The financial statements are one of the essential and comprehensive information about the company, which is available to a wide range of users from banks, investors to the tax office. Its aim is to provide information not only on the profit or loss for accounting period, but also on the status of assets and liabilities of the company. The information in the financial statements must be legally reliable, comparable, understandable and judged by materiality.
The company should, either in the annex or in the annual report, describe in detail the impact of the covid pandemic on its economic situation, even if there have been no significant impacts on the company's operations and continuity.
The most common negative impacts of a pandemic, which must be described in the annex, include:
An important advance of the financial closure is the inventory. It establishes the actual balances of assets and liabilities and records them in the inventories. All components of assets and liabilities are subject to inventory.
Entities may commence the inventory not earlier than four months before the balance sheet date and complete the inventory no later than two months after the balance sheet date, and are required to demonstrate the inventory for 5 years after the inventory pursuant to Section 29 (3) of Act 563/1991 Coll. about accounting.
Inventory can be physical determining the actual balance of property by counting, measuring and weighing, such as stocks and petty cash. Based on the findings is made the physical inventory list.
Ascertained inventory differences, i.e. surpluses and shortages, are recognized in profit or loss in the accounting period for which the inventory is checked.
Secondly, the documentary inventory is used to find out the actual state of assets and liabilities for which physical inventory, such as receivables and payables, cannot be performed. In doing so, the actual situation is determined on the basis of various documents for example invoices and preparing breakdowns of individual components of assets and liabilities.
The financial closure includes a final audit of accounting and booking specific cases at the balance sheet date. The most common closing operations are:
The financial statements are usually in the form of the so-called regular, i.e. once every 12 months, when its processing closes the annual accounting period.
The final version of the financial statements is presented and approved at the General Meeting, which is legally required by the statutory body once a year. The statutory body (executive director and the board of directors) is generally responsible for the accounting and the resulting financial statements, i.e. for the results presented therein.
The financial statements must be approved no later than six months after the last day of the previous financial year. Therefore, if the financial statements are prepared as of December 31, 2019, the General Meeting must be convened by June 30, 2020 and the financial statements approved.
Pursuant to Act No. 191/2020 Coll., Lex covid justice, the deadline for approving the financial statements for 2019 is postponed until 3 months after the end of the extraordinary epidemiological measure, ie until 31 December 2020. This new law also brings a number of changes, in particular the possibility of holding meetings of the institutions by videoconference and extending the term of office of members of the institutions.
Unfortunately, if you fail to approve and publish the financial statements for the year 2019 by 31 December 2020 in the Commercial Register, you risk a fine of up to 3 % of the gross value of assets from the tax office.
We remind you that small and micro-enterprises that are not required to have their financial statements audited need not still publish a profit and loss statement unless required to do so by special legislation. If an entity presents selected information from its financial statements, it shall state that it is only selected information from the financial statements and also state information about where the financial statements are stored. Other units are required to publish all the balance sheet, profit and loss account, annex and, if audited, the annual report and the auditor's report.
In case the financial statements or statement of assets and liabilities and the annual report are not published within the above-mentioned period, a fine may also be imposed on the company by the Registration court.
As can be seen above, the closing operations, as well as deadlines that need to be met, are numerous and nothing should be forgotten, otherwise, you risk significant fines. If you need assistance in this matter, we are fully at your disposal.
At the end of this article, we would like to wish you a merry Christmas and a happy New Year 2021 full of success and health!
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