The change of accountant is a key moment for any company operating in Bulgaria. This step brings with it both advantages and risks that should not be ignored. Each company should carefully consider and plan the process of transferring accounting in order to avoid possible problems with tax audits, incorrect submission of accounting documentation, or violation of legal requirements.
When the time comes to change an accountant, numerous questions come to the fore, such as how to properly carry out the transfer of accounting documentation and what responsibilities the old accountant bears in terms of the company's tax obligations. In addition, an important stage of the process is the termination of the contract for accounting services with the previous accounting house or chief accountant, as well as the correct transfer of accounting to the new responsible person.
In this procedure, not only the physical and electronic documentation is transmitted, but also a detailed overview of the current state of the company's finances is carried out. The departure of a chief accountant can create a vacuum in the management of company assets, so it is essential that each step is planned and coordinated correctly, especially in the presence of open audits or checks by the tax authorities.
The responsibility of the accountant in a tax audit is essential, and the new accountant or accounting services firm should be aware of all ongoing audits to ensure that the firm will not be affected by errors or omissions of the old accountant. The termination of contractual relations and the transfer of responsibilities should be transparent and in accordance with current legislation.
In this topic, we will look at the following issues in detail:
1. When is it necessary to change an accountant?
2. How correctly is the change of accountant of a company carried out?
3. How do you terminate an accounting service contract with an old accountant?
4. What accounting documentation should be submitted by the old accounting firm/old accountant?
The change of accountant may be necessary in different situations, each of which brings to the fore the need for efficiency and transparency in the management of company finances. In the following paragraphs we will look at the main reasons why companies decide to take this step.
1. Lack of competence in the specific industry
One of the most common reasons for changing an accountant is the lack of specific competencies in demand. For example, if the company operates in a sector such as construction and the need arises to post employees abroad, the process involves the preparation of documents such as the A1 form. If the accountant is not familiar with this type of procedures or does not have experience in applying specific rules and legal requirements in the relevant sphere, this can become a significant problem for the company. The competence of the accountant is of critical importance, since any error in specific procedures can lead to legal and financial consequences.
2. The occurrence of a dispute with the old accountant
The relationship between the firm and the accountant can deteriorate for a variety of reasons, including disagreements about the quality of the services provided, lack of communication, or unclear expectations about responsibilities. In cases of a serious dispute between the management of the company and the accountant, which threatens the normal course of accounting activities, the change of accountant is often the most logical decision. Problems with trust and professional ethics can have a negative impact on the overall financial health of the company, so this aspect should not be neglected.
3. Termination of the contract for accounting services on the initiative of the accountant
Sometimes the change of accountant does not depend on the company itself, but on the accountant, who for personal or professional reasons decides to terminate the contract. In such cases, it is important for the firm to quickly find a new accountant so as not to interrupt the financial management process. Even if the previous accountant leaves the documentation in pristine condition, the change process can be challenging, especially if time is limited and there are ongoing obligations related to filing returns, taxes or other financial statements.
4. Lack of transparency and delays in the implementation of obligations
Another reason for changing an accountant may be a lack of transparency and inadequate handling of accounting obligations. If the company notices frequent delays in filing declarations or making mistakes, this can pose serious risks. Irregular performance of accounting tasks not only leads to penalties and fines, but also undermines trust in the accountant. In such cases, the change of accountant is necessary to ensure that the firm will avoid financial and legal consequences.
5. Business expansion and the need for greater expertise
As businesses grow and become more complex, so does the need for greater expertise and knowledge in matters related to international operations, complex tax structures or the management of multiple legal entities. An accountant who has done well with a smaller company may not have the necessary competencies to work with larger businesses. In such cases, it is wise to consider hiring an accountant or a firm that has experience in more complex corporate structures and can guarantee correct and timely accounting services.
6. Problems with tax audits and inspections
Tax audits and inspections by state bodies require the accountant to be precise and willing to provide the necessary documentation and explanations. If during an audit errors or omissions are found in the accounting documentation, this can lead to serious financial penalties for the company. In such situations, companies often decide to change the accountant in order to avoid future problems and be better prepared for subsequent inspections. The new accountant must be carefully selected to ensure that the firm will be protected in future tax audits.
The process of changing an accountant requires careful planning and compliance with a number of key steps to ensure that the financial activity of the firm will not be disrupted. The first and most important step is to prepare a smooth transition, ensuring full communication between the current and future accountant. This includes informing the current accountant of the decision and starting the process of transmitting all accounting documentation, which usually includes both current and archived data.
Once the decision to change the accountant has been made, the next step is the formal termination of the accounting service contract with the old accountant. This must be done in accordance with the clauses provided for in the contract, following the legal procedure for notification and assignment of obligations. It is important to review the financial obligations to the old accountant in order to avoid possible disputes regarding remuneration or outstanding obligations.
The handover of accounting documentation is one of the most delicate stages in the process of changing an accountant. We are talking about both physical and electronic archives, which must be transmitted correctly and in full volume. It includes documentation such as accounting books, journals, master accounting registers, declarations and reports to government institutions. For this purpose, it is advisable to draw up a detailed transmission/transmission protocol, in which all documents transmitted and their status are described.
After the documentation has been handed over, the new accountant must make a detailed review of the current state of the company's finances. This includes checking current liabilities and receivables, tax returns, bank statements and other key documents to ensure there are no deviations or omissions in the statements. It is important that the new accountant has access to all systems and platforms related to the accounting activity of the company, such as bank accounts, finance management software and tax platforms.
Before the process of changing the accountant is finally completed, it is important to notify the relevant institutions, including the NRA and the NOI, of the change. In most cases, the new accountant will take on this responsibility by preparing and submitting the necessary documents. This ensures that all future financial and tax obligations will be assumed by the new person responsible for the company's accounting.
Apart from the purely administrative steps, a key part of a successful accountant change is building trust and communication with the new accountant or accounting firm. It is important that the firm and the new accountant discuss future tasks and strategies for managing finances, including tax liabilities, annual accounting closure and strategic plans for optimizing financial resources.
Finally, for the change of accountant to be effective and trouble-free, it is important to place emphasis on the continuity of accounting processes. Any transition period carries risks of error, so it is essential that the old and new accountant work together during this stage to avoid ambiguities or omissions.
.webp)
Termination of an accounting service contract must be carried out in accordance with the conditions set out in the contract itself. Usually, the contract contains clear clauses regarding the term and conditions of termination, as well as the notice that each party must provide in order to comply with the legal requirements. It is common practice for this type of contract to be perpetual, with each party having the right to terminate it with prior written notice.
In most cases, termination requires one month, two months or three months notice from the party wishing to terminate the contract. This notice must be sent in writing, which provides clarity and legal protection for both parties. This period allows the accountant and the company to organize a smooth transfer of documentation and accounting obligations, without disrupting the current activities of the company.
An important point in the termination of the contract is the obligation of the old accountant to carry out the annual accounting closure if the termination coincides with the end of the financial year. This ensures that all obligations to state institutions are fulfilled and that there are no financial inconsistencies before the transfer of documentation to the new accountant.
Once the notice has been filed, the process of handing over all accounting documents follows. The accountant is obliged to return all accounting documentation to the company, both physical and electronic documents, to ensure full accountability and continuity. This includes accounting books, tax returns, financial statements, and other key documents that need to be reviewed by the new accountant.
It is also important to ensure that all controversial issues between the company and the accountant are resolved before the official termination of the contract. Disputes relating to remuneration or the liability of the accountant must be settled by mutual agreement, with any outstanding amounts or additional liabilities settled before the relationship is terminated. If this is not possible, the legislation provides for mechanisms for resolving disputes through a judicial order.
When a contract for accounting services is terminated or terminated, different hypotheses arise depending on the clauses in the contract itself and on the stage of the accounting cycle in which the company is located. Here are some of the most common hypotheses:
If the contract terminates or breaks down towards the end of the fiscal year (for example, December), in most cases the contract obliges the accountant to carry out the annual accounting closure and prepare the annual financial statement. Usually, this obligation is specified in the clauses on termination of the contract and can be a condition for the correct finalization of the relationship between the company and the accountant. The accountant must prepare:
If the contract is terminated during the current fiscal year (for example, in July), the responsibility for the annual accounting closure and preparation of the annual financial statement can be transferred to the new accountant. In this case, the old accountant is not obliged to draw up the GFO for the year, but must:
If the company and the accountant agree to terminate the contract before the end of the year, the obligations for the preparation of the GFO and the annual closing can be transferred to the new accountant. In such a case, the old accountant must:
In the event of termination of the contract due to omissions or errors on the part of the accountant, there is a possibility that the accountant will not be able to carry out the annual closure. In such cases, the company may:
If you do not pay what is due to the accountant by the date of termination of the contract, this can lead to a number of negative consequences and penalties for you and your company. First of all, the accountant has the right to seek his remuneration through the courts. In case of non-payment, he can sue for the amounts due, adding to them interest for late payment, as well as costs of legal proceedings, which will further increase the financial burden on you.
Non-payment can also lead to the refusal of the accountant to hand over all the necessary documents and reports. Accountants often hold company documentation until all financial obligations to them are cleared. This can interfere with the normal continuation of accounting activities and slow down the process of transferring accounting to the new accountant. As a result, the company may find itself in a situation where it cannot file tax returns or other important documents on time, which can lead to fines and penalties from the NRA.
In addition, unsettled financial relations can negatively affect the reputation of your company in accounting circles, which will make it difficult to find a new accountant in the future. Accounting services are based on trust and correctness, and such situations can cause future accountants to be more careful or even refuse to work with you.
In other words, in addition to financial losses from interest and court costs, your company may experience difficulties in operating activities and be exposed to additional risks of tax penalties if the accounting documentation is not handed over in time.
When changing an accountant, it is essential to carry out a correct and complete transfer of all accounting documents to ensure continuity of the financial management of the company. The documentation should include both current accounting documents and those from previous reporting periods, each type of document plays an important role in the overall accounting process.
It is crucial to hand over the documents related to the previous fiscal year. This includes Turnover Payroll, which shows the movements in all accounting accounts, and Analytical Turnover, which provides more detailed information on the movement of assets and liabilities. In addition, the annual financial report(GFO) is a central document that summarizes the financial results of the firm for the past year, and should be handed over to the new accountant. (The annual financial report for the previous fiscal year is transmitted insofar as reports for 2-3 fiscal years back are very often published in the Bulgarian Commercial Register and the last report can rarely be downloaded, and in most cases it is also transmitted in a simplified form, as some of the important information cannot be seen)
The Inventory Bookis also an important element, since it contains information about the assets of the company, which must be inventoried and accounted for correctly. To these documents is added and the accounting and tax depreciation plan, which shows depreciation accruals and must be monitored over the years.
In order for accounting management to continue without interruption, all documents for the current fiscal year must also be submitted. This includes Turnover and Analytical Payrollfor the current year, which reflect the movement in the accounts until the time of the change of accountant. These payrolls are important to track all the assets, liabilities, income and expenses of the firm.
It is also important to transmit all primary accounting documents, which include:
In addition to the primary ones, it is important to surrender and secondary accounting documents, which include reports and references compiled on the basis of primary documents. These can be monthly and quarterly reports, VAT declarations, as well as other documents that are part of the internal statements of the company.
Chronologies of all accounting accounts, on which there is a movement from the beginning of the year to the time of the change of accountant, must also be handed over. This includes detailed information about each transaction carried out on the company's accounts, providing the new accountant with a complete picture of financial operations.
All bank statementsfrom the beginning of the current year are also needed. They make it possible to track all cash flows through the company's bank accounts and are an important element for proper accounting.
If the company has hired employees, they should be handed over all employment records, which include employment contracts, declarations under Article 62 of the Labor Code, official memos and orders related to the hiring and dismissal of employees. Employment records must also contain personal data, job descriptions and any other documents related to employment relationships.
The complete and correct transmission of these documents is essential to ensure the smooth continuation of accounting processes and to prevent future errors or inconsistencies.
All primary accounting documents for the current fiscal year— include invoices for purchases and sales, contracts, monthly statements from cash (fiscal) apparatus, income and expenditure cash orderset al.:
All secondary accounting documents for the current year— include reports based on primary documents, monthly and quarterly reports, VAT returnsand others:
It is important to note that depending on the activity of the company, it is quite possible that in certain spheres and industries the documents to be submitted may differ. We advise you to consult an expert from Elan Consulting, in case you are about to change accountant, so that we can guide you correctly on how to approach the situation.
