INTERNAL CONTROL OF LVSLI: IMPROVING METHODOLOGY TO ENHANCE THE ENTERPRISE’S ACCOUNTING AND TAXATION SYSTEM

Abstract

In modern business conditions, enterprises increasingly depend on the effectiveness of internal control systems, as such control ensures the reliability of accounting and tax data, transparency of operations, and timely detection of violations. In this context, particular attention should be paid to low-value and short-lived items (LVSLI), which, despite their relatively low value, are characterized by high turnover, a significant volume of movement, and a substantial impact on enterprise expenses. An insufficient level of control over LVSLI leads to persistent losses, misuse, unjustified write-offs, and distortion of information regarding this category of assets in accounting records and financial reporting. The problem is further complicated by the frequent inconsistency between the requirements of regulatory and legal acts and the actual organization of accounting practices at enterprises. Therefore, improving the methodology of internal control over LVSLI becomes particularly important. The purpose of internal control over LVSLI is to ensure the correctness, legality, reliability, and timeliness of transactions involving low-value and short-lived items, as well as compliance with the established procedures for their reflection in accounting records. The objectives of internal control over LVSLI include verifying the correctness of accounting for LVSLI in accordance with the enterprise’s accounting policy, assessing the state of material responsibility for LVSLI, reviewing the documentation of transactions involving LVSLI, examining analytical and synthetic accounting records, verifying the accuracy of LVSLI valuation, assessing the correctness of inventory procedures, evaluating the configuration of accounting automation for LVSLI, and reviewing tax aspects related to LVSLI. The proposed methodology of internal control over LVSLI includes an internal control test, program for LVSLI, as well as working documents of the internal controller. This methodology enables the examiner to systematically assess key aspects of LVSLI accounting, ensure the correctness, legality, reliability, timeliness, and accuracy of reflecting transactions related to the movement and write-off of LVSLI, maintain a high quality of inspection, and prevent potential violations in accounting and taxation related to LVSLI. The developed internal control methodology for LVSLI may be useful for employees of internal audit departments, auditors, specialists of supervisory authorities, and other interested stakeholders.