is implemented as regards business procedures and internal controls, that it is embedded in the descriptions of roles and responsibilities, and that the chart of accounts, reporting template, etc. are adjusted.

We can assist your business with consultancy related to interpretation and management of a conversion project to design business procedures.

When designing effective internal controls, it is decisive to consider which risks in your financial reporting your business is exposed to.

Once you have identified the risks, you should quantify and assess them according to their importance.

If you set the acceptable level of error (level of materiality) too low, it will result in lower efficiency because immaterial errors are corrected, while a too high level will result in an unreliable decision base, and/or external reporting that is non-compliant with the basic requirement for a true picture.

Then, the controls must be designed so that the risks are unveiled. Design possibilities are plentiful and have different advantages and disadvantages, and they must also be considered as regards type of risk, materiality, technology availability, and the organisational context in which they are to function. Finally, internal controls must be implemented so that they function in an efficient way.

It will be a weakness of your company's internal control environment if the risks aren't identified, if the controls have been wrongly designed, or if they are not performed as intended.

We can help you ensure a control environment with an overview of your risks and effective controls, and with a level of maturity adjusted to the needs of your business.

It becomes still more complex to handle corporate tax, VAT, and dues. The rules are comprehensive and changeable, and it may be difficult to interpret them, i.a. because new decisions are made regularly that change the previous assessment.

Basico has consultants who are specialists in corporate tax, and we can, i.a., help you design and implement business procedures and internal controls, handle corporate tax in the annual report according to the provisions of the financial statements act and IFRS, fill in tax returns and various documents, and update transfer pricing documentation, etc.