The Annual Report Season and Its Audit
With the autumn coming, we begin to focus on the preparation of the Annual Reports for 2018, as well as their audit. This is actually a good sign, since the timely organisation of this hard process assumes more effective work, better results and less pressure at the last moment. We, therefore, would like to provide you with a few tips that would help you with the successful closure of the financial year.
Please note the last amendments in the accounting legislation are from 2016, with respect to the preparation of financial statements, as follows:
- categorisation of entities – see art. 19 of the Accountancy Act;
- categorisation of groups – see art. 21 of the Accountancy Act;
- what components comprise the Annual Reports of the corresponding category – see art. 29, which provides guidelines for preparation of full and short form of Annual Report;
- what shall be published for the corresponding category – see art. 38 of the Accountancy Act;
- the contents of Management’s Report is described in Chapter Seven of the Accountancy Act, while additional requirements for stock companies are included in the Commerce Act – art. 247 and 187d.
Prepare confirmation letters for amounts and/or turnovers at 31 December to clients, suppliers, banks and others.
Inventory of assets and liabilities
Prepare order for inventory, in compliance with the company’s policy for conducting annual or other inventories.
Valuations & Impairments
Check whether there are conditions for impairment of assets, in compliance with the company’s policy and the applicable standards, for example:
- Defining the useful life of non-current assets – NAS/IAS 16;
- Valuation of the recoverable amount of non-current assets against their balance value and the need for impairment at 31 December – NAS/IAS 16;
- Valuation of receivables and the need for impairment at 31 December – NAS/IAS 36;
- Valuation of investments in subsidiaries and the need for impairment at 31 December – NAS/IAS 36;
- Valuation of inventories against their net realisable value, thus comparison of their balance value against their net realisable value – NAS/IAS 21.
Define the related parties of the company, while also preparing information about the relationship with them, which is to be disclosed in the Annual Report.
Time & Resources
In conclusion, our advice is to prepare in advance the data and information, necessary for the Annual Report, while providing enough time for the technical execution of this process.