A new Law on Annual Reports and Consolidated Annual Reports (hereinafter - the Law) has entered into force on 1 January 2016. It replaces the previous 2 laws - Law on Annual Reports and Law on Consolidated Annual Reports.

The Law refers to annual reports and consolidated annual reports as of 2016 reporting year which starts 1 January 2016 or later. The companies which terminate their business activities during 2016 and prepare annual reports for the period less than 12 months are allowed to apply provisions of the previous Law on Annual Reports till 31 December 2016.  

The new law defines the following type of companies as per size: 

  • Micro enterprise is a small company not exceeding the thresholds of at least two of the three criteria listed in the table No 1.
  • A small size company - not exceeding at least two of the three thresholds at the balance sheet date.
  • A medium size company not exceeding at least two of the three thresholds at the balance sheet date.
  •  A large size company exceeds at least two of the three thresholds at the balance sheet date.

Table No. 1
                             Thresholds

Type of company /
Criteria


Total balance at balance sheet date (euro)  
Net turnover at balance sheet date (euro)  
Average number of employees in reporting year 

Micro enterprise
(< 2 of criteria )

350 000
700 000
10
A small size company
(< 2 of criteria )
4 000 000
8 000 000
50
A medium size 
(< 2 of criteria )
20 000 000
40 000 000
250
A Large size company
(> 2 of criteria )

20 000 000
40 000 000
250 


There are new requirements for statutory audits and reviews performed by certified auditors as per the type of company (small, medium or a large company) in accordance with the Article 91 and 92 of the Law:  

- An audit of annual reports carried out in accordance with International Auditing Standards issued by the International Federation of Accountants (hereinafter - the audit);

- Limited review of annual reports including verification of the compliance of the amount of corporation income tax carried out in accordance with International Standards on Review Engagements issued by the International Federation of Accountants (hereinafter - the review). 

Further, information regarding criteria for an audit and a review are summarized in the table No. 2 below.  

Table No. 2

Statutory audit mandatory for:
Statutory review mandatory for:
A medium size company 
n/a
A large size company n/a
Company whose transferable securities admitted to trading on the regulated market 
n/a
Consolidated annual report prepared by the parent company  
n/a

Small companies:  

1) if company indicators at balance sheet date in two consecutive years i.e., current and proceeding year or the newly established company exceeding two of the following thresholds at balance sheet date of the first reporting year:  

- balance sheet total 800 000 euro,

- net turnover 1 600 000 euro,

- number of average employees - 50.  

2) If small company is the parent company (regardless of obligation to prepare/not prepare consolidated annual report); 

3) If company is a public person corporation, its subsidiary or public private corporation[1]

4) If company has prepared annual report on the basis of Article 13, paragraph 5 (2) of the Law in accordance to IFRS.

[1] In accordance with Law on capital shares of public person and corporation governance.

Small companies if they do not need to carry out full review and company indicators at balance sheet date in two consecutive years exceed two of the following thresholds: 

- balance sheet total 400 000 euro,

- net turnover 800 000 euro,

- number of average employees - 25. 

Note:  

The company is entitled to choose the audit instead of review of annual reports. 



The audit or review is not mandatory for micro enterprises.