New Act on Accounting

New Act on Accounting

3 min.

The new Act on Accounting was published in the Official Gazette Number 78/15 on July 17, 2015, a consequence of the Accounting Directive 2013/34/EU which has come into force. The most significant changes of the Act will enter into force on January 1, 2016, and are described below.

The classification of enterprises and the definition of the conditions for the classification of enterprises. New and different classifications of enterprises have been stipulated for:

  • micro entities,
  • small entities,
  • medium-sized and
  • large entities.

1. Accounting documentation and issuing of invoices

Furthermore, the Act stipulates that each accounting document must be authentic, orderly and prepared in such a way as to ensure timely monitoring with the signature of the responsible person. However, invoices which serve as accounting documents and were released/issued by the authorized person do not need to be signed if they:

  • contain all elements required by tax regulations and
  • include the first and last name of the person responsible for its issuance.

Electronically issued invoices (e-invoice) or electronic records are explicitly permitted by the new Act, something that has not been the case so far. This implementation will lead to a substantial improvement of e-business.

2. Storage of business records and accounting documents

Changes have been made as well in terms of deadlines for the storage of accounting documents and records. The retention period so far was at least seven years and it has been extended to at least eleven years now, as follows:

  • payroll lists, i.e. records of employee earnings that are paid by mandatory  contributions, must be kept permanently,
  • accounting documents are based on the data entered in the journal, general ledger and subledger and must be kept for at least eleven years,
  • business books  or journals and general ledgers as well as subledgers must be kept for at least eleven years.

3. Certified accountant for the business

The Act includes a provision that “if an entrepreneur entrusts their accounting services and accounting functions to other legal entities or individuals, these must be licensed for performing such activities on the basis of a special law.”  It further stipulates that an entrepreneur is still solely responsible for all activities performed by the licensed accountant, and that the audit done by the supervisory authorities is to be carried out smoothly. This obligation of licensing shall enter into force on January 1, 2018, and the deadline for getting the license for providing accounting services to other legal entities and individuals is December 31, 2017.

4. Annual financial statements

Deadlines for closing the business books or due date for submission of yearly financial statements for publication is reduced to no later than April 30 of the following year for the previous year, which is now in compliance with the deadlines for the submission of the report for statistical and other purposes and those of the Tax Administration.

5. Chart of accounts

A unique chart of accounts will be prescribed.

The new Act redefines classifications and sets new regulations – all changes that must be noted.

Author
Dr. Branka Niemann

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