According to the Insolvency Division, which operates under the Competition Authority, the problem is that in Estonia, anyone can currently work as an accountant — even individuals with prior criminal convictions or ties to troubled companies.

"Accounting is not some arbitrary creative activity; the accounting of any legal entity must comply with legal requirements and be reliable," emphasized the division's head, Signe Viimsalu, in her statement.

According to the Insolvency Division, the following individuals should not be allowed to work as accountants:

• those convicted of economic offenses or crimes against the state;
• individuals declared bankrupt or whose debt discharge proceedings ended less than a year ago;
• persons expelled from the Estonian Bar Association;
• individuals dismissed from public service due to disciplinary violations;
• those removed from positions as judges, notaries or bailiffs, or who are subject to a ban on acting as a liquidator, bankruptcy trustee, restructuring advisor, trustee or debt counselor;
• individuals who, within the past five years, have served on the management or supervisory boards of a legal entity whose bankruptcy petition or proceedings were dismissed due to lack of assets.

Currently, there are no legal requirements or restrictions for accountants in Estonia. The division believes that only legally competent individuals residing in Estonia, with valid professional certification and the necessary education and language skills, should be permitted to work as accountants in the future.

Amendments and tougher punishments sought

The division also proposed amending Section 381¹ of the Penal Code, which addresses violations of accounting obligations. Currently, such offenses carry a fine or up to three years in prison.

According to the division, these penalties are too lenient. "The Insolvency Division believes — and to our knowledge, all bankruptcy trustees working in Estonia share this view — that the penalties set by lawmakers for such offenses are too mild. Without proper accounting, neither restructuring nor bankruptcy proceedings can be conducted quickly and cost-effectively to recover diverted assets and satisfy creditors' claims," Viimsalu explained.

The division argues that violations should be punishable by up to seven years in prison, similar to tax offenses.

It also highlights practical issues commonly encountered during bankruptcy proceedings. For example, there have been cases where the accounting records of bankrupt companies have disappeared or accounting software providers have deleted data before investigators could access it. For this reason, the division wants the obligation to retain accounting documents extended to include accounting software providers and service providers — without charging extra fees.

Reliable and transparent accounting is essential for conducting insolvency proceedings efficiently and affordably and for protecting the interests of creditors, Viimsalu emphasized.

The division submitted its proposals in early May, but as of now, it has not received any responses from the other institutions.

The Insolvency Division's primary task is to investigate the actions of bankrupt debtors to identify any potential illegal activity.

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