Most accounting departments will only be drawing up financial statements according to the reporting requirements of an amendment of the accounting act from the year 2016, while another amendment has taken effect as of January 1, 2017, which extends to requirements on reporting. Compared to the amendment from last year, though, these are only minor changes, which will only affect a small proportion of accounting entities.

The amendment for the year 2017 mainly brings a completely new arrangement relating to the stating of non-financial information. The amendment incorporates directive 2013/34/EU into Czech law, with which the European Commission aims at achieving a comparably high level of information provided by companies in all member states in the social area and the realm of environment.

The duty to state new non-financial information only applies to large accounting entities, which are companies as well as public interest entities, if exceeding the criterion on an average number of 500 employees during the accounting period as of balance sheet date. It also applies to consolidating accounting entities of large groups of accounting entities, which are also public interest entities, if exceeding the criterion on an average number of 500 employees on consolidated basis during the accounting period as of balance sheet date.

Let us point out here that a large accounting entity is an entity, which exceeds at least two of the following criteria as of balance sheet date: a) assets totalling CZK 500m, b) annual total of net turnover of CZK 1bn, c) an average number of employees reaching 250 in the course of the accounting period. Public interest entities are for example banks, insurance companies, pension companies, health insurance companies and companies, whose issued securities are accepted for trading on the European regulated market.

The above-mentioned accounting entities will state non-financial information in the extent needed for understanding the development of the accounting entity or group, its performance and position and the effects of its activity, especially with regard to the following areas:

1. the environment,
2. social and employee environment,
3. respecting human rights,
4. fighting corruption and bribery.

The act also sets the extent and structure of the stated non-financial information, the form of their publication, while also stipulating, which accounting units are exempted from the duty to state non-financial information. Accounting entities may state non-financial information in their annual report, a consolidated annual report, or in a separate report. If the entity draws up a separate report, it needs to be published along with the annual report or made accessible to the public within 6 months from the balance sheet date on the website of the accounting entity.

The amendment also more generally specifies subjects, to whom conversions apply. In addition to business corporations according to the act on conversions of business corporations and cooperatives, these can also be for example foundations, clubs, investment companies and investment funds. Following this change, the term “trade register” has been replaced in the act by the term “public register”.

For reporting in the financial statement, the terminology when reporting assets has been specified. Historically, assets were divided into non-current and current, and the current ones were divided into long-term and short-term. The amendment specifies a division of assets into fixed and current. Fixed assets mean long-term intangible, tangible and financial assets, current assets mean stockpile, long-term and short-term receivables and short-term financial assets. This specification will enable unifying the division of assets in the balance sheet of an accounting entity following EU regulations and the use of other options for reporting accounting information according to the directive 2013/34/EU.

Author: Jan Vácha
Revised by: Klára Honzíková