Continuing on the theme of the most topical issues of cash restriction, I would like to draw your attention to the following issue.
What is the action to be taken by an entrepreneur if the company does not have a specially equipped and guarded cash room and there are reasonable doubts about the security of the company's working capital (cash), or if the company's manager is allowed to keep cash with him in responsible custody, ensuring that the cash held in responsible custody is accounted for. Whether these activities (issuing to or receiving from responsible custody) are subject to the restriction/declaration obligation laid down in Article 30 of the Law on Taxes and Duties. The operator explains that the head of the undertaking draws up a statement of the cash received into custody and the cash dispensed from custody, as well as the balances of cash in custody at the beginning and end of the accounting period, which is supported by cash receipts and payments orders, current account print-outs and other accounting source documents. In addition, the company's accounting records provide for the possibility of holding the company's cash in a current account with a credit institution, in the cashier's office and in the custody of an officer of the company. The cashier is materially responsible for the safekeeping of the company's funds in the cash office, the company officer is responsible for the safekeeping of the company's funds in escrow, and the credit institution is responsible on the basis of the legislation.
The answer to the legal situation could be.
In accordance with Cabinet of Ministers Regulation No 584 of 21 October 2003 „Regulations on Accounting of Treasury Operations” (hereinafter - Cabinet Regulation No 5849.3), cash transactions shall be recorded on the basis of cash receipt or expenditure warrants (in credit institutions, credit unions and the Bank of Latvia - cash deposit and disbursement justification documents), indicating in the cash book the number of the relevant warrant (in credit institutions, credit unions and the Bank of Latvia - cash deposit and disbursement justification document), the purpose of the payment and the amount of the cash transaction.
Pursuant to Paragraph 27 of Cabinet Regulation No 584, treasury operations shall be performed by the person who, in accordance with a contract, a written order or a power of attorney issued by the head of the enterprise, performs the duties of the treasurer (hereinafter referred to as the treasurer). Paragraph 31 of the said Regulation stipulates that the cashier shall commence the performance of his/her duties by accepting the cash balance in the cash register and the cash book of the company for safekeeping by means of an acceptance and handing over act, by receiving for use the cash storage place indicated by the head of the company and, where applicable, the cash register.
According to Paragraph 32 of Cabinet Regulation No 584, the security of the cash storage area of an establishment is the responsibility of the establishment's manager.
In addition, Paragraph 42 of the Cabinet of Ministers Regulation No.585 of 21 October 2003 “Regulations on the Maintenance and Organisation of Accounting” (hereinafter - Cabinet Regulation No.585) stipulates that, unless otherwise stipulated in special laws or other normative acts with respect to any specific accounting organisation documents, accounting organisation documents shall be developed, approved and their content shall be the responsibility of the head of the enterprise.
Given that the regulatory enactments do not specify the location and equipment requirements to be ensured at the cash storage location, and the manager of the company is responsible for the security of the cash storage location, the entrepreneur shall specify the cash storage procedure in its accounting organisation documents, as well as the procedure for handing over the cash to the responsible person for safekeeping.
If, in accordance with the procedure for cash storage set out in the documents of the accounting organisation, cash from the cash register is delivered to the head of the company for safekeeping, then the Applicant shall execute a cash expenditure warrant for cash delivered from the cash register, which shall contain the details (identification data) set out in Paragraph 15 of Cabinet Regulation No 585, and a cash receipt warrant shall be executed for cash returned to the cash register, which shall contain the details (identification data) set out in Paragraph 14 of Cabinet Regulation No 585.
Thus, in the light of the above legal situation, the provision of company cash to or receipt from a responsible person for safekeeping, as specified in the accounting organisation documents, is not a cash transaction within the meaning of Section 30 of the Taxes and Duties Law.
More to come.
