Financial Health Check

Client Profile

Incorporated in Shanghai Free Trade Zone (“FTZ”), the client’s principal business is the sale of high-end Western-style furniture to customers in Shanghai. Established since 2008, the company currently has an office in the FTZ and another in downtown Shanghai, with a total headcount of 30.

Challenges

  • The company’s individual income tax (IIT) filing base was inconsistent with the salary amount stated in employment contracts, resulting in under-reported IIT since the company was incorporated.
  • Cash revenue was understated, resulting in under-reported corporate income tax (CIT) and value-added tax (VAT).
  • Risk of challenges from the tax authority on applicable VAT rate

Our Engagement

  • Conduct on-site visit to client’s office and understand the company’s current business situation
  • Financial health check
  • Accounting health check for FY 2014-2015 and provide health check report and recommendations for required accounting adjustments
  • HR health check for FY 2015
  • Health check on internal workflow

Results

  • Improved internal control over workflow for bank account, cash management, staff claim, vendor payments and supply chain
  • Improved inventory management, resulting in more accurate cost calculation
  • Minimise risk of challenges from the tax authority


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