Two-year auditing ban for startups introduced in Belarus

MINSK, 16 October (BelTA) – Uniform auditing regulations based on brand new approaches have been introduced in Belarus. President of Belarus Alexander Lukashenko signed the relevant decree on 16 October, the press service of the Belarus President told BelTA. The decree shortlists government agencies, which are authorized to audit businesses, and specifies their responsibility areas. In line with the decree startups cannot be audited within two years since their state registration. The decree lays down the finite number of reasons which can trigger an unplanned audit of such economic operators. The periodicity-based approach to auditing (once a year at most) has been replaced with a brand new mechanism based on risk groups. All economic operators are categorized according to the potential risk that their infringements pose to the government and the general public. Exhaustive criteria are specified by the decree. High-risk businesses can be audited once a year at most, medium-risk ones — once in three years, low-risk ones — once in five years. If a planned audit reveals no violations, the next planned audit can be held in two years for high-risk businesses or five years for medium-risk ones. Instead of total auditing the new mechanism will bring about individualized control based on the economic operator’s compliance with the law. The audit planning process will no longer be confidential and will be accessible to economic operators. The latter will be able to independently assess their operation and take measures to get transferred into a lower risk group. All the planned audits will be coordinated by the State Control Committee and its bodies. As a result, several auditing bodies can audit one economic operator only via a joint audit. Auditing agencies will not check records older than three years except for several cases the decree exhaustively specifies. The limitation will allow minimizing the interference of auditing agencies into the operation of businesses. An audit of a corporation cannot exceed 30 business days, an audit of a self-employed entrepreneur — 15 business days. The document lists the grounds and government officials who will be able to authorize off-schedule audits. An off-schedule audit can be authorized by a senior official of the national level or by one of his deputies to check the information on alleged offences. A procedure of conducting an audit and formalizing its results is spelled out for all watchdog bodies. Special attention is attached to the observance of the rights and legal interests of an auditee. The decree restricts patrol inspections which are now conducted in any territory, in respect of any entity and regarding any issue. In accordance with the new mechanism, such audits may be authorized by several bodies (eight of them) and in respect of a certain entity and on the grounds specified by the decree. An audit of an unspecified entity can be held only on motorways, trading areas and pavilions in the marketplaces, and also at construction sites, and only one time a month in one and the same territory. According to the decree, economic entities can be relieved of administrative responsibility if the violations are minor, and if the measures are taken to eliminate them and to compensate for the damage. The responsibility of the officials of the watchdog authorities has been toughened for violating the procedure of authorizing an audit including responsibility for ungrounded authorization. In this case the officials will be brought to administrative and disciplinary responsibility (right to the dismissal). For authorizing an audit out of mercenary or other personal interest which has damaged the rights and legal interests of the audited economic entity or state or public interests, officials will be brought to criminal responsibility. In this case the results of the audit will be invalidated. This decree is aimed at addressing the objectives that were formulated by the President of the Republic of Belarus. They are to slash considerably the number of audits, eliminate the duplication of the functions of the watchdog authorities, create a transparent system of audits that would not be burdensome for businesses, would not stifle business initiative in Belarus and that would allow holding preventive audits rather than punitive ones. The regulatory act is another fact indicating Belarusian authorities’ commitment to creating the most favored treatment regime for bona fide economic operators. It also shows that the country’s authorities put trust in economic entities and stand ready to build partner relationships with businesses and individual entrepreneurs.

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