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.
A temporary scheme has been established which pays out grants to enterprises which have experienced a substantial decrease in turnover as a result of the coronavirus pandemic during the period
September 2020 – October 2021. The regulations applicable to the scheme are set out in:
- Act on a temporary grant scheme for enterprises experiencing a substantial decrease in turnover after August 2020 (in Norwegian only)
- Regulation for the completion and implementation of the Act on a temporary grant scheme for enterprises experiencing a substantial decrease in turnover after August 2020 for grant periods after February 2021 (in Norwegian only)
The auditor or authorised accountant must verify the information given in the application; see Section 4-5 of the Compensation Regulation. The Brønnøysund Register Centre is the grant authority and is responsible for establishing requirements regarding checks which the auditor or authorised accountant must perform when verifying the information. Section 4-3, second paragraph of the Regulation and the application form itself stipulate the information that must be provided in the application.
Checks
Check for small enterprises; see Section 1-5 of the Regulation
If the enterprise has stated in its application that it is applying under the rules for small enterprises:
- Check that there is a list in accordance with Section 4-6 (5) of the Regulation which shows the enterprises that are included in the calculation to confirm that the enterprise meets the criteria for small enterprises under Section 1-5 of the Regulation, as well as the most recently approved annual accounts for these enterprises.
- Check that the total figures for number of employees, turnover and balance sheet total used as a basis for the list are below the limits in Section 1-5 first paragraph of the Regulation.
Owners
- Obtain an updated shareholder register or overview of partners, and check that enterprises which, according to the shareholder register/partner overview, hold more than 25 percent of the ownership or votes are included in the list
- Select two enterprises from the list and check that the number of employees, turnover and balance sheet total from the last annual accounts are:
- for owners listed with an ownership or voting share of more than 50 percent – included in the list at 100 percent
- for other owners – included in the list with a proportionate share
Shareholdings
- Check that enterprises where the applicant holds more than 25 percent of the ownership or votes are included in the list.
- Select two enterprises from the list and check that the number of employees, turnover and balance sheet total from the last annual accounts are:
- for owners listed with an ownership or voting share of more than 50 percent – included in the list at 100 percent
- for other ownership or voting shares – included in the list with a proportionate share
Turnover – Sections 2-2 and 2-3 of the Regulation
Checks covering all periods; see Sections 2-2 and 2-3 of the Regulation
- Is there is a statement which supports the turnover figures which form the basis for the application (Section 4-6 of the Regulation) which includes:
- a reference to relevant accounting information, and
- information on how the turnover was accrued.
- Has all turnover which satisfies the requirements of Section 2-2 of the Regulation been included in the reported turnover:
- Check the reported turnover in the application against the recognised turnover, and ensure that any discrepancies are explained and documented.
Checks on turnover during the period for which a grant is sought; see Section 2-2 of the Regulation
- Goods delivered or services provided:
- Take a random sample of five sales vouchers from the period following the grant period and check whether there is underlying documentation showing that the income has been correctly accrued.
- For enterprises with cash turnover:
- Make sure all daily settlements during the grant period are included as turnover in the period.
- Credit notes issued:
- Take a random selection of the credit notes corresponding to 20% of the credit notes during the grant period (a minimum of two and a maximum of five) and check whether there is any evidence to indicate that the credit note is genuine and whether they have been included under the appropriate period.
- Other posted corrections (manual postings):
- Take a random sample of corrections from the grant period corresponding to 20% of the number of corrections (a minimum of two and a maximum of five) and check whether there is any evidence to indicate that the correction is genuine and included in the appropriate period.
- For enterprises with long-term manufacturing contracts:
Checks on turnover during the comparative period for the period for which a grant is sought; see Section 2-2 first paragraph of the Regulation
- Goods delivered or services provided:
- Take a random sample of five sales vouchers from the comparative period and check whether there is underlying documentation showing that the income has been correctly accrued.
- Credit notes issued:
- Take a random selection of the credit notes corresponding to 20% of the credit notes during the period after the comparative period (a minimum of two and a maximum of five) and check whether there is any evidence to indicate that the credit note is genuine and whether they have been included under the appropriate period.
- Other posted corrections (manual postings):
- Take a random sample of corrections during the comparative period corresponding to 20% of the number of corrections (a minimum of two and a maximum of five) and check whether there is any evidence to indicate that the correction is genuine and included in the appropriate period.
- For enterprises with long-term manufacturing contracts:
- Check whether the turnover reported for the manufacturing contracts is based on the ongoing settlement method, including profit.
Checks for other public grants and income safeguards received; see Section 2-2, second paragraph of the Regulation
- Ask the company’s management whether they have received any other grants or compensation for lost income in connection with the coronavirus pandemic, and if so check that it has been included in the application. Grants awarded under this Regulation for previous periods must not be included. The same applies to grants awarded under compensation scheme 1 (Regulation No. 820 of 17 April 2020), compensation scheme 2 (Regulation No. 3085 of 21 December 2020 ) and specified support from municipalities provided in accordance with the regulations concerning de minimis aid.
- Review the reconciliation of bank accounts for the end of the grant period and check that there are no open items for paid but unposted public grants which should have been taken into account in the application.
Checks on fixed, unavoidable costs; see Section 3-2 of the Regulation
- Check that there is a statement which supports the fixed, unavoidable costs included in the application (Section 4-6 of the Regulation) which includes:
- a reference to relevant accounting information, and
- information about how the turnover was accrued.
- Take a random sample of underlying documentation (cost vouchers, agreements, etc.) for each item in the statement, which amounts to 20% of the costs per item in total (a minimum of two and a maximum of five) and ensure that:
- the cost qualifies as being fixed and inevitable,
- there is underlying documentation showing that the cost follows from an agreement which was not established or expanded over and above normal price adjustment after 1 September 2020; see Section 3-2, fourth paragraph of the Regulation,
- the cost can be attributed to a specified item in the application.
Checks regarding lost stock; see Section 3-6 of the Regulation
- Check that there is:
- a written statement explaining how the loss occurred, with reference to a state or municipal order to suspend serving or close the establishment, why it was not possible to avoid the loss and what has happened to the lost goods; see Section 3-6 third paragraph of the Regulation
- a list of the individual types of goods for which compensation is sought, specifying the number or quantity and purchase cost, with reference to relevant bookkeeping records; see Section 3-6, third subsection
- Check that what is stated in the report concerning the period during which serving was suspended or the establishment closed corresponds to the cited order.
- Check that the total purchase cost for lost goods according to the list corresponds to what is stated in the application.
- Select a random sample of five types of goods included in the list and check them against the cited bookkeeping records to ensure that:
- the number or quantity at least corresponds to what is stated in the list
- the purchase cost corresponds to what is stated in the list, and
- the goods were ordered before the order to suspend serving or close was issued
Condition that the enterprise has employees; see Section 2-1 of the Regulation
Enterprises that have stated in their application that they have employees
- Check that an a-melding from the period August 2019 to September 2020 indicates that wages have been paid.
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.
Sole proprietorships and general partnerships which do not have employees
- The applicant is a general partnership (ANS, DA or shipping partnership) which has stated in its application that income from the enterprise is the main source of income for at least one personal partner:
- Main source of income in 2019: Obtain a tax return from the partner who has income from the enterprise as their main source of income and check that it shows that the income from the general partnership accounted for at least 50% of the person’s personal income for 2019, or
- main source of income in January and February 2020: Ask the partner to request a “Mine inntekter og arbeidsforhold” (My income and employment) statement from the Norwegian Tax Administration for January and February 2020, and check that the work remuneration recognised for the partner amounted to at least 50% of their personal income during the period.
- The applicant is a sole proprietorship that has stated in its application that income from the enterprise constitutes the owner’s main source of income:
- Main source of income in 2019: Obtain the owner’s tax return for 2019 and check that it shows that the income from the enterprise constituted at least 50% of the owner’s personal income, or
- main source of income in January and February 2020: Ask the owner to request a “Mine inntekter og arbeidsforhold” (My income and employment) statement from the Norwegian Tax Administration for January and February 2020, and check that the recognised operating result amounted to at least 50% of their personal income during the period. A comprehensive calculation of personal income may be provided instead of a posted operating result.
Financial difficulties; see Section 2-5, third paragraph of the Regulation
For medium and large enterprises:
- Obtain the annual accounts for the most recent financial year with a balance sheet date before 1 March 2020 and check that total equity does not constitute less than half of the subscribed share capital and premium.
For large enterprises:
- Obtain the annual accounts for the last two financial years with a balance sheet date before 1 March 2020 and check that total debt does not amount to more than 7.5 times total equity, and that the ratio of EBITDA to net costs does not exceed 1.
Estimated loss during the grant period; see Section 3-1 third paragraph
Use the list of the enterprise’s or group’s calculated loss during the grant period; see Section 4-6, third paragraph of the Regulation.
- Check that the list shows a calculated loss for the period and that the amount corresponds to what is stated in the application.
- Salary and other personnel costs
- Check that the cost belongs to the grant period.
- Cost of goods
- Check that the cost of goods belongs to the grant period.
- Change in stocks of semi-finished and finished goods
- Check that the expensed change in stock corresponds to the invoicing/settlement for the period.
- Depreciation of fixed assets and intangible assets
- Check that the cost belongs to the grant period.
- Other operating costs
- Take a random sample of five vouchers which have not been entered as a fixed unavoidable cost under the Regulation, and check that the cost belongs to the grant period.
Ordinary result before tax; see Section 3-1 fourth paragraph of the Regulation
- Check that the information provided in the application concerning the ordinary result before tax corresponds with this item in the enterprise’s annual financial statements for the most recent financial year ending before 1 March 2020.
Has the applicant used an improved ordinary result before tax in January/February 2020 as an alternative to the ordinary result before tax; see Section 3-1 fourth paragraph of the Regulation
The check must be performed if the applicant is using an improved ordinary result before tax in January/February 2020 as an alternative to the ordinary result before tax:
- At least the following checks must be performed in connection with information provided in the application regarding an ordinary result before tax in January and February 2020; see Section 3-1, fourth paragraph, last sentence of the Regulation.
- This does not preclude the performance of checks which provide greater certainty as regards the verification process, e.g. in accordance with audit standards.
Checks covering the period
- Is there is a statement which supports the incomes and costs which form the basis for the result before tax which includes:
- a reference to relevant accounting information, and
- information about how the incomes and costs were accrued.
- Has all income earned during the period been included:
- Check the statement of income for the period against the posted income, and ensure that any discrepancies have been explained and documented.
- Have all costs during the period been included:
- Check the statement of costs for the period against the posted costs, and ensure that any discrepancies have been explained and documented.
Checks on income during the period
- Check that all incomes have been included, i.e. sales income, operating income, government grants, financial income, gains etc.
- Goods delivered or services provided:
- Take a random sample of five sales vouchers from December 2019 and five sales vouchers from January 2020 and check whether there is underlying documentation showing that the income has been correctly accrued.
- Other posted corrections (manual postings):
- Take a random sample of corrections during the period corresponding to 20% of the number of corrections (a minimum of four and a maximum of ten) and check whether there is any evidence to indicate that the correction is genuine and included in the correct period. Focus in particular on reversed credit notes.
- For enterprises with long-term manufacturing contracts:
- Check whether the income reported for the manufacturing contracts is based on the ongoing settlement method, including profit.
Checks on costs during the period
- Take the 10 cost accounts with the highest balance, as well as a random sample of three accounts where the balance as of January and February 2020 exceeds NOK 10,000. Take a random sample of underlying documentation (cost vouchers, agreements, etc.) for each account, which in total corresponds to 20% of the cost per account (minimum of three and maximum of ten) and verify that there is underlying documentation which shows that the cost is valid and, where applicable, follows from an agreement.
- Make sure that accrual items have been included and correctly accrued:
- Salary
- Depreciation
- Cost of goods
- Insurance
- Rent.
The above list is not exhaustive.
Paid taxes, duties and withholding tax due before 29 February; see Section 2-6 first paragraph (b) of the Regulation.
- Check the enterprise’s documentation to ensure that it does not have arrears relating to claims that fell due for payment before 29 February 2020.
Has submitted a VAT return with a submission deadline before the end of the grant period; see Section 2-6 first paragraph (c) of the Regulation.
- Check the enterprise’s documentation to verify that a VAT return with a submission deadline before the end of the grant period has been submitted.
Further action if any errors are discovered
The auditor or authorised accountant can only submit his verification if the checks have not revealed any errors. If a check has uncovered any errors, the enterprise must correct the errors concerned in the application. The checks on the relevant items must be performed again.
The information in an application also cannot be verified if the auditor or accountant is aware that the applicant has otherwise provided inaccurate information in the application.
Verification
Verification is given by signing the “Compensation scheme for businesses” form in Altinn. By signing, the auditor or authorised accountant gives the following verification:
We have performed the specified checks which follow from the Brønnøysund Register Centre’s checks which the auditor or authorised accountant must carry out in order to verify information provided in a grant application for enterprises experiencing a substantial decrease in turnover.. The checks were performed in order to verify the information given in the application; see Section 4-5 of the Compensation Regulation.
Our checks did not reveal any errors.
To the best of our knowledge, no inaccurate information has otherwise been provided in the application.
Our confirmation has been prepared solely to verify the information given in the application for use by the grant authority (see Section 4-5 of the Compensation Regulation), and is therefore not suitable for other purposes.