Guide to the auditor or authorised accountant’s confirmation of the content in a subsidy application from an enterprise with a large drop in revenue

The Compensation Scheme

Information to be audited

Follow-ups when errors are found

Audits

a.     industry, and information regarding business activity in more than one industry

b.    sole proprietorships and shared liability partnerships must state whether income from the enterprise is the main source of income

c.     revenue numbers for the relevant periods, see sections 2-2 and 2-3 of the Regulations

d.    other received state subsidies and cover for lost income that is granted in connection with the virus outbreak

f.     unavoidable fixed costs, see section 3-2 of the Regulations

g.     information regarding whether the enterprise is considered to be closed by the state

Reporting

The Compensation Scheme

The government has established a temporary scheme to provide subsidies for enterprises with a large drop in revenue due to the coronavirus outbreak (the Compensation Scheme). The set of rules governing the scheme is provided in:

Information to be audited

An auditor or an authorised accountant must confirm the content of the application, see section 4-5 of the Regulations. Section 4-3, subsection 3 of the Regulations describes the information that must be included in the application. The auditor or authorised accountant must perform an audit of the following information in the application:

a. industry, and information regarding business activity in more than one industry

b. sole proprietorships and shared liability partnerships must state whether income from the enterprise is the main source of income

c. revenue numbers for the relevant periods, see sections 2-2 and 2-3.

d. other received state subsidies and cover for lost income that is granted in connection with the virus outbreak

f. unavoidable fixed costs as described in section 2-3

g. information regarding whether the enterprise is considered to be closed by the state

Other information in the application will be covered by the automatic checks performed by the Tax Administration when processing the application, or it will not be not relevant to the subsidy. The auditor or authorised accountant provides a confirmation based on the audits described below.

Follow-ups when errors are found

The auditor or authorised accountant may only provide a confirmation if the audit did not uncover any  errors. If the audit uncovers errors, the enterprise must correct the error and send an amended application. The confirmation must then be provided for the amended application. The audit that uncovered the error must be performed again on the amended application, and on a new random selection where relevant.

Audits

a. industry, and information regarding business activity in more than one industry

  • Is the enterprise’s selected industry in the application correct, based on your knowledge of the enterprise’s business?
  • If the enterprise conducts business in more than the selected industry:
    • Has the enterprise ticked the box for «The enterprise also carries out business activity that does not fall under the selected industry» in the application form?

b. sole proprietorships and shared liability partnerships must state whether income from the enterprise is the main source of income

  • If the applicant is a shared liability partnership (ANS or DA)
    • For applications submitted before submitting the tax return for 2019:
      • Obtain the enterprise’s basis for the calculation stating that the shared liability partnership is the main source of income for at least one of the partners. Check whether the basis shows that the income from the shared liability partnership accounted for at least 50% of the personal income for 2019 for at least one of the partners.
    • For applications submitted after submitting the tax return for 2019:
      • Obtain the tax return for the partner with the main source of income from the enterprise, and check whether the income from the shared liability partnership accounted for at least 50% of the personal income for 2019.
  • If the applicant is a sole proprietorship
    • For applications submitted before submitting the tax return for 2019:
      • Check whether the owner’s income from the enterprise for 2019 amounted to at least 50% of the personal income, see information in the pre-filled tax return.
    • For applications submitted after submitting the tax return for 2019:
      • Check whether the owner’s income from the enterprise for 2019 amounted to at least 50% of the owner’s personal income, see information in the pre-filled tax return.

c. revenue numbers for the relevant periods, see sections 2-2 and 2-3 of the Regulations.

Audits for all periods

  • If there is an overview that substantiates the revenue numbers  used in the application and which contains the following, in reference to section 4-6 of the Regulations:
    • a reference to the relevant accounting information, and
    • information about how the revenue has been periodised
  • Does the reported revenue include all the revenue that fulfils the requirement in section 2-2 of the Regulations?
    • Compare the reported revenue in the application with the revenue stated in the accounts, and check that any discrepancies are explained and documented

Audits for the revenue in the month for which they apply for a subsidy

  • Goods delivered or services rendered
    • Select 5 sales vouchers at random from the period after the application month, and check whether there is information that proves the income is periodised correctly.
  • Issued credit notes
    • Select at random credit notes amounting to 20% of the credit notes in the period (at least 2, no more than 5). Check whether there is information that proves the credit notes are real, and that they are included in the correct period.
  • Other corrections in the accounts (manual posts)
    • Select at random corrections in the period amounting to 20% of the number of corrections (at least 2, no more than 5). Check whether there is information that proves the corrections are real, and that they are included in the correct period.
  • For enterprises with long-term production contracts:
    • Check whether the reported revenue from the production contracts is based on a ongoing settlement method, including profit

Audits for the revenue in the comparison period for the month for which they apply for a subsidy

  • Goods delivered or services rendered
    • Select 5 sales vouchers at random from the period after the comparison period, and check whether there is information that proves the income is periodised correctly.
  • Issued credit notes
    • Select at random credit notes amounting to 20% of the credit notes in the period (at least 2, no more than 5). Check whether there is information that proves the credit notes are real, and that they are included in the correct period.
  • Other corrections in the accounts (manual posts)
    • Select at random corrections in the period amounting to 20% of the number of corrections (at least 2, no more than 5). Check whether there is information that proves the corrections are real, and that they are included in the correct period.
  • For enterprises with long-term production contracts:
    • Check whether the reported revenue from the production contracts is based on a ongoing settlement method, including profit

Audits of revenue in January and February 2019 and January and February 2020

For enterprises that use the revenue definition according to section 2-3 subsection 2 of the Regulations (accounting information) in their application, the auditor or authorised accountant must ask the enterprise whether the sales documentation has been issued and entered into the accounts according to the provisions of the Bookkeeping Act. The audit is considered to be covered by the audits specified under «Audits for all periods».

For enterprises that use the revenue definition according to section 2-2 subsection 1 of the Regulations (goods delivered and services rendered), the additional audit specified below must be carried out for the periods January and February 2019 and January and February 2020.

January and February 2019

  • Goods delivered or services rendered
    • Select 5 sales vouchers at random from March 2019, and check whether there is information that proves the income is periodised correctly.
  • Issued credit notes
    • Select at random credit notes amounting to 20% of the credit notes in January and February 2019 (at least 2, no more than 5). Check whether there is information that proves the credit notes are real, and that they are included in the correct period.
  • Other corrections in the accounts (manual posts)
    • Select at random corrections in January and February 2019 amounting to 20% of the number of corrections (at least 2, no more than 5). Check whether there is information that proves the corrections are real, and that they are included in the correct period.
  • For enterprises with long-term production contracts:
    • Check whether the reported revenue from the production contracts is based on a ongoing settlement method, including profit

January and February 2020

  • Goods delivered or services rendered
    • Select 5 sales vouchers at random from January and February 2020, and check whether there is information that proves the income is periodised correctly.
  • Other corrections in the accounts (manual posts)
    • Select at random corrections in January and February 2020 amounting to 20% of the number of corrections (at least 2, no more than 5). Check whether there is information that proves the corrections are real, and that they are included in the correct period.
  • For enterprises with long-term production contracts:
    • Check whether the reported revenue from the production contracts is based on a ongoing settlement method, including profit

d. other received state subsidies and cover for lost income that is granted in connection with the virus outbreak

  • Ask the enterprise’s management whether they have received other subsidies or coverage of their lost income in connection with the virus outbreak, and check whether the aid has been included in the application.
  • Check whether the enterprise has entered into the accounts other subsidies or coverage of lost income in connection with the virus outbreak for the relevant month that has not been included in the application.
  • Check the reconciliation of accounts for the relevant month and make sure there are no open items for state aid that are paid, but not entered into the accounts.

f. unavoidable fixed costs, see section 3-2 of the Regulations

  • Is there an overview that substantiates the unavoidable fixed costs that is used in the application (section 4-6 of the Regulations) and which contains the following:
    • reference to the relevant accounting information, and
    • information about how the costs have been periodised
  • Select at random from the substantiating documentation (expenditure voucher, contracts, etc.) per item in the overview that in total amounts to 20% of the costs per item (at least 3, no more than 10) and check the following:
    • that the cost really is unavoidable and fixed,
    • that there is documentation showing that the cost is resulting from contract that is not entered into or increased more than the normal price adjustment following 1 March 2020, see
      section 3-2 subsection 4 of the Regulations,
    • that the cost can be referenced to the stated item in the application

g. information regarding whether the enterprise is considered to be closed by the state

  • If the enterprise has stated in their application that they are considered closed by the state:

Reporting

Based on the audits carried out as detailed above, the auditor or authorised accountant may provide the confirmation below.

Confirmation relating to the content in a subsidy application from an enterprise with a large drop in revenue

The confirmation is relating to an application for a subsidy for [application month] 2020, sent by ABC AS [date and time from the Altinn receipt].

We have performed the audits described in the Guide to the auditor or authorised accountant’s confirmation of the content in a subsidy application from an enterprise with a large drop in revenue. The audits were performed in order to confirm the content of the application, see section 4-5 of the Regulations concerning compensation.

Our audits have not uncovered any errors. The sole purpose of our confirmation is described in the second paragraph in this confirmation, and is therefore not meant for any other use.