Packaging undertakings, be prepared for audits of packaging reporting!

Time flies and it is once again that time of year when packaging undertakings which are about to file packaging reports have to determine whether they need to have their report audited.

The need for auditing packaging reports was a more salient issue for 2020 packaging reports and to some extent, 2021 packaging reports, as the obligation to evaluate financial capability was added then. Whether the 2024 packaging report needs to be audited depends on whether the most recent audited packaging report was for 2020 or 2021.

Even more important, however, is to make sure that the preparation of packaging reports continued consistently during the interim period, taking into account all factors arising from the specific nature of the undertaking. That gives greater confidence that the accounting is in line with the valid requirements and that all types of packaging are documented along with the correct data. Above all, the goal is to receive an unqualified opinion from the auditor, since this will mean an exemption from the audit for the next three years.

Everything starts from proper packaging reporting

That makes now the right time to review your packaging accounting and make sure it is ready for a packaging audit. If it isn’t, you will need to lay down an action plan to meet this goal. It’s important to be aware that if the packaging mass placed on the market is in excess of 20 tons, it will incur a packaging audit requirement. Yet even if there is no need for a packaging report audit, properly maintained packaging accounting makes the preparation of the packaging report more efficient and easier and will also mitigate the risk that some packaging will be over-declared or not declared at all.

Important aspects before audit

Next, I’ll give a few suggestions for what to review for the purpose of the packaging report audit.

• Have there been any changes in packaging accounting? If so, they need to be documented in writing, and you should make sure that the changes have been reflected in packaging accounting (such as in accounting software, inventory accounting, separate registers outside the program etc.). It is useful to implement routines where the recognition of packaging placed on the market is checked in accounting software or inventory accounting to be sure that the packaging reflected in the report is up to date (that no changes have occurred in the meantime in the type or mass of packaging etc.).
• In the course of the process described you have to determine the mass of the packaging material and the recognition method, how the data on packaging weight were obtained (whether the packaged goods were weighed on the pallet received from the supplier etc.). This document should be checked at least once every 12 months to make sure that all inputs remain current. These checks must be traceable (the documented self-inspection system is signed or re-confirmed).
• What are the current supply chains? The goal is to ensure that goods being imported and exported from Estonia are taken into account in packaging accounting. If the principles underlying packaging accounting are not regularly reviewed, it could lead to mismatch in the declared packaging mass leading to a situation where the packaging is significantly under-declared. And that entails the risk that packaging excise will have to be paid for the undeclared portion.

Following these recommendations gives assurance that preparation of packaging accounting remains in compliance with the valid requirements. A full self-inspection system makes the audit process more streamlined and efficient for both packaging undertakings and the auditor.