Recovery of PLN 342,800 for a home appliance manufacturer
We conducted an audit of PR and sponsorship spending from the last two years. We found 147 incorrectly classified invoices, which allowed for a successful correction of tax returns.
We analyzed the marketing expenses of a large home appliance manufacturer from Małopolska. Numbers don't lie – we found hundreds of thousands of zlotys hidden in incorrect PR invoice settlements.
The challenge
The client allocated over PLN 2.47 million to sponsorship activities and events in 2022–2023. A lack of clear procedures between the marketing and accounting departments led to serious errors in cost classification. 147 invoices for image services were settled in a way that prevented VAT deduction and inclusion in tax-deductible costs.
The company was losing financial liquidity due to capital frozen in overpaid taxes. Management did not know that marketing is mathematics, not just pretty graphics. There was also a risk of a tax penalty during an audit.
Our approach
Our team of three auditors from Orzeł Consulting Group manually checked 842 accounting documents from a 22-month period. We focused on provisions in sponsorship agreements and campaign performance reports. We compared actual advertising services with what appeared on the invoices.
Each document was verified against the case law of administrative courts. We looked for evidence that the expenses had a real impact on the company's revenue. We worked directly at the client's office in Niepołomice, cooperating with the chief accountant.
The solution
We prepared full documentation justifying the correction of CIT and VAT returns for previous years. We demonstrated that the 147 disputed invoices concerned real advertising services and not representation, which allowed for their full settlement.
We implemented a simple system for describing marketing invoices at Pol-AGD Systemy Sp. z o.o. Every new invoice must now include an attachment with proof of service performance (e.g., a photo of a billboard, a screenshot of a post). This eliminates errors at the start and shortens the accounting working time by 4.2 hours per month.
Results
We recovered capital that lay unused at the tax office. Thanks to our actions, the client gained funds to finance a new product campaign without taking out an operational loan.
Timeline
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March 2024Scanning and verification of 842 accounting documents
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April 2024Identification of 147 incorrectly classified costs
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June 2024Filing of correction applications to the Tax Office
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July 2024Receipt of a decision on the refund of overpaid tax
"Orzeł Consulting Group proved to us that marketing is pure mathematics. We recovered funds that we had forgotten existed. We are recovering capital and moving forward."