Do not forget about entity categorization testing by 31/12/2018

Czech companies, prepare youreselves for entity categorization after two years! Any category change may affect the scope of the financial statements to be prepared. 

On 1/1/2016, a new categorization of entities was introduced. The categorization of entities is valid for two consecutive periods, FY 2016 and FY 2017.

In the financial statements as at 31/12/2018 at the latest, a new test must be carried out for inclusion in the correct entity category. If the entity category is changed before 31/12/2018, the entity must prepare financial statements under the criteria applying to the relevant group. There are four groups that need to be distinguished and that are divided according to the determined categories, with the classification requiring compliance with at least two of the three listed criteria in two consecutive years:

1. micro entities

  • assets totalling CZK 9 million
  • annual net turnover totalling CZK 18 million
  • average number of employees: 10

2. small entities

  • assets totalling CZK 100 million
  • annual net turnover totalling CZK 200 million
  • average number of employees: 50

3. medium-sized entities

  • assets totalling CZK 500 million
  • annual net turnover totalling CZK 1 billion
  • average number of employees: 250

4. large entities

  • exceeding at least two of the three criteria
  • assets totalling CZK 500 million
  • annual net turnover totalling CZK 1 billion
  • average number of employees: 250

When preparing financial statements based on category classification, entities must prepare:

1) unabridged balance sheet – entities categorized as large and medium-sized, as well as small and micro entities that must have audited financial statements; abridged balance sheet – small and micro entities that are not obliged to have audited financial statements;

2) unabridged profit and loss statement – entities that are companies, large and medium-sized entities, as well as small and micro entities that must have audited financial statements; abridged profit and loss statement – small or micro entities that are companies and are not obliged to have audited financial statements;

3) notes to unabridged financial statements are prepared by entities categorized as large and medium-sized, as well as by small and micro entities that must have audited financial statements; notes to abridged financial statements may be prepared by small and micro entities that are not obliged to have audited financial statements.

Further testing of entity categorization will take place by 31/12/2020, with effect from 1/1/2020.

Source:
Act No. 563/1991 Coll., on accounting Decree No. 500/2002 Coll.

 

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