An amendment to the Act no. 563/1991 Coll., On Accounting, which incorporates new European Union legislation into Czech law, will come into force on 1st January 2016. This extensive amendment, published in September in the Collection of Laws under no. 221/2015 Coll., brings the greatest changes in accounting since 2003. The main changes concern the categorization of accounting entities and consolidation groups. The amendment also reinstates the institution of single-entry bookkeeping and a new obligation to draw up a report on government payments.
In the first part of the article, we described the new categories of accounting entities and consolidation groups of entities. In this part, we will focus on single-entry bookkeeping and the new obligation to prepare a report on government payments.
Who can use single-entry bookkeeping and how
The amendment reinstates the possibility of using single-entry bookkeeping to the Accounting Act. Small entities that were set up to make no profits are allowed to use single-entry bookkeeping as double-entry is too administratively and financially difficult for them. According to Section 1f, associations, trade unions, employers' organizations, churches and religious communities and hunting communities can use single-entry bookkeeping if they are not subject to VAT, their total revenue for the last financial year does not exceed CZK 3 million and the value of their assets is not more than CZK 3 million.
Section 13b of the Accounting Act states:
(1) Entities using single-entry bookkeeping keep accounts in the form of
a) a cash book,
b) a book of receivables and payables,
c) auxiliary books on other components of the assets.
(2) A cash book contains information about
a) cash resources and cash on accounts mainly in banks, savings and credit cooperatives,
b) incomes and expenses actually received or paid in the accounting period,
c) suspense items. i.e. movements of funds which are not final incomes or expenses as specified in subparagraph b).
Accounting entities using single-entry bookkeeping shall prepare a statement of assets and liabilities and a statement of incomes and expenses within six months after the end of an accounting period. Accounting entities using single-entry bookkeeping do not account in marketing years.
Report on government payments
The amendment to the Accounting Act introduces another new obligation, which is to prepare and publish a report on government payments in the EU Member States or a third country. The aim of this measure is to achieve greater transparency in the payments made to governments. Large and public interest entities which are active in the extractive industry or in logging of native forests are obliged to prepare the report.
Section 32a of the Accounting Act states:
A payment means the amount that was paid, either in the form of monetary or non-monetary transactions, for the activities specified in paragraph 1, as follows
a) part of production levied in kind,
b) tax, charge and other similar cash payment paid out of income, production or profits, excluding excise duties, value added tax, tax on personal income or sales taxes,
c) profit-sharing,
d) payment in return for concluding a contract, discovery of deposits or mining sites and manufacturing or mining,
e) license fee, rent, payments for licenses and concessions and
f) payment for infrastructure improvements.
The report must be compiled in Czech and value data specified in units of Czech currency. Payments, the amount of which do not exceed CZK 2,600,000 in the financial year, do not need to be mentioned in the report.
Changes in related regulations
Changes in the Accounting Act will also be reflected in changes of related regulations, especially the Decree on implementing the Act on Accounting for entrepreneurs (no. 500/2002 Coll.) and the Czech accounting standards for entrepreneurs. The new Czech accounting standards will be published in the Financial Bulletin of the Ministry of Finance.
Announcement of the Ministry of Finance on the amendment to the Accounting Act and the related laws.
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