In recent years, the Bosnian market has witnessed the emergence of numerous accounting firms, established with the aim of attracting a larger number of clients, often at the expense of the quality of the services provided. The low price of the service, starting at BAM 50,00 for a wide range of requirements, is often tempting for business entities that opt for external accountants at favorable prices. However, such a decision also comes with a business risk. A single mistake by an accountant can lead the company director to face imprisonment for up to 20 years. Although this topic is not widely discussed in public, in recent times, the Law Firm has been receiving an increasing number of client requests related to representing clients in misdemeanor, civil, and even criminal proceedings arising from the negligent actions of accountants.
Are you absolutely certain that your accountant is providing accurate information to the relevant institutions at all times regarding their taxable income, obligations, health and pension insurance contributions, filling out tax returns accurately, and determining the basis for tax deduction? In case there is any doubt about a positive answer to this question, there is a real risk of a potential prison sentence of up to 20 years (admittedly, this is an extreme and worst-case scenario, but a genuine risk). While many may believe that they bear no responsibility if they have delegated their accounting services to an employee or an external accountant, in practice, this matter is significantly different.
One mistake by an accountant can lead to a misdemeanor or criminal proceeding against the company’s director. Even though most accountants will mention the existence of professional liability insurance when offering their services, which protects their clients, one thing must be clear – the policy has no bearing on criminal or misdemeanor liability. Even the possibility of a payout under the policy in case of an error is complicated and limited to amounts that do not cover the amount of the monetary penalty.
To prove criminal offenses in this field, conducting financial forensic analysis is characteristic and necessary. Prosecutors are required to appoint experts from the list of court-appointed experts. This list includes experts in the field of economics, but their knowledge is often insufficiently specialized for specific cases, and the services of some experts are harder to access due to limitations on expert fees. Additionally, in practice, it has been shown that some experts are not independent, not sufficiently qualified, insecure in court when subjected to cross-examination, tend to relativize their conclusions, and change them due to the emergence of new evidence. Consequently, the fate of a director is often in the hands of an unqualified expert who plays a crucial role in proving the existence of a criminal offense.
Although defense in such cases typically insists that the director has delegated their responsibility to an accountant through an engagement contract or an employment contract, courts have different opinions on this matter. In one case, the court did not find the contract as an authentic document, according to the handwriting expert’s findings, because it was not signed by the responsible person of the externally engaged accountant, and therefore, it couldn’t be used as evidence. In another case where the accused was an accountant and an authorized signatory of orders on the company XY’s account, where the accused was employed, and she was accused of using her official authority to manage the account and sequentially withdraw cash payments for expenses, the court determined that the authorities of an external or internal accountant must be specified in the company’s internal regulations. In this sense, if the employment contract did not specify which official authorities were involved, it was necessary for this to be described in any internal regulation of the same company to speak of the transfer of responsibility from the director to a third party. The mere fact that the accused was listed as the signatory for the bank orders was not sufficient to support the claim of transferring responsibility.
In cases resulting in convictions, the following key positions have been taken: that the status of a responsible person is determined based on factual circumstances and that a responsible person doesn’t necessarily have to be registered in the court’s register as a responsible person, e.g., the director of a legal entity; that the harm inflicted, regardless of its amount, may only constitute an element of the basic form of a criminal offense; when establishing guilt for a criminal offense, responsible persons can be found guilty, regardless of whether they work in a company that is entirely privately owned or their employment is associated with a state-owned company or one with mixed ownership capital.
Therefore, the question of directors’ liability for economic and commercial crimes and tax-related offenses should be addressed preventively at two levels: – by making an adequate choice of a competent and conscientious internal or external accountant (considering the price range of services and ensuring that accounting services guarantee civil, criminal, and misdemeanor liability protection for responsible individuals); – and by conducting a legal analysis of internal regulations and contracts through which the company delegates specific tasks to employees or contracted individuals. While the judiciary issues inconsistent and often poorly reasoned decisions against legal entities and responsible individuals, where unreliable experts play a crucial role, a systematic solution to the relationships between responsible individuals, accountants, and their rights and obligations is crucial for preventive action and allowing directors to focus on strategic decisions and the economic growth of the companies they lead, rather than worrying about daily business tasks, in order to avoid potential liability before the relevant courts.
