Starting from 1 January 2016 an amended Accounting Act, including related decrees and accounting standards, enters into force. Also an Act on auditors has been amended.
The amendments bring a range of changes in accounting methods, reporting scope and statutory audit obligations.
Categorization of reporting entities
The Accounting Act differentiates the reporting entities into 4 categories. The categorization
of accounting unit to the particular category depends on the entity achieving or exceeding given criteria (as presented in the following table) as of the balance sheet date.
|Category of Reporting Entity
|At the balance sheet date
|Total assets (millions of CZK)1
|Total net turnover (millions of CZK)2
|Average-number of employees3
|Does not exceed the limits of at least two of the following three criteria
|Is not a micro entity + does not exceed the limits of at least two of the following three criteria
|Is not a micro or small entity + does not exceed the limits of at least two of the following three criteria
|Exceeds the limits of at least two of the following three criteria Note: public interest entity is always treated as a large entity
1 total assets as reported in the balance sheet
2 total revenues decreased by sale discounts, divided by a number of commenced months of the accounting period, multiplied by 12.
3 average number of full time equivalent employees according to a methodology of the Czech statistical office.
Statutory audit obligations
In line with a categorization of the reporting entities also statutory audit obligations have been changed. The obligation has been extended also to non-business entities. On the contrary, micro entities are required to have their financial statements audited only if the requirement arises from a special legal regulation, even if they are joint stock companies or trust funds.
Auditor`s report on the financial statements and the annual report
Starting from 1 January 2016 the auditor issuing a report on a mandatory audit can issue only one document, i.e. a report on the audit on the financial statements and the annual report, jointly. It will thus not be possible to issue the auditor`s report on the financial statement separately and only afterwards a report on the annual report, as is currently possible.
Obligation to publish the financial statements
All entities registered in public registers will have an obligation to publish their financial statements, and that within 12 months from the balance sheet date. The obligation will thus be extended also to entities registered in other registers (e.g. associations, non-profit entities).
The audited companies are then obliged to publish the financial statements and the annual report within 30 day from the date of the auditor`s report and approval by an authorized body, but not later than 12 months from the balance sheet date, regardless if the financial statements have been approved.
Changes in the scope and structure of the financial statements
The amendment of the accounting decree defines new financial statements in the full format
and abbreviated format, including new statements structure and items descriptions. Further, cash flow statement and statement of changes in equity become mandatory part of the financial statements. However, micro and small reporting entities do not have an obligation to prepare those reports.
The decree will now also define the minimal extent of the financial statements for particular categories of the reporting entities.
The notes to the financial statements are designed in such a way so that:
- small and micro reporting entities without the mandatory audit disclose only the basic information,
- small and micro reporting entities with the mandatory audit disclose the basic information
and also additional information concerning mainly long-term assets and transaction between related parties,
- medium and large reporting entities disclose a complex information.