Audit of a Liberian company, financial statements, accounting, consulting in Liberia

Liberia is a country located in West Africa, bordered by Sierra Leone, Guinea, Côte d’Ivoire and washed by the Atlantic Ocean. The country’s strategic location on the coast of West Africa provides access to regional markets and trade routes. The country has a population of approximately 5 million people. As a former U.S. colony, Liberia is known for its diverse culture and unique history. Liberia gained independence in 1847 and since then has experienced periods of political instability, civil wars, and economic problems. Liberia is home to several ethnic groups and languages, with English as the official language and the primary language of government, commerce, and education. The country possesses significant natural resources, including iron ore, gold, diamonds, and timber. Liberia has made progress in improving its business climate, including simplifying regulations and streamlining the processes for starting and doing business. The government has implemented policies to attract foreign investment: tax incentives, investment guarantees and the creation of a “one-stop shop” for investors. Liberia has a relatively young and growing population that can provide a potential market for consumer goods and services, as well as a workforce for businesses.

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200 USD per hour

(depending on the type of work and qualifications of the employed specialist, but not less than 1 900 USD)

100 - 400 USD per hour

from 200 USD per hour

200 USD per hour

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General requirements

Financial reporting requirements in Liberia are regulated by the Financial Reporting Act of 2011 and the Liberian Associations Law.

Companies in Liberia must make financial statements in accordance with the International Financial Reporting Standards (IFRS) or the Generally Accepted Accounting Principles (GAAP) for small and medium-sized enterprises. Financial statements must include a balance sheet, profit and loss statement, cash flow statement and notes to financial statements.

The Liberia Institute of Certified Public Accountants / (LICPA) is responsible for establishing and ensuring compliance with the GAAP in Liberia. The GAAP of Liberia to a great extent are based on the IFRS, however there are some differences between them, especially in terms of taxation and public accounting.

In addition to the reporting standards, Liberian companies must also comply with other accounting requirements and regulations: - regulations of the Securities and Exchange Commission of Liberia (SEC), - standards of the Liberia Extractive Industries Transparency Initiative (LEITI), - regulations of the Central Bank of Liberia (CBL).

The official language of Liberia is English. The law prescribes that financial statements of companies incorporated in Liberia must be in English, unless otherwise permitted by the Corporate Registry. This rule applies to annual financial statements, interim financial statements and any other statements required in accordance with Liberian legislation or regulations.

The accounting currency in Liberia is usually the Liberian dollar (LRD), the official currency of Liberia. Companies operating in Liberia must make their financial statements in LRD, unless the LICPA has authorized them to use another accounting currency. If a company uses an accounting currency other than LRD, it must also state amounts in LRD. It shall be done so the reported financial information is comprehensible and comparable to local concerned parties and investors.

Time frame for preparation and submission of financial statements

Companies in Liberia must keep proper records of their financial transactions and store accounting records and accompanying documents for at least 5 years. Those records must include invoices, receipts, bank statements, contracts and other supporting documents.

Financial statements shall be filed once a year with the Liberia Revenue Authority (LRA) and the Financial Reporting Council of Liberia (FRCL). The deadline for filing financial statements with the LRA is 6 months after the end of the financial year, and the deadline for filing with the FRCL is 9 months after the end of the financial year.

Financial year in Liberia starts on 1 July and ends on 30 June of the following calendar year.

Besides financial statements, tax returns shall be filed with the LRA and taxes shall be paid monthly. A tax return must contain information on income, expenses and tax obligations of the company for the reporting period. The deadline for filing tax returns and paying taxes usually falls on the 15th day of the month following the month after the end of the reporting period.

Audit of accounts

Companies in Liberia must get their financial statements audited by a licensed registered auditor or audit firm. An auditor’s report must express an opinion on reliability of the financial statements and compliance with the relevant accounting standards.

Accounts of the following must be audited:

companies that exceed certain thresholds for income, assets or number of employees (for example, companies whose annual turnover is over 250 000 USD or whose assets are over 250 000 USD must get their financial statements audited);
companies that have a complex ownership structure or have their shares listed on an exchange (to ensure transparency and guarantees for shareholders and other concerned parties);
companies operating in certain industries, for example, banking, insurance or securities market.

Liability for late filing of accounts

All legal entities established in accordance with the law of Liberia or authorized to conduct business in Liberia, if they fail to fulfil the obligation to keep and store accounting records and accompanying documents, will have to pay a penalty of 3 000 USD to 5 000 USD. Other possible sanctions are termination of the legal status of good standing of the company, cancellation of the license to conduct business and even dissolution of the company. Any combination of the mentioned sanctions is allowed that the Registrar considers matching the gravity of the violation.

Companies that do not provide financial statements within the prescribed period may be imposed with penalties. A specific penalty for late filing of financial statements may vary depending on the type of the company, duration of the delay and specific circumstances of non-compliance.

According to the LRA, companies that fail to file their tax returns or financial statements on time may be imposed with a penalty of up to 10% of the amount of the due tax and required to pay additional interest on outstanding tax. The penalty may increase depending on the duration of delay, and additional penalties are charged for each subsequent month of non-compliance.

Consolidated financial statements

Requirements regarding consolidated financial statements in Liberia normally include the following:

All subsidiaries, associated companies and joint ventures over which the company has control or significant influence must be included in consolidation.
Consolidated financial statements must include financial information on the parent company and all its subsidiaries, associated entities and joint ventures represented as if they were a single business entity.
Financial statements must be prepared using unified accounting policy and procedures, and any significant transactions or balances within the company must be excluded to avoid double counting.
Consolidated financial statements must be accompanied by an exhaustive set of notes and disclosures that give further information on the financial position, results of activity and cash flows of the group.
Consolidated financial statements must be audited by a licensed skilled auditor in Liberia.

Companies that must file consolidated financial statements include:

companies that manage several subsidiaries, associated companies or joint ventures over which the parent company has control or significant influence;
companies that are listed on a stock exchange or subject to securities regulations that require provision of consolidated financial statements;
companies with a complex ownership structure or significant transactions with related parties, which may require further disclosure of information and transparency in their financial statements;
companies that are subject to certain industry standards or regulations that prescribe preparation and submission of consolidated financial statements;
companies that are part of a group or conglomerate with centralized management of finance and control, where financial indicators and position of the group in general matter to investors, concerned parties or regulatory authorities.

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