Annex 2: Overview of the accounting requirements in force on January 31, 2013 per entity type

Transcription

1 Annex 2: Overview of the accounting requirements in force on January 31, 2013 per entity type CIP Programme 153/PP/ENT/CIP/12/F/S01C04 Written by EY March CIP PROGRAMME

2 EUROPEAN COMMISSION DG for Internal Market, Industry, Entrepreneurship and SMEs Directorate F Entrepreneurship & SMEs Unit F.3 SME Access to Finance GROW-F3@ec.europa.eu European Commission B-1049 Brussels

3 EUROPEAN COMMISSION Annex 2 Overview of the accounting requirements in force on 31 January 2013 per entity type CIP Programme 153/PP/ENT/CIP/12/F/S01C DG for Internal Market, Industry, Entrepreneurship and SMEs

4 Europe Direct is a service to help you find answers to your questions about the European Union. Freephone number (*): (*) The information given is free, as are most calls (though some operators, phone boxes or hotels may charge you). LEGAL NOTICE This document has been prepared for the European Commission however it reflects the views only of the authors, and the Commission cannot be held responsible for any use which may be made of the information contained therein. More information on the European Union is available on the Internet ( Luxembourg: Publications Office of the European Union, 2015 ISBN doi: / European Union, 2015 Reproduction is authorised provided the source is acknowledged. Printed in Belgium

5 Table of contents 1. Type I - Medium Sized 6 2. Type I - Small Sized Type I - Micro Entity I Type I - Micro Entity II Type II - Medium Sized Type II - Small Sized Type II - Micro Entity I Type II - Micro Entity II 65

6 1. Type I - Medium Sized Type I : medium-size Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany Legal entity name Size thresholds Accounting Systems General Partnership : Offene Gesellschaft (OG) Limited Partnership : Kommanditgesellschaft (KG) Cooperative : Genossenschaft (Gen) EU Medium-size entities correspond principally to medium-size entities in the local (+ part of small entities) General Partnership : Société en nom collectif/vennootschap onder firma (VOF/SNC) Limited Partnership : Société en commandite simple / gewone comanditaire vennootschap (Comm. V/SCS) Cooperative : Société cooperative / coöperatieve vennootschap (CV/SC) : 2 types with (un)limited liabilities EU Medium-size entities correspond to large-size but also to small-size entities in the local General Partnership : Събирателно дружество Limited Partnership : Командитно дружество Limited liability or joint stock companies : Кооперативни предприятия Cooperative Unions : Кооперативни съюзи EU Medium-size entities correspond principally to medium-size entities in the local (+ part of small entities) General Partnership : Javno trgovačko društvo Limited Partnership : Komanditno društvo EU Medium-size entities correspond principally to medium-size entities in the local (+ part of small and large entities) General partnership : Veřejná obchodní společnost, (VOS) Limited partnership : Komanditní společnost (KS) Cooperative : Družstvo EU Medium-size entities correspond to large-size entities in the local General Partnership : Interessentskaber (I/S) Limited Partnership : Kommanditselskaber (K/S) Cooperative : Andelsselskaber med begrænset ansvar (AMBA) EU Medium-size entities correspond principally to medium-size entities in the local (+ part of small and large entities) General partnership : Täisühing (TÜ) Limited partnership : Usaldusühing (UÜ) Cooperative : Tulundusühistu (TuÜ) General partnership : Société en nom collectif (SNC) Limited parternship : Société en commandite simple (SCS) Cooperative : Société coopérative (SC) Civil society : Société civile General partnership : Offene Handelsgesellschaft (OHG) Limited partnership : Kommanditgesellschaft (KG) Cooperative : Genossenschaft (Gen) No size regulation No size regulation EU Medium-size entities correspond principally to medium size entities in the local 1) Internal accounting Not Not Not Not Not Not Not Not Not 2) External accounting Keep books (double entry ) 3) Tax accounting VOF/SNC & Comm. V/SCS : if net turnover (excl. VAT) > 500K -> double entry CV/SC: double entry system used at least on a monthly basis (sub ledgers centralized in the ledgers). Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Exhaustive chronological registration Systematic accounting ledgers Synthetic and analytical accounting ledgers, and reconciliation among them Interim and annual closing -> journal Change in book by adjustment Individual chart of accounts but separate VAT ledger and fixed assets tax depreciation plans. Keep accounting books: journal entry book, general ledger and auxiliary books (double entry ) Need to prepare financial Double entry I/S, K/S : no requirement to prepare FS AMBA : required to prepare FS as per law Local GAAP based on IFRS SME s (double entry ) Double entry and : Chronological accounting Supporting document evidences Value and existence of assets and liabilities 2 different taxes: corporate tax or individual income tax Cooperatives: in general corporate tax General partnership: individual income tax Limited partnership: Income tax Civil society: depends of the nature of the enterprise 4) Other accounting systems None None None None None None None None None Accounting framework 1) Accounting principles 1.a) Cash basis Not allowed Not allowed Not allowed Not allowed Not allowed Not allowed Not allowed Not allowed Not allowed 1.b) Accrual basis 1.c) Other accounting principles 2) Principles for external financial None None None None None None None None None OG, KG : format described but not mandatory Cooperatives : format described but not mandatory receivables and liabilities > 1 year shown separately or disclosed in the notes capital not yet paid up is deducted from the nominal capital share capital called up separated reserves divided into capital reserves and turnover reserves Management required to prepare: notes (simplified for cooperatives) management report Financial mandatory for all type I enterprises SME : full financial in accordance with NFRSSME or IFRS 2.a) True and fair view Fair : if contents of individual items correspond to respective facts and comply with applicable accounting principles and accounting policies True : if FS prepared using accounting principles and policies Obligation of establishing financial Good information principle 2.b) Going concern 2.c) Prudence (prudence, sincerity and good faith) (prudence, sincerity and good faith) No prudence principle but neutrality principle (any change in value shown irrespective of the effect on equity and profit and loss account) Double entry used by means of a set of ledgers, subledgers and accounts (e.g. expenses for accrued pending losses not accepted by the tax authority). Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements (+ imparity : unrealized losses must be accounted, but not unrealized profits) 6

7 7 Type I : medium-size Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) (based on inventory) (specific requirement when liquidation, merger, ) 2.e) Consistency (primarily to classification and format) (fixity principle & Nominalism principle - historical cost) 2.f) Separate valuation As per Art. Accountancy Act Measurement requirement under HSFI (similar to IFRS) Valuation performed : as at the date of accounting transaction (acquisition cost, conversion cost, nominal value, replacement cost or fair value) as at the balance sheet date (for securities, derivatives, financial allocations and accounts receivables for trading) as at another date if required by special (compensation 2.g) Materiality Yes Yes ( all relevant matters ) Immaterial items recorded with simplified method Relative importance principle (compensation Other measurement rules as per HGB 2.h) Other principles 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions Goodwill capitalised and amortised over useful life (max 15 years) Internally developed intangibles not capitalised 1) Financial records Set of ledgers, sub ledgers and accounts (satisfied criteria of timely, completeness correct and systematic recording) Original documents kept for 7 years 2) Double-entry vs. Singleentry None None HSFI prescribe following principles : Understandability Reliability Comparability Completeness Yes None Clarity Understandability None consequences of changes in accounting principles and corrections for the previous year -> recognized in the current P&L Hedging principle: under strict assumptions -> recognize gains and losses with respect to cashflow or fair value hedge contracts Set of ledgers, sub ledgers and accounts (satisfied criteria of timely, completeness, correct and systematic recording) -> justification document Original documents kept for 7 years Set of ledgers, sub ledgers and accounts (satisfied criteria of timely, completeness, correct, chronological and systematic) -> justification document Original documents kept for 5 years (10 years for FS). Keep accounting books: journal entry book, general ledger and auxiliary books Keep accounting books : general journal (chronological order) general ledger (synthetic accounts) Set of ledgers, sub ledgers and accounts (satisfied criteria of completeness, traceability, systematic recording) Original documents kept for 5 years Accounting registers Chronological order Original documents kept for 7 years Keep accounting books : general journal (chronological order) general ledger (synthetic accounts) Inventory book Double-entry Double-entry Determined by management Double-entry Double-entry Double-entry Double-entry Double-entry Double-entry Set of ledgers, sub ledgers and accounts (satisfied criteria of systematic recording) Original documents kept for 10 years (6 for secondary documentation) 3) Chart of accounts Prescribed (not mandatory) Prescribed Not prescribed Not prescribed Prescribed Not prescribed Not prescribed Prescribed Partnerships and associations: No statutory chart of accounts Coop.: Statutory Chart of acc. accounts 4) Other None None None None None None None None None Components of financial Balance sheet Profit and loss account 1) Profit & loss account Required full fin. for OG, KG and Gen OG, KG : 2 methods (total cost format >< cost-of-sales format) but no requirement regarding the structure Gen : 2 methods but requirement regarding the structure Balance sheet Profit and loss account Required full financial Required full financial 2 formats P&L : two-sides P&L (turnover and expenses listed in 2 columns) or one-side P&L (like IAS 1) 2) Balance sheet Required full financial Required full financial Required full financial (scheme prescribed by NFRSSME) Balance sheet Profit and loss account Balance sheet P&L Cash flow statement Scheme prescribed by law Scheme prescribed by law Required Required : grouping of costs by nature or by function (min. details prescribed) Scheme prescribed by law Scheme prescribed by law Required Different schemes prescribed by law Balance sheet Profit and loss account Tabular form or as a list Described separately assets and liabilities and equity 3) Cash flow statement Not Not Scheme prescribed by NFRSSME Scheme prescribed by law Not (no layout) Not (excepted for conso) 4) Notes to financial OG, KG : not Gen : : BS, P&L and general situation and prospects Mention of tax obligations Mention of tax obligations (form as per NFRSSME) (scheme prescribed by HFSI) and contain : application of the accounting principle accounting policies suppl. information other events not presented in balance sheet which affect the financial position and contain : applicable financial reporting framework accounting principle detailed information on figures other circumstances that affect the position (to complete the figures) Required full financial 2 formats P&L : by nature or by Function Abbreviated format allowed for partnerships and associations Abbreviated format allowed for partnerships and associations Not Cooperatives: Partnerships: Not

8 Type I : medium-size Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany 5) Consolidated financial 6) Other financial OG, KG : no requirement Gen : Requirements : P&L, BS, Notes, Cash flow, equity presentation Exemptions : negligible, restrictions to the information, # cost Requirements : P&L, BS, notes if 2 out of 3 criteria exceeded during 2 consecutive years : Net turnover (excl. TVA) > K Balance sheet > K Employees > 250 Exemptions : negligible, restrictions to the information, # cost, held to sell Requirements : P&L, BS, notes, cash flow statement and statement of changes in equity Exemptions : negligible or absorption could affect the fair image Requirement Exemption : if min. 90% owned by another enterprise which makes consolidated financial and if there is no opposition Requirement if exceeded 2 out of 3 criteria: Net turnover (excl. VAT) > K Balance sheet > K Employees > 50 Exemption : sub-consolidation Requirement if exceeded 2 out of 3 criteria during 2 years : Net turnover (excl.vat) > 9.600K Balance sheet > 4.800K Employees > 50 Exemption : sub-consolidation Requirement : notion of control, if exceed 2 out of 3 criteria : Net turnover (excl VAT) > 1.000K Balance sheet > 500K Employees > 15 OR exceeded 1 of the criteria : Net turnover (excl. VAT) > 3.000K Balance sheet > 1.500K Employees > 45 Exemptions : sub-conso, negligible (less than 5% conso turnover) + parent of group required to disclose the standalone BS, P&L, cash-flow and change in equity Requirement : notion of control and significant influence (conso + report on the management of the group + Cash flow statement required) Generally not required 7) Statement of equity Voluntarily Required Only required for consolidation Management report Auditing OG, KG : not Gen : 1) Appointment of auditor OG, KG : no requirement Gen : auditor required VOF / SNC, Comm.V / SCS, CVOA / SCRI: Not (unless one of the unlimited liability partners is incorporated) VOF / SNC, Comm.V / SCS, CVOA / SCRI: Not (unless one of the unlimited liability partners is incorporated) 2) Scope of audit Statutory audit Statutory audit + specific legal engagement audit 3) Content of the audit report (Consolidated) financial Management report financial and applicable accounting framework Scope of audit Mention : established in accordance with legal and management regulation Opinion (with or without emphasis paragraph) 4) External audit / internal audit / other Publication of financial External audit: statutory audit on financial OG, KG : not Gen : (FS + notes + management report) after approval of shareholders but not later than 9 months after year-end close (Consolidated) financial Management report Specific legal engagements audits Fin. and applicable accounting framework Scope of audit Mention : established in accordance with legal and management regulation Opinion (with or without emphasis paragraph) Conformity of result allocation in accordance with law Act or decision taken in breach of law External audit: statutory audit on financial + specific legal engagements audits VOF / SNC, Comm.V / SCS, CVOA / SCRI: Not (unless one of the unlimited liability partners is incorporated) Not later than 30 days after approval of financial, and within 7 months after yearend close I/S and K/S : management report not AMBA : management report auditor required Statutory audit + specific legal engagement audit (Consolidated) financial Management report Specific legal engagements audits As per ISA 700 Opinion whether the management report is in line with FS External audit : statutory audit on financial + specific legal engagements audits Other : None Limited partnerships whose total turnover in previous financial year > 3.950K : auditor required auditor required if 2 out of 3 criteria exceeded during 2 consecutive years : net turnover (excl VAT) > 3.123K balance sheet > 1.561K employees > 50 Consolidated financial : auditor required I/S, K/S : generally no requirement AMBA : auditor required Cooperative : Partnership : not Auditor required if: exceed 2 out of 3 criteria : Net turnover > 2.000K Balance sheet > 1 000K Employees > 30 OR exceed any of the 3 criteria : Net turnover > 6.000K Balance sheet > 3.000K Employees > 90 A review is if: exceeded 2 out of 3 criteria : Net turnover > 1 000K Balance sheet > 500K Employees > 15 exceed any of the 3 criteria: Net turnover > 3.000K Balance sheet > 1.500K Employees > 45 Statutory audit Statutory audit Statutory audit Statutory audit or statutory review As per ISA 700 External audit : statutory audit on financial Other : None statutory : at latest 6 months after year end consolidated : at latest 9 months after year end (Consolidated) financial Management report Related party report Indication of the FS audited Scope of audit Opinion (unqualified, qualified, adverse opinion or disclaimer of opinion) Description of material fact in FS External audit : statutory audit (FS, auditors report, management report and report on relations), at latest 30 days after approval, and at latest at end of following accounting period (Consolidated) financial Management report Indication of the FS audited Description of management s and auditors responsibilities Financial and applicable accounting framework Scope of audit Opinion External audit : statutory audit after the approval on the General Meeting and at latest 5 months after year-end closing I/S and K/S : Management report publication not AMBA : management report publication Indication of the FS audited Financial and applicable accounting framework Description of management s and auditors responsibilities Opinion External audit : statutory audit or statutory review, with management reports no later than 6 months after the end of the financial year Auditor required (Consolidated) financial + specific legal engagement audit Subject of audit: certify and justify their opinions, that FS are true and fair permanent mission to check values and records ensure that equality was respected among shareholders, partners or members of relevant body report at general meeting all irregularities and mis Sole proprietorship: Seizure of the principal residence and any land not used in professional case within one month following the approval of the financial by shareholders Partnership : no requirement cooperatives : Auditor required for statutory accounts including management report and list of members of the cooperative Financial + management report + members of the cooperative Audit engagement General findings Scope of audit Findings on the financial reporting / on group financial reporting Overall picture conveyed by FS / consolidated FS (significant valuation basis, overall assessment) Audit opinion External audit: statutory audit (including management report & list of members) + consolidation Partnership : not Cooperative : (in German) 8

9 9 Type I : medium-size Greece Hungary Ireland Italy Lithuania Norway Poland Portugal Legal entity name General Partnership : Omorythmi Eteria (OE) Limited Partnership : Eterorythmi Eteria (EE) Civil Law Company : Astiki Eteria Cooperative : Syneterismos Joint venture : Koinopraksia Undisclosed Partnership : Afanis Eteria General partnershup : Közkereseti társaság (Kkt) Limited partnership : Betéti társaság (Bt) Cooperative : Szövetkezet (Szöv Size thresholds No size regulation EU Medium-size entities correspond principally to medium-size entities in the local (+ part of large entities) Accounting Systems Unlimited companies Partnerships Charities EU Medium-size entities correspond principally to medium-size entities in the local (+ part of small entities) General partnership : Società in Nome Collettivo (SNC) Limited partnership : Società in Accomandita Semplice (SAS) No size regulation General partnership : Tikroji ùkine bendrija (TUB) Limited partnership : Komanditiné ùkiné bendrija (KUB) Small partnership : Mažoji bendrija (MB) EU Medium-size entities correspond to medium-size entities in the local General partnership : Ansvarlige selskaper (ANS) and Deltakerlignet selskap (DA) Limited partnership : Kommandittselskap (KS) EU Medium-size entities correspond principally to medium-size entities in the local (+ part of small entities) General partnership : Spółka jawna (s.j.) osób fizycznych and Pozostałe spółki jawne Limited partnership : Spolka komandytowa (sp.k) Cooperative : Spółdzielnia socjalna and Inne spółdzielnie Civil partnership : spółka cywilna (s.c.) osób fizycznych and Pozostałe spółki cywilne No size regulation 1) Internal accounting Not Not Not Not Not Not Not Not 2) External accounting Double entry if net turnover > 1.500K (journals and ledgers aligned with GGCA) and if double entry -> draft of FS required (i.e. Balance Sheet, Profit and Loss Account and Operating Results Statement Double entry (transactions recorded without delays) 3) Tax accounting (nevertheless there can be differences between tax values and accounting values of assets and/or liabilities) Exception: if HUF money not used, should maintain HUF denominated VAT register for VAT return s No specific obligation SNC, SAS : double entry Double entry Double entry (set of ledgers, sub-ledgers and accounts) at least on a monthly basis -> centralization of sub ledgers 4) Other accounting systems None None None None None None (except for specific requirement in the construction industry to install project accounting) Accounting framework 1) Accounting principles Double entry Separate tax registers kept for VAT and excise taxes. For CIT s the entity is obliged to carry out separate ledgers for fixed assets. None General partnership : Sociedade em nome colectivo Limited partnership : Sociedade em comandita simples Cooperative : Cooperativas Associations : Associações Civil partnership : Sociedade Civil Associations of business enterprises : Agrupamentos complementares de empresas (ACE) EU Medium-size entities correspond to large-size entities in the local All transactions supported by documentation satisfied criteria of chronological, correct and timely rec. (within 90 days) - permanent inventory system 1.a) Cash basis Not allowed Not allowed Not always Not allowed Not allowed Not allowed Not allowed Not allowed Not allowed 1.b) Accrual basis Not always 1.c) Other accounting principles None None None None None None None None 2) Principles for external financial None 2.a) True and fair view (information : existence, tenable and verifiable) 2.b) Going concern The notion exists but there is not an explicit requirement 2.c) Prudence 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) 2.e) Consistency 2.f) Separate valuation (prudence, sincerity and good faith) Unrealized losses shall be recognized (exception for mergers, demergers, ) (but valuation rules may vary) (compensation Not (compensation 2.g) Materiality Principle of materiality Yes (prudence, sincerity and good faith) Not Not (compensation possible), measurement base are: historical cost current cost realizable value present value fair value

10 Type I : medium-size Greece Hungary Ireland Italy Lithuania Norway Poland Portugal 2.h) Other principles 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions Historical cost principle Single currency principle Entries have to be supported by appropriate documentation 1) Financial records Double entry accounting : Daily journal(s) General and analytical ledgers - - Trial Balance Fixed Assets register Book of Inventory Accounts and Balance Sheets principle of completeness principle of clarity principle of accruals principle of cost-benefit None Historical cost valuation of creditors and debtors at nominal amount provisions should be made for certain or probable future liabilities when the amount can be reliably estimated completeness no offsetting Enterprise s principle: each enterprise preparing FS is a separate unit of accounting (only assets, liabilities and shareholder s equity, income and expenses belonging to that enterprises are included into FS) Periodic information: enterprise s activities are divided into financial year or other periods, after which financial are prepared. Currency unit Comparison: enterprise s income earned is related to expenses which occurred while earning the income. At least 1 year comparative information presented in financial. Neutrality: financial are prepared without bias. -> entries supported by documents A double entry : set of ledgers, sub ledgers and accounts (satisfied criteria of systematic recording) Original documents kept for 8 years Unlimited companies : keep proper books of accounts (satisfied criteria of timely, correct, comply with requirements recording) Partnership : no requirement Charities : no requirement SCN, SAS: (original documents kept for 10 years) All transactions supported by accounting documents. Every economic transaction has to be registered not later than after 4 months. The form, contents and number of the accounting registers shall be set by an economic entity according to its needs (satisfied criteria of chronological and systematic rec.) Congruence principle: all turnover and costs shall be recognized Hedging principle: gains and losses are recognized in the same period Double entry (set of ledgers, sub ledgers and accounts satisfied criteria of timely, completeness, systematic recording) -> accompanied by justification document. Original documents kept for 10 years (3.5 years for secondary documentation) None Books of accounts include: journal general ledger subsidiary ledgers trial balances of general and subsidiary ledger accounts list of assets, liabilities and equity (inventory) Aggregation Comparative information Double entry (set of ledgers, sub ledgers and accounts which satisfies criteria of timely, chronological, correctness, complete and systematic recording) All transactions supported by documentation original documentation kept for 10 years 2) Double-entry vs. Single-entry Double-entry Double entry Not prescribed by the law Double entry Double entry Double entry Double entry Double entry 3) Chart of accounts Prescribed by GGCA Prescribed Not prescribed Not prescribed Prescribed (the management prepares its own chart based on chart approved by government) Prescribed (but not mandatory) Not prescribed Prescribed 4) Other None None None None None None None None Components of financial 1) Profit & loss account Required Required full fin. by nature or by function Unlimited companies : required Partnership : not required Charities : required but abbreviated 2) Balance sheet Required Required full financial Unlimited companies : required Partnership : not required Charities : required but abbreviated 3) Cash flow statement Not and included in the supplementary notes -> structure defined Unlimited companies : generally others : not 4) Notes to financial Not Unlimited companies: others : generally not 5) Consolidated financial 6) Other financial 7) Statement of equity No requirement Requirement : if exceeded 2 out of 3 criteria, for 2 years : Net turnover > K Balance sheet > 9.238K Employees > 250 Exemption : sub-consolidation Unlimited companies : requirement others : no requirement Require full financial TUB: Not Required full financial Required full financial Required full financial KUB: Not MB: Required full financial TUB, KUB: Not Required full financial Required full financial Required full financial MB: Not No requirement (small entities exempted) (direct or indirect method) TUB, KUB: Not MB: No requirement Requirement : if 2 out of 3 criteria : Net turnover > K Balance sheet > K Employees > 250 Exemption : immaterial, restrictions to the information, # costs, held for sale Conso contains : P&L BS CFS Changes in equity Requirement : if 2 out of 3 criteria exceed : Net turnover > K Balance sheet > K Employees > 250 Management report Not Unlimited partnership : Others : not Auditing Partnership : not Not General partnership and civil partnership : not Limited partnership and cooperative : 10

11 11 Type I : medium-size Greece Hungary Ireland Italy Lithuania Norway Poland Portugal 1) Appointment of auditor Not (unless one of the limited liability partners is incorporated and if 2 out of 3 criteria are exceeded during 2 consecutive years : Net turnover > 5.000K Balance sheet > 2.500K Employees > 50 Auditor required if for 2 consecutive years : Net turnover > 685K or Employees > 50 Unlimited companies : auditor required Partnership : no requirement Charities : auditor required SNC, SAS : no requirement No requirement Auditor required if 2 out of 3 criteria exceeded during 2 consecutive years : Net turnover > 672 K Balance sheet > 2690 K Employees > 10 Auditor required Auditor required if 2 out of 3 criteria exceeded : Balance sheet > 1.500K Net turnover > 3.000K Employees > 50 2) Scope of audit (Consolidated) financial + business report + specific legal engagement audit (mergers, ) (Consolidated) financial + management report Financial + management report (if applicable) + specific engagements audits ((de)merges, contribution in kind,...) Statutory audit + specific legal engagements audits (contribution in kind, merger or demerger, proposal to dissolution, issuance of shares without nominal value below listing value, call on public savings, ) 3) Content of the audit report As per ISA 700 Unlimited companies: introduction, financial reporting framework, audit scope, identification of auditing standards, opinion, responsibility of the management, Introduction over FS Responsibility of management Opinion about the FS FS determined in accordance with laws and regulations Opinion about management report Audit being in accordance with laws, regulations, and auditing standards Specific matters on which auditor want to bring attention Introduction over FS and applicable accounting framework Responsibilities of management and auditors Audit scope Bookkeeping established in accordance with legal and management regulation applicable Opinion on FS Reference to management report (if applicable) Introduction over financial and applicable accounting framework Audit scope Description of liabilities Opinion Reference to specific matters on which the auditor want to bring attention 4) External audit / internal audit / other External audit: statutory audit (including business report) + consolidation External audit: for unlimited companies and charities External audit : no requirement Others : None External audit : (consolidated) annuals accounts + management report Others : None External audit: statutory audit on FS + specific legal engagements audits (contributions in kind, mergers, demergers,...) External audit : statutory audit + specific legal engagements audits Others : None Publication of financial for Omorythmos Eteria and Eterorythmos Eteria under certain circumstances within 5 months from year-end close for statutory accounts (including audit report) within 6 months from end of financial year for consolidated accounts (including audit report) Unlimited companies : (exemption under certain conditions) Partnership : not Charities : not SNC, SAS : not TUB, KUB: Not MB: within 1 month after FS is set, including the management report and the auditors report : annual financial statement, management report, auditors report, resolutions approving the financial and details of profit distribution and loss absorption before the 15th day of the 7th month following the year-end

12 Type I : medium-size Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK Legal entity name Size thresholds Accounting Systems General partnership : Societate in nume colectiv (SNC) Limited partnership : Societate in comandita simpla (SCS) Cooperative : Cooperativa EU Medium-size entities correspond to large-size entities in the local 1) Internal accounting for entities audited (according to management needs) General partnership : verejná obchodná spoločnosť (v.o.s.) Limited partnership : komanditná spoločnosť (k.s.) Cooperative : družstvo EU Medium-size entities correspond to medium-size entities in the local General Partnership : Družba z neomejeno odgovornostjo (d.n.o.) Limited Partnership : Komanditna družba (k.d.) Cooperative : Zadruga EU Medium-size entities correspond principally to medium-size entities in the local (+ part of large entities) 2) External accounting Double entry Double entry Double entry used by means of a set of ledgers, subledgers and accounts 3) Tax accounting. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. General partnership : Sociedad colectiva Limited partnership : Sociedad comanditaria simple Cooperative : Sociedades cooperativas (S.Coop) EU Medium-size entities correspond to large-size but also to medium-size and small-size entities in the local General partnership : Handelsbolag, HB Limited partnership : Kommanditbolag, KB EU Medium-size entities correspond principally to large-size entities in the local (+ part of small entities) General partnership : Maatschap and Vennootschap onder firma (VOF) and maatschappij Limited partnership : Commanditaire Vennootschap (CV) Cooperative : Cooperatie (COOP) Association : Vereniging Fondation : Stichting EU Medium-size entities correspond principally to medium-size entities in the local (+ part of large entities) General partnership : Kolektif Şirket Limited partnership : Komandit Şirket Cooperative : Kooperatif Şirket EU Medium-size entities correspond principally to medium-size entities in the local (+ part of large entities) Not Not Not Not Not Not. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements.. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Double entry. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. All legal forms of business entities are required to maintain accounting records according to the Book Keeping Act (double entry ). Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Double entry (according to EU-IFRS or Dutch law) Separate accounting for tax. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. 4) Other accounting systems None None None None None None None None Accounting framework 1) Accounting principles Unlimited companies Partnerships (personally owned Unlimited liability) Limited partnership Charities EU Medium-size entities correspond principally to medium-size entities in the local (+ part of large entities) Partnership : no specific requirement Others : comply with UK GAAP or IFRS 1.a) Cash basis Not allowed Not allowed Not allowed Not allowed Not allowed Not allowed Not allowed Not always 1.b) Accrual basis Not always 1.c) Other accounting principles None None None None None None None None 2) Principles for external financial Obligation for establishing : Statement of financial position P&L Cash flow statement Capital flow statement Management report In case of conflict between several principles, true and fair view of the assets, financial position and results of the enterprise prevail Balance sheet Profit and loss account Management report 2.a) True and fair view 2.b) Going concern Unlimited companies, limited partnership and charities : Partnership : not 2.c) Prudence 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) Not Not 2.e) Consistency Unlimited companies, limited partnership and charities : 2.f) Separate valuation (compensation 2.g) Materiality Yes Yes (compensation 2.h) Other principles Independence None None Relevance : those amounts with less relevance can be grouped with other of similar nature or function 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions 1) Financial records Double entry accounting (journal ledger, inventory ledger, general ledger) -> Trial Balance monthly prepared based on movements in General Ledger. Bookkeeping should satisfy criteria of systematic recording and all transactions must be accompanied by justification document. Original documentation kept for 10 years Double-entry (general journal and general ledger satisfied criteria of chronological, systematic recording) Double entry (set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness and systematic recording). All transactions must be accompanied by a justification document. The financial records should be kept permanently. Accounting books kept (journal book, inventory book and financial, satisfying criteria of chronological, and clear, recording without blank spaces, no abbreviation) 2) Double-entry vs. Single-entry Double-entry Double-entry Double-entry Double entry or single entry book but double entry is recommended (compensation Double entry book (set of ledgers, sub ledgers and accounts satisfying criteria of timely and completeness). All transactions should refer to a justification document. Original documents kept for 7 years Original documents kept for 7 years (compensation Double entry (set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness and systematic recording). All transactions must be accompanied by justification document. Original documents are kept for 10 years. Keep books Unlimited companies : original documents kept for 10 years Charities : original documents kept for 6 years Double-entry Double entry or single book Double-entry Unlimited companies : double entry Others : double entry or single book 12

13 13 Type I : medium-size Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK 3) Chart of accounts Prescribed Prescribed Prescribed Prescribed (but not mandatory) Not prescribed Not prescribed Prescribed Not prescribed 4) Other None None None None None None None None Components of financial BS P&L Changes in equity CFS notes 1) Profit & loss account Required full financial Required full financial and structured (no change possible) 2) Balance sheet Required full financial Required full financial and structured (no change possible) BS P&L CFS Capital flow statement notes management report Require abbreviated financial Require abbreviated financial Require full financial FS Management report Required full financial and structure (no change possible) Require abbreviated financial by nature or by function (minimum items required) : abbreviated for medium-size entities Require full financial Required full financial Require abbreviated financial 3) Cash flow statement Not Not Not Not 4) Notes to financial (accounting principles and accounting policies, other events) 5) Consolidated financial 6) Other financial Requirement and contains : P&L BS CFS Equity change Requirement of FS conso and conso management. report (notion of control) for 2 out of 3 criteria : Net turnover > K Balance sheet > K Employees > 250 Exemption if all of at least 90% of shares are owned by the parent enterprise but simplification compared to large entities Requirement and contains : P&L BS 7) Statement of equity Required Requirement (notion of control) Requirement under conditions, contains : management report P&L BS CFS Exemption : if negligible, held for sale or # cost + sous-conso Requirement (notion of control) : cash flow statement consolidated required Exemption sous-conso, immaterial, # cost, held to sell Required Required Requirement, contains : P&L BS Exemption : negligible, restriction to information, # cost (mention in the notes) Management report General partnership and cooperative : not Limited partnership : Auditing 1) Appointment of auditor 1 to 3 auditor required (called censors ) if 2 out of 3 criteria exceeded : Balance sheet > 3.650K Net Turnover > 7.300K Employees > 50 2) Scope of audit Statutory audit + management report + specific legal engagement audit 3) Content of the audit report Introduction with regard to audit framework Description on scope of audit performed Management s responsibility Auditor s responsibility Mention : established in accordance with legal and management regulation Opinion (with or without emphasis paragraph) 4) External audit / internal audit / other Publication of financial External audit : statutory audit + specific legal engagements audits + management report Internal audit : for audited entities Other : None < 150 days after close of financial year Auditor required if 2 out of 3 criteria exceeded during 2 consecutive years: Balance sheet > 1.000K Net Turnover > 2.000K Employees > 30 Or if the entities prepare FS in accordance with IFRS (Consolidated FS must be audited by an auditor) (consolidated) financial + management report Identification of the FS Audit scope Opinion (unqualified, qualified, adverse opinion of disclaimer of opinion) description of material facts which the auditor considers necessary to emphasize External audit : statutory audit + management report Other : None < 30 days after approval Auditor required Auditor required Auditor required for large entities (if 2 out of 3 criteria exceeded : Balance sheet > 4.650K Net turnover > 9.300K Employees > 50) (consolidated) fin. Management report Specific legal engagements audits (contribution in kind, quasi contribution, merger or demerger, proposal to dissolution, ) Identification of the FS and applicable accounting framework Audit scope Opinion Reference to specific matters on which the auditor want to bring attention irrespective of an emphasis paragraph Opinion on business report Description of any act or decision taken by the Companies in breach of the Companies Act External audit :(consolidated) fin. + management report + specific legal engagements audits Other : None < 8 months after close of financial year Not mentioned (consolidated) financial + specific engagements audits + management report Abreviated P&L Full BS management report notes Require abbreviated P&L under different circumstances Required full balance sheet Requirement unless exemption (BS + P&L + notes) Auditor required No requirement Auditor required (consolidated) financial + management report Not mentioned As per ISA 700 Identification of FS and applicable accounting framework Audit scope Opinion Reference to specific matters on which the auditor want to bring attention Other : None not External audit :(consolidated) fin. + management report + specific legal engagements audits Other : None HB/KB which closes financial with management report: when asked by interested party External audit :(consolidated) financial + management report Other : None N/A (consolidated) financial N/A Unlimited companies : Identification of FS and financial reporting framework Audit scope Statement as opinion prepared in accordance with the Companies Act 2006 Opinion if enterprise does not keep adequate accounting records if enterprise does not provide the auditors with all the information they need External audit : not required Other : None External audit : (consolidated) financial Others : None not Unlimited companies : if subsidiary undertaking or a parent of a limited undertaking Limited partnership : Charities : not

14 2. Type I - Small Sized Type I : small-size Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany Legal entity name Size thresholds Accounting Systems General Partnership : Offene Gesellschaft (OG) Limited Partnership : Kommanditgesellschaft (KG) Cooperative : Genossenschaft (Gen) EU Small-size entities correspond to small-size entities in the local General Partnership : Société en nom collectif/vennootschap onder firma (VOF/SNC) Limited Partnership : Société en commandite simple / gewone comanditaire vennootschap (Comm. V/SCS) Cooperative : Société cooperative / coöperatieve vennootschap (CV/SC) : 2 types with (un)limited liabilities EU Small-size entities correspond to small-size entities in the local General Partnership : Събирателно дружество Limited Partnership : Командитно дружество Limited liability or joint stock companies : Кооперативни предприятия Cooperative Unions : Кооперативни съюзи EU Small-size entities correspond to small-size entities in the local General Partnership : Javno trgovačko društvo Limited Partnership : Komanditno društvo EU Small-size entities correspond to small-size entities in the local General partnership : Veřejná obchodní společnost, (VOS) Limited partnership : Komanditní společnost (KS) Cooperative : Družstvo EU Small-size entities correspond to medium-size but also small-size entities in the local General Partnership : Interessentskaber (I/S) Limited Partnership : Kommanditselskaber (K/S) Cooperative : Andelsselskaber med begrænset ansvar (AMBA) EU Small-size entities correspond to small-size entities in the local General partnership : Täisühing (TÜ) Limited partnership : Usaldusühing (UÜ) Cooperative : Tulundusühistu (TuÜ) General partnership : Société en nom collectif (SNC) Limited partnership : Société en commandite simple (SCS) Cooperative : Société coopérative (SC) Civil society : Société civile General partnership : Offene Handelsgesellschaft (OHG) Limited partnership : Kommanditgesellschaft (KG) Cooperative : Genossenschaft (Gen) No size regulation No size regulation EU Small-size entities correspond to small-size entities in the local 1) Internal accounting Not Not Not Not Not Not Not Not Not 2) External accounting Net turnover > 700 K for 2 years OR > 1 M for 1 year -> Keep books (double entry ) Otherwise: -> Keep books (single entry ) 3) Tax accounting VOF/SNC & Comm. V/SCS : if net turnover (excl. VAT) > 500K -> double entry and preparation of financial (abbreviated) CV/SC: double entry system used at least on a monthly basis (sub ledgers centralized in the ledgers). Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Exhaustive chronological registration Systematic accounting ledgers Synthetic and analytical accounting ledgers, and reconciliation among them Interim and annual closing -> journal Change in book by adjustment Individual chart of accounts but separate VAT ledger and fixed assets tax depreciation plans. Keep accounting books: journal entry book, general ledger and auxiliary books (double entry ) Need to prepare financial Double entry If 2 of 3 criteria are exceeded: Balance sheet < App. 940 K Net Turnover < App K Average number of employees: < 10 Double-entry Local GAAP based on IFRS SME s (double entry ) Double entry and : Chronological accounting Supporting document evidences Value and existence of assets and liabilities 2 different taxes: corporate tax or individual income tax Cooperatives: in general corporate tax General partnership: individual income tax Limited partnership: Income tax Civil society: depends of the nature of the enterprise Personal enterprise with limited liability: individual income tax 4) Other accounting systems None None None None None None None None None Accounting framework 1) Accounting principles 1.a) Cash basis 1.b) Accrual basis 1.c) Other accounting principles 2) Principles for external financial for single-entry for double-entry Allowed for single-entry Not allowed Not allowed Not allowed If exempted from preparation of : allowed BUT have to be according to DBA and double- entry Not always Allowed to use simplified method Not allowed Not allowed Not allowed None None None None None None None None None OG, KG, cooperatives : format described but not Not : notes (simplified for cooperatives) manag. report Financial : Abbreviated financial : allowed financial for all type I enterprises SME : full financial in accordance with NFRSSME or IFRS 2.a) True and fair view Fair : if contents of individual items correspond to respective facts and comply with applicable accounting principles and accounting policies True : if FS prepared using accounting principles and policies Obligation of establishing financial 2.b) Going concern 2.c) Prudence (prudence, sincerity and good faith) 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) (prudence, sincerity and good faith) No prudence principle but neutrality principle (any change in value shown irrespective of the effect on equity and profit and loss account) (based on inventory) (specific requirement when liquidation, merger, ) Double entry used by means of a set of ledgers, subledgers and accounts (e.g. expenses for accrued pending losses not accepted by the tax authority) (+ imparity : unrealized losses must be accounted, but not unrealized profits) 14

15 15 Type I: small-size Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany 2.e) Consistency (primarily to classification and format) (fixity principle & Nominalism principle - historical cost) 2.f) Separate valuation As per Art. Accountancy Act Measurement requirement under HSFI (similar to IFRS) Small entities (for which simplified accounting methods are allowed): no need to follow strict accrual principle of accounting (creation of reserve, provisions) no need to reflect value adjustments depreciate assets in line with general rules no need to use fair value for valuation of assets and liabilities Valuation rules: idem Medium (compensation 2.g) Materiality Yes Yes ( all relevant matters ) Immaterial items recorded with simplified method Relative importance principle (compensation Other measurement rules as per HGB 2.h) Other principles 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions Goodwill capitalised and amortised over useful life (max 15 years) Internally developed intangibles not capitalised 1) Financial records Single entry-: Financial ledger Purchase ledger Fixed assets ledger Double entry-: Set of ledgers, sub ledgers and accounts (satisfied criteria of timely, completeness, correct and systematic recording) Original documents kept for 7 years 2) Double-entry vs. Singleentry None None HSFI prescribe following principles : Understandability Importance Reliability Comparability Completeness None Clarity Substance over form Materiality Accrual accounting Yes Relevance Understandability Substance over form Net turnover > 700 KEUR for 2 years OR > 1 MEUR for 1 year -> Keep books (double entry ) Otherwise: -> Keep books (single entry ) Set of ledgers, sub ledgers and accounts (satisfied criteria of timely, completeness, correct and systematic recording) -> justification document Original documents kept for 7 years VOF/SNC & Comm. V/SCS : if net turnover (excl. VAT) > 500K -> double entry CV/SC: double entry system used at least on a monthly basis (sub ledgers centralized in the ledgers) Set of ledgers, sub ledgers and accounts (satisfied criteria of timely, completeness, correct, chronological and systematic recording) -> justification document Original documents kept for 5 years (for tax audit) (10 years for FS). Keep accounting books: journal entry book, general ledger and auxiliary books Keep accounting books : General journal (chronological order) General ledger (synthetic accounts) (small entities can keep these two in one book) Set of ledgers, sub ledgers and accounts (satisfied criteria of completeness, traceability, systematic recording) Original documents kept for 5 years Accounting registers Chronological order Original documents kept for 7 years None Keep accounting books : general journal (chronological order) general ledger (synthetic accounts) Inventory book Determined by management Double-entry Double-entry Double-entry Double-entry Double-entry Double-entry Principle of imparity Consequences of changes in accounting principles and corrections for the previous year Hedging principle: under strict assumptions Set of ledgers, sub ledgers and accounts (satisfied criteria of systematic recording) Original documents kept for 10 years (6 for secondary documentation) 3) Chart of accounts Prescribed (not mandatory) Prescribed Not prescribed Not prescribed Prescribed Not prescribed Not prescribed Prescribed Partnerships and associations: No statutory chart of accounts Coop.: Statutory Chart of acc. 4) Other None None None None None None None None None Components of financial Double-entry : Balance sheet, P&L Single-entry : Free scheme 1) Profit & loss account Double entry : Required full fin. account for OG, KG and Gen 2 methods (total cost format >< cost-of-sales format) but no requirement regarding the structure Single entry : Free scheme 2) Balance sheet Double entry : Required full financial Single entry : Free scheme Balance sheet Profit and loss account Abbreviated financial allowed Abbreviated financial allowed Required full financial 2 formats P&L : two-sides P&L (turnover and expenses listed in 2 columns) or one-side P&L (like IAS 1) Required full financial (scheme prescribed by NFRSSME) Balance sheet Profit and loss account Balance sheet Profit and loss account Scheme prescribed by law Scheme prescribed by law Required : grouping of costs by nature or by function (min. details prescribed) Scheme prescribed by law Scheme prescribed by law Required Different schemes prescribed by law Tabular form or as a list Described separately assets and liabilities and equity 3) Cash flow statement Not Not Scheme prescribed by NFRSSME Scheme prescribed by law Not Not (no layout) Not (excepted for conso) Cooperatives: abridged version optional Partnerships: No mandatory format Cooperatives: abridged version optional Partnerships: No mandatory format Not

16 Type I: small-size Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany 4) Notes to financial 5) Consolidated financial 6) Other financial Not Abbreviated financial allowed (form as per NFRSSME) Not No requirement Requirements : P&L, BS, notes, cash flow statement and statement of changes in equity Exemptions : negligible or no publicly traded debt (scheme prescribed by HFSI) Requirement Exemption : if min. 90% owned by another enterprise which makes consolidated financial and if there is no opposition and contain : application of the accounting principle accounting policies suppl. information other events not presented in balance sheet which affect the financial position and contain : applicable financial reporting framework accounting principle detailed information on figures other circumstances that affect the position No requirement No requirement Requirement : notion of control, if consolidated group exceeds 2 out of 3 criteria : Net turnover (excl VAT) > 1.000K Balance sheet > 500K Employees > 15 OR exceeds 1 of the criteria : Net turnover (excl. VAT) > 3.000K Balance sheet > 1.500K Employees > 45 Exemptions : sub-conso, negligible (less than 5% conso turnover) + parent of group required to disclose the standalone BS, P&L, cash-flow and change in equity (to complete the figures) Requirement : notion of control and significant influence (conso + report on the management of the group + Cash flow statement required) Generally for cooperatives Generally not required for partnerships 7) Statement of equity Voluntarily Required Only required for consolidation Management report Not Not if 2 out of 3 criteria exceeded during 2 consecutive years: BS > 767 K Net turnover > K Employees > 50 Auditing 1) Appointment of auditor No requirement No requirement (unless workers council exists) Auditor required if 2 out of 3 criteria exceeded during 2 consecutive years: BS > 767 K Net turnover > K Employees > 50 2) Scope of audit Statutory audit + specific legal engagement audit 3) Content of the audit report (Consolidated) financial Management report Specific legal engagements audits As per ISA 700 Opinion whether the management report is in line with FS 4) External audit / internal audit / other Publication of financial External audit: None Not External audit: not required VOF / SNC, Comm.V / SCS, CVOA / SCRI: Not (unless one of the unlimited liability partners is incorporated). Not later than 30 days after approval of financial, and within 7 months after yearend close External audit : statutory audit on financial + specific legal engagements audits Other : None Not Limited partnerships whose total turnover in previous financial year > 3.950K : auditor required if 2 out of 3 criteria exceed during 2 consecutive years: BS > K Net turnover > K Employees > 50 Auditor required if 2 out of 3 criteria exceeded during 2 consecutive years: BS > K Net turnover > K Employees > 50 Consolidated financial statement: auditor required No requirement Usually not Cooperative : Partnership : usually not Auditor required if 2 out of 3 criteria exceeded during 2 consecutive years: BS > 530 K Net turnover > K Employees > 12 Auditor required if: exceed 2 out of 3 criteria : Net turnover > 2.000K Balance sheet > 1 000K Employees > 30 OR exceed any of the 3 criteria : Net turnover > 6.000K Balance sheet > 3.000K Employees > 90 A review is if: exceed 2 out of 3 criteria : Net turnover > 1 000K Balance sheet > 500K Employees > 15 exceed any of the 3 criteria : Net turnover > 3.000K Balance sheet > 1.500K Employees > 45 Statutory audit Statutory audit Statutory audit Statutory audit or statutory review As per ISA 700 External audit : statutory audit on financial Other : None statutory : at latest 6 months after year end consolidated : at latest 9 months after year end (Consolidated) financial Management report Related party report Indication of the FS audited Scope of audit Opinion (unqualified, qualified, adverse opinion or disclaimer of opinion) Description of material facts in FS External audit : statutory audit (FS, auditors report, management report and report on relations), at latest 30 days after approval, and at latest at end of following accounting period (Consolidated) financial Management report Indication of the FS audited Description of management s and auditors responsibilities Financial and applicable accounting framework Scope of audit Opinion External audit : statutory audit after the approval on the General Meeting and at latest 5 months after year-end closing I/S and K/S : management report publication not AMBA : Management report publication Indication of the FS audited Financial and applicable accounting framework Description of management s and auditors responsibilities Opinion External audit : statutory audit or statutory review, with management reports no later than 6 months after the end of the financial year Auditor required if 2 out of 3 criteria exceeded during 2 consecutive years: BS > K Net turnover > K Employees > 50 ALSO: For partnerships (general / limited): If partner asks and takes legal action Cooperatives / Civil societies: subject to civil / commercial form and field of activity (Consolidated) financial + specific legal engagement audit Subject of audit: certify and justify their opinions, that FS are true and fair permanent mission to check values and records ensure that equality was respected among shareholders, partners or members of relevant body report at general meeting all irregularities and mis Sole proprietorship: Seizure of the principal residence and any land not used in professional case within one month following the approval of the financial by shareholders Partnership : No requirement Cooperatives : Auditor required for statutory accounts including management report and list of members of the cooperative IF: BS > k financial + management report + members of the cooperative Audit engagement General findings Scope of audit Findings on the financial reporting / on group financial reporting Overall picture conveyed by FS / consolidated FS (significant valuation basis, overall assessment) Audit opinion External audit: statutory audit (including management report & list of members) + consolidation Partnership : not Cooperative : (in German) 16

17 17 Type I : small-size Greece Hungary Ireland Italy Lithuania Norway Poland Portugal Legal entity name General Partnership : Omorythmi Eteria (OE) Limited Partnership : Eterorythmi Eteria (EE) Civil Law Company : Astiki Eteria Cooperative : Syneterismos Joint venture : Koinopraksia Undisclosed Partnership : Afanis Eteria General partnershup : Közkereseti társaság (Kkt) Limited partnership : Betéti társaság (Bt) Cooperative : Szövetkezet (Szöv) Size thresholds No size regulation EU Small-size entities correspond principally to small-size entities in the local (+ part of micro entities) Accounting Systems Unlimited companies Partnerships Charities EU Small-size entities correspond to small-size entities in the local General partnership : Società in Nome Collettivo (SNC) Limited partnership : Società in Accomandita Semplice (SAS) No size regulation General partnership : Tikroji ùkine bendrija (TUB) Limited partnership : Komanditiné ùkiné bendrija (KUB) Small partnership : Mažoji bendrija (MB) EU Small-size entities correspond to small-size entities in the local General partnership : Ansvarlige selskaper (ANS) and Deltakerlignet selskap (DA) Limited partnership : Kommandittselskap (KS) EU Small-size entities correspond principally to medium-size entities in the local (+ part of small entities) General partnership : Spółka jawna (s.j.) osób fizycznych and Pozostałe spółki jawne Limited partnership : Spolka komandytowa (sp.k) Cooperative : Spółdzielnia socjalna and Inne spółdzielnie Civil partnership : spółka cywilna (s.c.) osób fizycznych and Pozostałe spółki cywilne No size regulation 1) Internal accounting Not Not Not Not Not Not Not Not 2) External accounting Double entry if net turnover > 1.500K (journals and ledgers aligned with GGCA) and if double entry -> draft of FS required (i.e. Balance Sheet, Profit and Loss Account and Operating Results Statement Double entry (transactions recorded without delays) 3) Tax accounting (nevertheless there can be differences between tax values and accounting values of assets and/or liabilities) Exception: if HUF money not used, should maintain HUF denominated VAT register for VAT return s. NOTE: Partnerships subject to EVA may use simplified taxation methods No specific obligation SNC, SAS : double entry Double entry Double entry (set of ledgers, sub-ledgers and accounts) at least on a monthly basis -> centralization of sub ledgers 4) Other accounting systems None None None None None None (except for specific requirement in the construction industry to install project accounting) Accounting framework 1) Accounting principles 1.a) Cash basis Not allowed Allowed for partnerships subject to EVA 1.b) Accrual basis for double-entry Double entry General partnership / Civil law with net turnover < K : Accounting records are based on selected tax settlements Separate tax registers kept for VAT and excise taxes. For CIT s the entity is obliged to carry out separate ledgers for fixed assets. General partnership / Civil law with net turnover < K : Prepare accounting documentation relevant to form of taxation chosen: Tax register of turnover and expenses Fixed amount tax (applicable only to limited scope of operations) Flat-Rate Income Tax on Selected Incomes (available only for taxpayers whose income in previous year < 150 K Not always Not allowed Not allowed Not allowed Allowed for: tax regulations for interest income and costs, F/X differences, payroll costs paid after maturity date and rental payments None General partnership : Sociedade em nome colectivo Limited partnership : Sociedade em comandita simples Cooperative : Cooperativas Associations : Associações Civil partnership : Sociedade Civil Associations of business enterprises : Agrupamentos complementares de empresas (ACE) EU Small-size entities correspond to large-size but also small-size entities in the local All transactions supported by documentation satisfied criteria of chronological, correct and timely rec. (within 90 days) permanent inventory system None Not allowed Not always 1.c) Other accounting principles None None None None None None None None 2) Principles for external financial Net turnover > K -> in accordance with GGCA Net turnover < K -> N/A 2.a) True and fair view (information : existence, tenable and verifiable) 2.b) Going concern The notion exists but there is not an explicit requirement 2.c) Prudence 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) 2.e) Consistency 2.f) Separate valuation (prudence, sincerity and good faith) SCN, SAS, Cooperatives: Italian GAAP General partnership / Civil law with net turnover < K -> N/A Other entities applying accounting act -> IFRS or PGAAP Unrealized losses shall be recognized( (exception for mergers, demergers, ) (but valuation rules may vary) (compensation Not (compensation (prudence, sincerity and good faith) Not Not (compensation possible), measurement base are: historical cost current cost realizable value present value fair value

18 Type I : small-size Greece Hungary Ireland Italy Lithuania Norway Poland Portugal 2.g) Materiality Principle of materiality Yes 2.h) Other principles 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions Historical cost principle Single currency principle; Entries have to be supported by appropriate documentation. 1) Financial records Net turnover > K : Double entry accounting : Daily journal(s) General and analytical ledgers Trial Balance Fixed Assets register Book of Inventory Accounts and Balance Sheets Net turnover < K : Single-entry accounting 2) Double-entry vs. Single-entry Net turnover > K -> Double-entry Net turnover < K -> Single-entry 3) Chart of accounts Net turnover > K : Prescribed by GGCA Net turnover < K : Not prescribed Principle of completeness Principle of clarity Principle of accruals Principle of cost-benefit None None Enterprise s principle Periodic information Currency unit Neutrality Congruence principle Hedging principle A double entry : set of ledgers, sub ledgers and accounts (satisfied criteria of systematic recording) Original documents kept for 8 years Unlimited companies : keep proper books of accounts (satisfied criteria of timely, correct, complying with requirements recording) Partnership : no requirement Charities : no requirement SCN, SAS: (original documents kept for 10 years) All transactions supported by accounting documents. Every economic transaction has to be registered not later than after 4 months. The form, contents and number of the accounting registers shall be set by an economic entity according to its needs (satisfied criteria of chronological and systematic rec.) Double entry (set of ledgers, sub ledgers and accounts satisfied criteria of timely, completeness, systematic recording) -> accompanied by justification document. Original documents kept for 10 years (3.5 years for secondary documentation) None Books of accounts include: journal general ledger subsidiary ledgers trial balances of general and subsidiary ledger accounts list of assets, liabilities and equity (inventory) Double-entry Not prescribed by the law Double-entry Double-entry Double-entry Double-entry Single-entry under tax regulations in case: flat rate income tax fixed amount tax.. (double entry for a tax register of turnover and expenses) Prescribed Not prescribed Not prescribed Prescribed (the management prepares its own chart based on chart approved by government) Compensation Comparative information Double entry (set of ledgers, sub ledgers and accounts which satisfies criteria of timely, chronological, correct, completeness and systematic recording) All transactions supported by documentation original documentation kept for 10 years Double-entry Prescribed (but not mandatory) Not prescribed Prescribed 4) Other None None None None None None None None Components of financial 1) Profit & loss account Net turnover > K : Required Net turnover < K : Not required 2) Balance sheet Net turnover > K : Required Net turnover < K : Not required If more than one criteria exceeded: BS: K Net turnover: K Avg number of employees: 50 -> Full FS OTHERWISE: -> Abbreviated FS allowed Required Above threshold: full financial by nature or by function Under threshold: abbreviated financial Required Above threshold: full financial Under threshold: abbreviated financial 3) Cash flow statement Not Above threshold: and included in the supplementary notes -> structure defined Under threshold: not 4) Notes to financial Not Above threshold: Under threshold: abbreviated Allowed 5) Consolidated financial 6) Other financial 7) Statement of equity Unlimited companies : required Partnership : not required Charities : required but abbreviated Unlimited companies : required Partnership : not required Charities : required but abbreviated Unlimited companies : generally others : not Unlimited companies and others : generally not No requirement No requirement Unlimited companies : requirement others : no requirement Abbreviated fin. allowed Abbreviated fin. allowed Not If more than one criteria exceeded BS: K Net turnover: K Avg number of employees: 15 -> Full FS OTHERWISE: -> Abbreviated FS allowed TUB, KUB: Not MB: Above threshold: full fin. statem. by nature or by function Under threshold: abbreviated financial TUB, KUB: Not MB: Above threshold: full financial by nature or by function Under threshold: abbreviated financial No requirement TUB, KUB: Not MB: Required full financial Required full financial Not (simplified requirements) If more than one criteria exceeded: BS: K Net turnover: K Avg number of employees: 50 -> Full FS OTHERWISE: -> Abbreviated FS allowed Required full/abbreviated annual accounts General partnership / Civil law under threshold: no requirement General partnership / Civil law with net turnover < K -> No requirement Other entities applying accounting act -> Required full/abbreviated financial General partnership / Civil law with net turnover < K -> Not Other entities applying accounting act -> Required full/abbreviated fin. if 2 of 3 criteria: Net turnover > K BS > K Employees > 50 General partnership / Civil law with net turnover < K -> No requirement Other entities applying accounting act -> Required full/abbreviated financial If more than one criteria exceeded: BS: K Net turnover: K Avg number of employees: 50 -> Full financial OTHERWISE: -> Abbreviated financial If more than one criteria exceeded: BS: K Net turnover: K Avg number of employees: 50 -> Full financial OTHERWISE: -> Abbreviated financial If more than one criteria exceeded: BS: K Net turnover: K Avg number of employees: 50 -> OTHERWISE: -> Not No requirement No requirement No requirement No requirement 18

19 19 Type I : small-size Greece Hungary Ireland Italy Lithuania Norway Poland Portugal Management report Not Not Unlimited partnership : Others : not Auditing 1) Appointment of auditor No requirement (unless one of the limited liability partners is incorporated and if 2 out of 3 criteria are exceeded during 2 consecutive years : Net turnover > 5.000K Balance sheet > 2.500K Employees > 50 Auditor required if for 2 consecutive years : Net turnover > 685K or Employees > 50 Auditor also required for consolidated financial 2) Scope of audit (Consolidated) financial + business report + specific legal engagement audit (mergers, ) Unlimited companies : auditor required Partnership : no requirement Charities : auditor required 3) Content of the audit report As per ISA 700 Unlimited companies: introduction, financial reporting framework, audit scope, identification of auditing standards, opinion, responsibility of the management, 4) External audit / internal audit / other Publication of financial Not (unless one of the unlimited liability partners is incorporated) External audit: statutory audit (including business report) + consolidation within 5 months from year-end close for statutory accounts (including audit report) within 6 months from end of financial year for consolidated accounts (including audit report) External audit: for unlimited companies and charities Unlimited companies : (exemption under certain conditions) Partnership : not Charities : not Partnership : not Not General partnership and civil partnership with net turnover < K : not Limited partnership and cooperative : No requirement No requirement Auditor required if 2 out of 3 criteria exceeded during 2 consecutive years : Net turnover > 672 K Balance sheet > 2.690K Employees > 10 SNC, SAS : not External audit : not required Others : None TUB, KUB: Not MB: (Consolidated) financial + Management report Introduction over FS Responsibility of management Opinion about the FS IFS determined in accordance with laws and regulations Opinion about management report Audit being in accordance with laws, regulations, and auditing standards Specific matters which auditor wants to bring to the attention External audit : (consolidated) annuals accounts + Management report Others : None within 1 month after FS is set, including the management report and the auditors report Auditor required if 2 out of 3 criteria exceeded during 2 consecutive years : Net turnover > K Balance sheet > 2500 K Employees > 50 General partnership / Civil law with net turnover < k and no application for accounting act: No requirement All IFRS FS: Auditor required Financial + Management report (if applicable) + specific engagements audits ((de)merges, contribution in kind,...) Introduction over FS and applicable accounting framework Responsibilities of management and auditors Audit scope Bookkeeping established in accordance with legal and management regulation applicable Opinion on FS Reference to management report (if applicable) External audit: statutory audit on FS + specific legal engagements audits (contributions in kind, mergers, demergers,...) For entities subject to Accounting Act and thus publication is : annual financial statement, management report, auditors report, resolutions approving the financial and details of profit distribution and loss absorption Not Auditor required if 2 out of 3 criteria exceeded : Balance sheet > 1.500K Net turnover > 3.000K Employees > 50 Statutory audit + specific legal engagements audits (contribution in kind, merger or demerger, proposal to dissolution, issuance of shares without nominal value below listing value, call on public savings, ) Introduction over financial and applicable accounting framework Audit scope Description of liabilities Opinion Reference to specific matters on which the auditor want to bring attention External audit : statutory audit + specific legal engagements audits Others : None filing before the 15th day of the 7th month following the year-end

20 Type I : small-size Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK Legal entity name Size thresholds Accounting Systems General partnership : Societate in nume colectiv (SNC) Limited partnership : Societate in comandita simpla (SCS) Cooperative : Cooperativa EU Small-size entities correspond to small-size entities in the local (+ part of large entities) General partnership : verejná obchodná spoločnosť (v.o.s.) Limited partnership : komanditná spoločnosť (k.s.) Cooperative : družstvo EU Small-size entities correspond to medium-size entities in the local (+ part of small entities) General Partnership : Družba z neomejeno odgovornostjo (d.n.o.) Limited Partnership : Komanditna družba (k.d.) Cooperative : Zadruga EU Small-size entities correspond principally to small-size entities in the local (+ part of large and micro entities) General partnership : Sociedad colectiva Limited partnership : Sociedad comanditaria simple Cooperative : Sociedades cooperativas (S.Coop) EU Small-size entities correspond to small-size but also to medium-size and micro-size entities in the local General partnership : Handelsbolag, HB Limited partnership : Kommanditbolag, KB EU Small-size entities correspond principally to small-size entities in the local General partnership : Maatschap and Vennootschap onder firma (VOF) and maatschappij Limited partnership : Commanditaire Vennootschap (CV) Cooperative : Cooperatie (COOP) Association : Vereniging Fondation : Stichting EU Small-size entities correspond principally to small-size entities in the local (+ part of medium entities) 1) Internal accounting According to management needs Not Not Not Not Incorporated entities must maintain financial information 2) External accounting Double entry Double entry Double entry used by means of a set of ledgers, subledgers and accounts 3) Tax accounting. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements.. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements.. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Double entry. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. All legal forms of business entities are required to maintain accounting records according to the Book Keeping Act chapter 2, 1 (double entry ). Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Corporations subject to Title 9 Book 2 DCC -> preparation of FS Corporations NOT subject to Title 9 Book 2 DCC -> preparation on basis of tax accounting sufficient Partnerships: Not Separate accounting for tax General partnership : Kolektif Şirket Limited partnership : Komandit Şirket Cooperative : Kooperatif Şirket EU Small-size entities correspond to small-size entities in the local Not In terms of. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. 4) Other accounting systems None None None None None None None None Accounting framework 1) Accounting principles 1.a) Cash basis Not allowed Not allowed Not allowed Not allowed Allowed for current recording if net turnover < 357 K HOWEVER fin. Statements -> accrual based Companies not subject to Title 9 Book 2 DCC + partnerships -> no requirements Companies subject to Title 9 Book 2 DCC -> not allowed 1.b) Accrual basis Companies not subject to Title 9 Book 2 DCC + partnerships -> no requirements Companies subject to Title 9 Book 2 DCC -> 1.c) Other accounting principles None None None In case of conflict between several principles, true and fair view of the assets, financial position and results of the enterprise prevail. 2) Principles for external financial Abbreviated financial allowed 2.a) True and fair view (Principle that prevails in case of conflict) Not allowed None None None None Balance sheet P&L Management report Less disclosures than Medium Sized Companies not subject to Title 9 Book 2 DCC + partnerships -> no requirements Companies subject to Title 9 Book 2 DCC -> 2.b) Going concern Companies not subject to Title 9 Book 2 DCC + partnerships -> no requirements Companies subject to Title 9 Book 2 DCC -> 2.c) Prudence Companies not subject to Title 9 Book 2 DCC + partnerships -> no requirements Companies subject to Title 9 Book 2 DCC -> 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) Obligation of establishing financial Unlimited companies Partnerships (personally owned Unlimited liability) Limited partnership Charities EU Small-size entities correspond principally to small-size entities in the local (+ part of medium entities) Not Partnership : no specific requirement Others : comply with UK GAAP or IFRS Not Not Allowed Allowed Unlimited companies, limited partnership and charities: Partnership: not 2.e) Consistency Unlimited companies, limited partnership and charities : Partnership : not 2.f) Separate valuation (compensation 2.g) Materiality Yes Yes (compensation (compensation Companies not subject to Title 9 Book 2 DCC + partnerships -> no requirements Companies subject to Title 9 Book 2 DCC -> (compensation 2.h) Other principles Independence None None None None None None None 20

21 21 Type I : small-size Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions 1) Financial records Double entry accounting (journal ledger, inventory ledger, general ledger) -> Trial Balance monthly prepared based on movements in General Ledger. Bookkeeping should satisfy criteria of systematic recording and all transactions must be accompanied by justification document. Original documentation kept for 10 years Double-entry (general journal and general ledger satisfied criteria of chronological, systematic recording) Double entry (set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness and systematic recording). All transactions must be accompanied by a justification document. The financial records should be kept permanently. Accounting books kept (journal book, inventory book and financial, satisfying criteria of chronological, and clear, recording without blank spaces, no abbreviation) Double entry book (set of ledgers, sub ledgers and accounts satisfying criteria of timely and completeness). All transactions should refer to a justification document. Original documents kept for 7 years Original documents kept for 7 years Double entry (set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness and systematic recording). All transactions must be accompanied by justification document. Original documents are kept for 10 years. Keep books Unlimited companies : original documents kept for 10 years Charities : original documents kept for 6 years 2) Double-entry vs. Single-entry Double-entry Double-entry Double-entry Double entry or single entry book but double entry is recommended Double-entry Double entry or single book Double-entry Unlimited companies : doubleentry Others : double-entry or singleentry 3) Chart of accounts Prescribed Prescribed Prescribed Prescribed (but not mandatory) Not prescribed Not prescribed Prescribed Not prescribed 4) Other None None None None None None None None Components of financial BS P&L Changes in equity Cash Flow Statement notes 1) Profit & loss account Abbreviated fin. allowed if not more than one criteria exceeded: BS: K Net turnover: K Avg number of employees: 50 2) Balance sheet Abbreviated fin. allowed if not more than one criteria exceeded: BS: K Net turnover: K Avg number of employees: 50 3) Cash flow statement If more than one criteria exceeded BS: K Net turnover: K Avg number of employees: 50 -> Required OTHERWISE: -> Abbreviated financial allowed -> Not BS P&L Required full financial and structured (no change possible) Required full financial and structured (no change possible) if 2 out of 3 criteria exceeded: BS > K Net turnover > K Employees > 30 OTHERWISE: -> Not 4) Notes to financial (accounting principles and accounting policies, other events) 5) Consolidated financial 6) Other financial Requirement if 2 of 3 criteria exceed: BS: K Net turnover: K Avg number of employees: 50 Contains : P&L BS CFS Equity change 7) Statement of equity If 2 of 3 criteria exceed: BS > K Net turnover > K Employees > 50 -> Required OTHERWISE: -> Not required Requirement if 2 out of 3 criteria exceeded: BS > K Net turnover > K Employees > 30 OTHERWISE: -> No requirement Management report if 2 out of 3 criteria exceeded during 2 consecutive years: BS > K Net turnover > K Employees > 30 Statement of financial position P&L notes BS P&L (not for abbreviated) Special auditors report + management report notes Abbreviated fin. allowed Abbreviated fin. allowed Abbreviated fin. allowed Depending on the legal type Required Require abbreviated P&L under different circumstances Abbreviated fin. allowed Abbreviated fin. allowed Abbreviated fin. allowed Companies not subject to Title 9 Book 2 DCC: No requirement Companies subject to Title 9 Book 2 DCC: Require abbreviated annual account Required Required full balance sheet Not Not Not Not Not Limited partnership, unlimited companies, charities: Partnership: not (except for abbreviated forms) Requirement and contains : P&L BS Companies not subject to Title 9 Book 2 DCC: Not Companies subject to Title 9 Book 2 DCC: (simplified relating to medium sized) Requirement (notion of control) No requirement Companies not subject to Title 9 Book 2 DCC + partnerships: No requirement Companies subject to Title 9 Book 2 DCC: Requirement (notion of control) Required if 2 out of 3 criteria exceeded during 2 consecutive years: BS > K Net turnover > K Employees > 50 Not for: General partnership (HB) that is only owned by physical persons Limited partnership (KB) that is owned only by physical persons Not for: Associations / Cooperations that are not subject to Title 9 Book 2 DCC Requirement, contains : P&L BS Exemption : negligible, restriction to information, # cost (mention in the notes) Unlimited companies, partnerships, charities: Requirement unless exemption (BS + P&L + notes) Unlimited companies, limited partnerships: General partnerships: Not

22 Type I : small-size Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK Auditing 1) Appointment of auditor 1 to 3 auditor required (called censors ) if 2 out of 3 criteria exceeded : Balance sheet > 3.650K Net Turnover > 7.300K Employees > 50 Auditor required if 2 out of 3 criteria exceeded during 2 consecutive years: Balance sheet > 1.000K Net Turnover > 2.000K Employees > 30 Or if the entities prepare FS in accordance with IFRS (Consolidated FS must be audited by an auditor) No requirement Abbreviated BS: no requirement Full BS: auditor required Cooperative: Auditor required Rest: No requirement No requirement No requirement Auditor required for: Charities if: Gross income > 583 K Gross assets > K Unlimited companies, Limited partnerships of which 2 of 3 criteria exceeded criteria: BS > K Net turnover > K Employees > 50 No requirement: General partnerships Cooperatives if: BS < K Net turnover < 408 K 2) Scope of audit Statutory audit + management report + specific legal engagement audit 3) Content of the audit report Introduction with regard to audit framework Description on scope of audit performed Management s responsibility Auditor s responsibility Mention : established in accordance with legal and management regulation Opinion (with or without emphasis paragraph) 4) External audit / internal audit / other Publication of financial External audit : statutory audit + specific legal engagements audits + management report Internal audit : for audited entities Other : None < 150 days after close of financial year (consolidated) financial + management report Identification of the FS Audit scope Opinion (unqualified, qualified, adverse opinion of disclaimer of opinion) description of material facts which the auditor considers necessary to emphasize External audit : statutory audit + management report Other : None < 30 days after approval Internal audit is not regulated < 3 months after close of financial year Not mentioned (consolidated) financial + specific engagements audits + management report N/A (consolidated) financial Not mentioned As per ISA 700 N/A Unlimited companies : Identification of FS and financial reporting framework Audit scope Statement as opinion prepared in accordance with the Companies Act 2006 Opinion if enterprise does not keep adequate accounting records if enterprise does not provide the auditors with all the information they need Other : None not External audit : (consolidated) fin. + management report + specific legal engagements audits Other : None HB/KB which closes financial with management report: when asked by interested party Corporations not subject to Title 9 Book 2 DCC: not Corporations subject to Title 9 Book 2 DCC: within 8 days of adoption of FS External audit : not required Other : None not External audit : (consolidated) financial Others : None Unlimited companies : if subsidiary undertaking or a parent of a limited undertaking Limited partnership : Charities : not 22

23 23 3. Type I - Micro Entity I Type I : micro-size I Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany Legal entity name Size thresholds Accounting Systems General Partnership : Offene Gesellschaft (OG) Limited Partnership : Kommanditgesellschaft (KG) Cooperative : Genossenschaft (Gen) EU Micro-size I entities correspond to small-size entities in the local General Partnership : Société en nom collectif/vennootschap onder firma (VOF/SNC) Limited Partnership : Société en commandite simple / gewone comanditaire vennootschap (Comm. V/SCS) Cooperative : Société cooperative / coöperatieve vennootschap (CV/SC) : 2 types with (un)limited liabilities EU Micro-size I entities correspond to small-size entities in the local General Partnership : Събирателно дружество Limited Partnership : Командитно дружество Limited liability or joint stock companies : Кооперативни предприятия Cooperative Unions : Кооперативни съюзи EU Micro-size I entities correspond to small-size entities in the local General Partnership : Javno trgovačko društvo Limited Partnership : Komanditno društvo EU Micro-size I entities correspond to small-size entities in the local General partnership : Veřejná obchodní společnost, (VOS) Limited partnership : Komanditní společnost (KS) Cooperative : Družstvo EU Micro-size I entities correspond to small-size entities in the local General Partnership : Interessentskaber (I/S) Limited Partnership : Kommanditselskaber (K/S) Cooperative : Andelsselskaber med begrænset ansvar (AMBA) EU Micro-size I entities correspond to small-size entities in the local General partnership : Täisühing (TÜ) Limited partnership : Usaldusühing (UÜ) Cooperative : Tulundusühistu (TuÜ) General partnership : Société en nom collectif (SNC) Limited parternship : Société en commandite simple (SCS) Cooperative : Société coopérative (SC) Civil society : Société civile General partnership : Offene Handelsgesellschaft (OHG) Limited partnership : Kommanditgesellschaft (KG) Cooperative : Genossenschaft (Gen) No size regulation No size regulation EU Micro-size I entities correspond to small-size entities in the local 1) Internal accounting Not Not Not Not Not Not Not Not Not 2) External accounting OG, KG, Gen Single entry is enough. 3) Tax accounting VOF/SNC & Comm. V/SCS : if net turnover (excl. VAT) > 500K -> double entry and preparation of financial (abbreviated) CV/SC: double entry system used at least on a monthly basis (sub ledgers centralized in the ledgers) Exhaustive chronological registration Systematic accounting ledgers Synthetic and analytical accounting ledgers, and reconciliation among them Interim and annual closing -> journal Change in book by adjustment Individual chart of accounts but separate VAT ledger and fixed assets tax depreciation plans. Keep accounting books: journal entry book, general ledger and auxiliary books (double entry ) Need to prepare financial Double entry Not Local GAAP based on IFRS SME s (double entry ) Double entry and : Chronological accounting Supporting document evidences Value and existence of assets and liabilities 2 different taxes: corporate tax or individual income tax Cooperatives: in general corporate tax General partnership: individual income tax Limited partnership: Income tax Civil society: depends of the nature of the enterprise Personal enterprise with limited liability: individual income tax 4) Other accounting systems None None None None None None None None None Accounting framework 1) Accounting principles 1.a) Cash basis 1.b) Accrual basis 1.c) Other accounting principles 2) Principles for external financial for single-entry for double-entry Allowed for single-entry for double entry Not allowed Not allowed Not allowed If exempted from preparation of : allowed BUT have to be according to DBA and double- entry Allowed to use simplified method Double entry used by means of a set of ledgers, subledgers and accounts Separate accounting for tax (e.g. expenses for accrued pending losses not accepted by the tax authority) Not allowed Not allowed Allowed for entities not listed in the commercial register and earnings after tax < 50 k None None None None None None None None None OG, KG, cooperatives : format described but not Not : notes (simplified for cooperatives) management report financial : Abbreviated financial : allowed Fin. for all type I enterprises SME : full fin. in accordance with NFRSSME or IFRS If IFRS not applied, abridged financial with NFRSSME (without management report, CF statement, statement of equity or disclosures required by NFRSSME) 2.a) True and fair view Fair : if contents of individual items correspond to respective facts and comply with applicable accounting principles and accounting policies True : if FS prepared using accounting principles and policies Obligation of establishing financial 2.b) Going concern 2.c) Prudence (prudence, sincerity and good faith) (prudence, sincerity and good faith) No prudence principle but neutrality principle (any change in value shown irrespective of the effect on equity and profit and loss account) (+ imparity : unrealized losses must be accounted, but not unrealized profits)

24 Type I : micro-size I Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) (based on inventory) (specific requirement when liquidation, merger, ) 2.e) Consistency (primarily to classification and format) (fixity principle & Nominalism principle - historical cost) 2.f) Separate valuation As per Art. Accountancy Act Measurement requirement under HSFI (similar to IFRS) Small entities (for which simplified accounting methods are allowed): no need to follow strict accrual principle of accounting (creation of reserve, provisions) no need to reflect value adjustments depreciate assets in line with general rules no need to use fair value for valuation of assets and liabilities Valuation rules: idem Medium (compensation (compensation Other measurement rules as per HGB 2.g) Materiality Yes Yes ( all relevant matters ) Immaterial items recorded with simplified method Relative importance principle Yes 2.h) Other principles Goodwill capitalised and amortised over useful life (max 15 years) Internally developed intangibles not capitalised None None HSFI prescribe following principles : Understandability Importance Reliability Comparability Completeness None Clarity Substance over form Materiality Accrual accounting Relevance Understandability Substance over form None Principle of imparity Consequences of changes in accounting principles and corrections for the previous year Hedging principle: under strict assumptions 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions 1) Financial records Single entry-: Financial ledger Purchase ledger Fixed assets ledger Single entry : Transactions booked without delay, accurately, complete and chronologically in financial ledger, purchase ledger and sales ledger. Double entry: Set of ledgers, sub ledgers and accounts (satisfied criteria of timely, completeness correct and systematic recording) -> justification doc. Original documents kept for 7 years Set of ledgers, sub ledgers and accounts (satisfied criteria of timely, completeness, correct, chronological and systematic recording) -> justification document Original documents kept for 5 years (for tax audit) (10 years for FS). Keep accounting books: journal entry book, general ledger and auxiliary books Keep accounting books : General journal (chronological order) General ledger (synthetic accounts) Set of ledgers, sub ledgers and accounts (satisfied criteria of completeness, traceability, systematic recording) Original documents kept for 5 years Accounting registers Chronological order Original documents kept for 7 years Keep accounting books : general journal (chronological order) general ledger (synthetic accounts) Inventory book Set of ledgers, sub ledgers and accounts (satisfied criteria of systematic recording) Original documents kept for 10 years (6 for secondary documentation) 2) Double-entry vs. Singleentry OG, KG, Gen single entry is enough. VOF/SNC & Comm. V/SCS : if net turnover (excl. VAT) > 500K -> double entry CV/SC: double entry Determined by management Double-entry Double-entry Double-entry Double-entry Double-entry Double-entry 3) Chart of accounts Prescribed (not mandatory) Prescribed Not prescribed Not prescribed Prescribed Not prescribed Not prescribed Prescribed Partnerships and associations: No statutory chart of accounts Coop.: Statutory Chart of acc. 4) Other None None None None None None None None None Components of financial Single-entry : Free scheme Balance sheet Profit and loss account Balance sheet Profit and loss account BS P&L Appendix 1) Profit & loss account Single-entry : Free scheme Abbreviated financial allowed Required full financial 2 formats P&L : two-sides P&L (turnover and expenses listed in 2 columns) or one-side P&L (like IAS 1) Scheme prescribed by law Scheme prescribed by law Required : grouping of costs by nature or by function (min. details prescribed) Tabular form or as a list Cooperatives: abridged version optional Partnerships: No mandatory format 2) Balance sheet Single-entry : Free scheme Abbreviated financial allowed Required full financial (scheme prescribed by NFRSSME) If abridged financial, shortened version of BS allowed 3) Cash flow statement Not Not Scheme prescribed by NFRSSME Not if abridged financial Scheme prescribed by law Scheme prescribed by law Required Different schemes prescribed by law Described separately assets and liabilities and equity Scheme prescribed by law Not Not (no layout) Not (excepted for conso) Cooperatives: abridged version optional Partnerships: No mandatory format Not 24

25 25 Type I : micro-size I Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany 4) Notes to financial Not Abbreviated financial allowed (form as per NFRSSME) Less disclosure requirements if abridged financial statement (scheme prescribed by HFSI) and contain : application of the accounting principle accounting policies suppl. information other events not presented in balance sheet which affect the financial position and contain : applicable financial reporting framework accounting principle detailed information on figures other circumstances that affect the position (to complete the figures) Generally for cooperatives Generally not required for partnerships 5) Consolidated financial Not No requirement Requirements : P&L, BS, notes, cash flow statement and statement of changes in equity Exemptions : negligible or no publicly traded debt Requirement Exemption : if min. 90% owned by another enterprise which makes consolidated financial and if there is no opposition No requirement No requirement No requirement No requirement No requirement 6) Other financial 7) Statement of equity Required Only required for consolidation Management report Not Not Not Not Not Not Cooperative : Partnership : usually not Auditing 1) Appointment of auditor No requirement No requirement (unless workers council exists) No requirement Limited partnerships whose total turnover in previous financial year > 3.950K : auditor required Micro entities exempted from audit No requirement N/A Not Not Partnership : No requirement Cooperative : Auditor required at 2 yearly interval with respect to the orderly nature of management with list of members of the cooperative 2) Scope of audit Statutory audit N/A Financial + management report + members of the cooperative 3) Content of the audit report As per ISA 700 N/A Audit engagement General findings Scope of audit Findings on the financial reporting / on group financial reporting Overall picture conveyed by FS / consolidated FS (significant valuation basis, overall assessment) Audit opinion 4) External audit / internal audit / other Publication of financial External audit: None Not External audit: not required VOF / SNC, Comm.V / SCS, CVOA / SCRI: Not when at least one of the unlimited liability partners is incorporated. Not later than 30 days after approval of financial, and within 7 months after yearend close External audit : specific legal engagements audits Other : None External audit : statutory audit on financial Other : None statutory : at latest 6 months after year end consolidated : at latest 9 months after year end External audit : not required (FS, auditors report, management report and report on relations), at latest 30 days after approval, and at latest at end of following accounting period N/A Not External audit : not required, with management reports no later than 6 months after the end of the financial year Sole proprietorship: Seizure of the principal residence and any land not used in professional case within one month following the approval of the financial by shareholders External audit: statutory audit (including management report & list of members) + consolidation Partnership : not Cooperative : (In German)

26 Type I : micro-size I Greece Hungary Ireland Italy Lithuania Norway Poland Portugal Legal entity name General Partnership : Omorythmi Eteria (OE) Limited Partnership : Eterorythmi Eteria (EE) Civil Law Company : Astiki Eteria Cooperative : Syneterismos Joint venture : Koinopraksia Undisclosed Partnership : Afanis Eteria General partnershup : Közkereseti társaság (Kkt) Limited partnership : Betéti társaság (Bt) Cooperative : Szövetkezet (Szöv) Unlimited companies Partnerships Charities General partnership : Società in Nome Collettivo (SNC) Limited partnership : Società in Accomandita Semplice (SAS) General partnership : Tikroji ùkine bendrija (TUB) Limited partnership: Komanditiné ùkiné bendrija (KUB) Small partnership : Mažoji bendrija (MB) General partnership : Ansvarlige selskaper (ANS) and Deltakerlignet selskap (DA) Limited partnership : Kommandittselskap (KS) General partnership : Spółka jawna (s.j.) osób fizycznych and Pozostałe spółki jawne Limited partnership : Spolka komandytowa (sp.k) Cooperative : Spółdzielnia socjalna and Inne spółdzielnie Civil partnership : spółka cywilna (s.c.) osób fizycznych and Pozostałe spółki cywilne General partnership : Sociedade em nome colectivo Limited partnership : Sociedade em comandita simples Cooperative : Cooperativas Associations : Associações Civil partnership : Sociedade Civil Associations of business enterprises : Agrupamentos complementares de empresas (ACE) Size thresholds No size regulation EU Micro-size I entities correspond principally to micro-size entities in the local EU Micro-size I entities correspond to small-size entities in the local No size regulation EU Micro-size I entities correspond to small-size entities in the local EU Micro-size I entities correspond to small-size entities in the local No size regulation EU Micro-size I entities correspond to small-size entities in the local Accounting Systems 1) Internal accounting Not Not Not Not Not Not Not Not 2) External accounting Not Double entry No specific obligation SNC, SAS : double entry if turnover (services) > 400k or turnover (goods) > 516k Double entry Double entry (set of ledgers, sub-ledgers and accounts) at least on a monthly basis -> centralisation of sub ledgers Double entry General partnership / Civil law : Accounting records are based on selected tax settlements All transactions supported by documentation satisfied criteria of chronological, correct and timely rec. (within 90 days) permanent inventory system 3) Tax accounting (nevertheless there can be differences between tax values and accounting values of assets and/or liabilities) NOTE: Partnerships subject to EVA may use simplified taxation methods Separate tax registers kept for VAT and excise taxes. For CIT s the entity is obliged to carry out separate ledgers for fixed assets. General partnership / Civil law with net turnover < K : Prepare accounting documentation relevant to form of taxation chosen: Tax register of turnover and expenses Fixed amount tax (applicable only to limited scope of operations) Flat-Rate Income Tax on Selected Incomes (available only for taxpayers whose income in previous year < 150 K 4) Other accounting systems None None None None None None (except for specific requirement in the construction industry to install project accounting) Accounting framework 1) Accounting principles None None 1.a) Cash basis Not allowed Allowed for partnerships subject to EVA Not allowed Not allowed TUB, KUB: allowed in certain cases MB: Not Allowed Not allowed Allowed for: tax regulations for interest income and costs, F/X differences, payroll costs paid after maturity date and rental payments Not allowed 1.b) Accrual basis for double-entry Not always 1.c) Other accounting principles None None None None None None None None 2) Principles for external financial SCN, SAS, Cooperatives: Italian GAAP Entities applying accounting act -> IFRS or PGAAP 2.a) True and fair view Not (generally accepted accounting principle) (information : existence, tenable and verifiable) 2.b) Going concern Not The notion exists but there is not an explicit requirement 2.c) Prudence Not Unrealized losses shall be recognized (prudence, sincerity and good faith) 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) Not (exception for mergers, demergers, ) Not 2.e) Consistency Not 2.f) Separate valuation Not Not (compensation Not (compensation possible), measurement base are: historical cost current cost realizable value present value fair value 2.g) Materiality Principle of materiality Yes 26

27 27 Type I : micro-size I Greece Hungary Ireland Italy Lithuania Norway Poland Portugal 2.h) Other principles Historical cost principle Single currency principle; Entries have to be supported by appropriate documentation. Principle of completeness Principle of clarity Principle of accruals Principle of cost-benefit None None Enterprise s principle Periodic information Currency unit Neutrality Congruence principle Hedging principle None Compensation Comparative information 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions 1) Financial records Based on appropriate supporting documents 2) Double-entry vs. Single-entry Net turnover < K -> Single-entry A double entry : set of ledgers, sub ledgers and accounts (satisfied criteria of systematic recording) Original documents kept for 8 years Unlimited companies : keep proper books of accounts (satisfied criteria of timely, correct, complying with requirements recording) Partnership : no requirement Charities : no requirement SCN, SAS: (original documents kept for 10 years) Double-entry Not prescribed by the law SNC, SAS : double entry if turnover (services) > 400k or turnover (goods) > 516k Cooperative : double-entry All transactions supported by accounting documents. Every economic transaction has to be registered not later than after 4 months. The form, contents and number of the accounting registers shall be set by an economic entity according to its needs (satisfied criteria of chronological and systematic rec.) 3) Chart of accounts Not prescribed Prescribed Not prescribed Not prescribed Prescribed (the management prepares its own chart based on chart approved by government) Double entry (set of ledgers, sub ledgers and accounts satisfied criteria of timely, completeness, systematic recording) -> accompanied by justification document. Original documents kept for 10 years (3.5 years for secondary documentation) Books of accounts include: journal general ledger subsidiary ledgers trial balances of general and subsidiary ledger accounts list of assets, liabilities and equity (inventory) Double-entry Double-entry Double-entry Single-entry under tax regulations in case: flat rate income tax fixed amount tax. (double entry for a tax register of turnover and expenses) Double entry (set of ledgers, sub ledgers and accounts which satisfies criteria of timely, chronological, correct, complete and systematic recording) All transactions supported by documentation original documentation kept for 10 years Double-entry Prescribed (but not mandatory) Not prescribed Prescribed 4) Other None None None None None None None None Components of financial Abridged statutory FS Abbreviated FS allowed For entities applying accounting act : Abbreviated financial 1) Profit & loss account Not Abbreviated financial allowed Unlimited companies : required Partnership : not required Charities : required but abbreviated Require full financial TUB, KUB: Not MB: Abbreviated fin. allowed Required full financial Abbreviated fin. allowed General partnership / Civil law : no requirement Abbreviated financial allowed 2) Balance sheet No requirement Abbreviated financial allowed Unlimited companies : required Partnership : not required Charities : required but abbreviated Required full/abbreviated annual accounts TUB, KUB: Not MB: Abbreviated financial allowed Required full financial Abbreviated financial allowed General partnership / Civil law : no requirement Abbreviated financial allowed 3) Cash flow statement Not Not required Unlimited companies : generally others : not Not No requirement Not Not Not 4) Notes to financial Not Act on Accounting limited disclosures required 5) Consolidated financial 6) Other financial 7) Statement of equity Micro-accounting government decree Not required Unlimited companies and: others : generally not No requirement Not required Unlimited companies : requirement others : no requirement TUB, KUB: Not MB: (simplified requirements) General partnership / Civil law : -> No requirement Other entities applying accounting act -> Required full/abbreviated financial No requirement No requirement No requirement No requirement Management report Not Not Unlimited partnership : Others : not Auditing 1) Appointment of auditor No specific obligation by Greek law Auditor required if for 2 consecutive years : Net turnover > 685K or Employees > 50 2) Scope of audit N/A Fin. + specific legal engagement audit (mergers, ) Unlimited companies : auditor required Partnership : no requirement Charities : auditor required 3) Content of the audit report N/A As per ISA 700 Unlimited companies: introduction, financial reporting framework, audit scope, identification of auditing standards, opinion, responsibility of the management, Partnership : not Not General partnership and civil partnership : not Limited partnership and cooperative : Not No requirement No requirement No requirement No requirement No requirement

28 Type I : micro-size I Greece Hungary Ireland Italy Lithuania Norway Poland Portugal 4) External audit / internal audit / other N/A External audit: statutory audit (including business report) + consolidation External audit: for unlimited companies and charities External audit : not required Others : None External audit : not required Others : None External audit: not required Publication of financial Not within 5 months from year-end close for statutory accounts (including audit report) EVA Kkt-s and Bt-s: Not relevant no external financial reporting obligation Unlimited companies : (exemption under certain conditions) Partnership : not Charities : not SNC, SAS : not KUB, TUB: Not MB: within 1 month after FS is set, including the management report and the auditors report For entities subject to Accounting Act and thus publication is : annual financial, management report, auditors report, resolutions approving the financial and details of profit distribution and loss absorption before the 15th day of the 7th month following the year-end 28

29 29 Type I : micro-size I Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK Legal entity name Size thresholds Accounting Systems General partnership : Societate in nume colectiv (SNC) Limited partnership : Societate in comandita simpla (SCS) Cooperative : Cooperativa EU Micro-size I entities correspond to small-size entities in the local General partnership : verejná obchodná spoločnosť (v.o.s.) Limited partnership : komanditná spoločnosť (k.s.) Cooperative : družstvo EU Micro-size I entities correspond to small-size entities in the local General Partnership : Družba z neomejeno odgovornostjo (d.n.o.) Limited Partnership : Komanditna družba (k.d.) Cooperative : Zadruga EU Micro-size I entities correspond to micro-size entities in the local General partnership : Sociedad colectiva Limited partnership : Sociedad comanditaria simple Cooperative : Sociedades cooperativas (S.Coop) EU Micro-size I entities correspond to micro-size entities in the local General partnership : Handelsbolag, HB Limited partnership : Kommanditbolag, KB EU Micro-size I entities correspond to small-size entities in the local General partnership : Maatschap and Vennootschap onder firma (VOF) and maatschappij Limited partnership : Commanditaire Vennootschap (CV) Cooperative : Cooperatie (COOP) Association : Vereniging Fondation : Stichting EU Micro-size I entities correspond to small-size entities in the local 1) Internal accounting According to management needs Not Not Not Not Incorporated entities must maintain financial information 2) External accounting Double entry Double entry Double entry used by means of a set of ledgers, subledgers and accounts 3) Tax accounting. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Double entry. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. All legal forms of business entities are required to maintain accounting records according to the Book Keeping Act chapter 2, 1 (double entry ). Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Corporations subject to Title 9 Book 2 DCC -> preparation of FS Corporations NOT subject to Title 9 Book 2 DCC -> preparation on basis of tax accounting sufficient Partnerships: Not Separate accounting for tax General partnership : Kolektif Şirket Limited partnership : Komandit Şirket Cooperative : Kooperatif Şirket EU Micro-size I entities correspond to micro-size entities in the local Not Obligation of establishing financial. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. 4) Other accounting systems None None None None None None None None Accounting framework 1) Accounting principles 1.a) Cash basis Not allowed Not allowed Allowed for single entry Not allowed Allowed for current recording if net turnover < 357 K HOWEVER fin. -> accrual based Companies not subject to Title 9 Book 2 DCC + partnerships -> no requirements Companies subject to Title 9 Book 2 DCC -> not allowed 1.b) Accrual basis Companies not subject to Title 9 Book 2 DCC + partnerships -> no requirements Companies subject to Title 9 Book 2 DCC -> 1.c) Other accounting principles None None None In case of conflict between several principles, true and fair view of the assets, financial position and results of the enterprise prevail. 2) Principles for external financial Management report with at least statement of financial position and P&L statement Abbreviated fin. allowed 2.a) True and fair view (Principle that prevails in case of conflict) Not allowed None None None None Balance sheet Profit and loss account Management report Less compulsary disclosures than Medium Sized Companies not subject to Title 9 Book 2 DCC + partnerships -> no requirements Companies subject to Title 9 Book 2 DCC -> 2.b) Going concern Companies not subject to Title 9 Book 2 DCC + partnerships -> no requirements Companies subject to Title 9 Book 2 DCC -> 2.c) Prudence Companies not subject to Title 9 Book 2 DCC + partnerships -> no requirements Companies subject to Title 9 Book 2 DCC -> 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) Unlimited companies Partnerships (personally owned Unlimited liability) Limited partnership Charities EU Micro-size I entities correspond to small-size entities in the local Not Partnership : no specific requirement Others : comply with UK GAAP or IFRS Not Not Allowed Allowed Unlimited companies, limited partnership and charities : Partnership : not 2.e) Consistency Unlimited companies, limited partnership and charities : Partnership : not 2.f) Separate valuation (compensation 2.g) Materiality Yes Yes (compensation (compensation Companies not subject to Title 9 Book 2 DCC + partnerships -> no requirements Companies subject to Title 9 Book 2 DCC -> (compensation 2.h) Other principles Independence None None None None None None

30 Type I : micro-size I Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions 1) Financial records Double entry accounting (journal ledger, inventory ledger, general ledger) -> Trial Balance monthly prepared based on movements in General Ledger. Bookkeeping should satisfy criteria of systematic recording and all transactions must be accompanied by justification document. Original documentation kept for 10 years Double-entry (general journal and general ledger satisfied criteria of chronological, systematic recording) Double entry (set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness and systematic recording). All transactions must be accompanied by a justification document. The financial records should be kept permanently. Accounting books kept (journal book, inventory book and financial, satisfying criteria of chronological and clear, recording without blank spaces, no abbreviation) Double entry book (set of ledgers, sub ledgers and accounts satisfying criteria of timely and completeness). All transactions should refer to a justification document. Original documents kept for 7 years Original documents kept for 7 years Double entry (set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness and systematic recording). All transactions must be accompanied by justification document. Original documents are kept for 10 years. Keep books Unlimited companies : original documents kept for 10 years Charities : original documents kept for 6 years 2) Double-entry vs. Single-entry Double-entry Double-entry Double-entry Double entry or single entry book but double entry is recommended 3) Chart of accounts Prescribed Prescribed Prescribed (no requirement for single entry ) Double-entry Double entry or single book Double-entry Unlimited companies : doubleentry Others : double-entry or singleentry Prescribed (but not mandatory) Not prescribed Not prescribed Prescribed Not prescribed 4) Other None None None None None None None None Components of financial BS P&L Changes in equity CFS notes BS P&L 1) Profit & loss account Abbreviated fin. allowed Required full fin. and structured (no change possible) 2) Balance sheet Abbreviated fin. allowed Required full fin. and structured (no change possible) Double entry : abridged Single entry : free scheme BS P&L (not for abbreviated) Special auditors report + management report notes Abbreviated fin. allowed Abbreviated fin. allowed Abbreviated fin. allowed Depending on the legal type Required Require abbreviated P&L under different circumstances Abbreviated fin. allowed Abbreviated fin. allowed Abbreviated fin. allowed Companies not subject to Title 9 Book 2 DCC: No requirement Companies subject to Title 9 Book 2 DCC: Require abbreviated annual account Required Required full balance sheet 3) Cash flow statement Not Not Not Not Not Not Not Limited partnership, unlimited companies, charities: Partnership: not 4) Notes to financial (accounting principles and accounting policies, other events) 5) Consolidated financial 6) Other financial No requirement No requirement Requirement and contains : P&L BS 7) Statement of equity Not Required Management report Not Management report with at least statement of financial position and P&L statement Auditing 1) Appointment of auditor No requirement (but may be appointed on shareholders decision) No requirement (except for abbreviated forms) Abbreviated fin. allowed No requirement (except for micro sized companies whose securities are traded on regulated market) Companies not subject to Title 9 Book 2 DCC: Not Companies subject to Title 9 Book 2 DCC: (simplified relating to medium sized) Requirement (notion of control) No requirement Companies not subject to Title 9 Book 2 DCC + partnerships: No requirement Companies subject to Title 9 Book 2 DCC: Requirement (notion of control) Not Abbreviated BS: no requirement Full BS: auditor required Not for: General partnership (HB) that is only owned by physical persons Limited partnership (KB) that is owned only by physical persons Cooperative: Auditor required Rest: No requirement Not for: Associations / Cooperations that are not subject to Title 9 Book 2 DCC No requirement Unlimited companies, partnerships, charities: No requirement Unlimited companies, limited partnerships: General partnerships: Not No requirement No requirement Auditor required for: Charities if: Gross income > 583 K Gross assets > K No requirement: Unlimited companies, Limited partnerships General partnerships Cooperatives if: BS < K Net turnover < 408 K 30

31 31 Type I : micro-size I Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK 2) Scope of audit Not mentioned (consolidated) fin. + specific engagements audits + management report (consolidated) financial 3) Content of the audit report Not mentioned As per ISA 700 Unlimited companies : Identification of FS and financial reporting framework Audit scope Statement as opinion prepared in accordance with the Companies Act 2006 Opinion if enterprise does not keep adequate accounting records if enterprise does not provide the auditors with all the information they need 4) External audit / internal audit / other External audit : not required Internal audit : for audited entities Other : None External audit : not required Other : None Internal audit is not regulated Other : None External audit :(consolidated) fin. + management report + specific legal engagements audits Other : None No requirement External audit : not required Other : None External audit : (consolidated) fin. Others : None Publication of financial < 150 days after close of financial year < 30 days after approval < 3 months after close of financial year not HB/KB which closes fin. with management report: when asked by interested party Corporations not subject to Title 9 Book 2 DCC: not Corporations subject to Title 9 Book 2 DCC: within 8 days of adoption of FS not Unlimited companies : if subsidiary undertaking or a parent of a limited undertaking Limited partnership : Charities : not

32 4. Type I - Micro Entity II Type I : micro-size II Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany Legal entity name Size thresholds Accounting Systems General Partnership : Offene Gesellschaft (OG) Limited Partnership : Kommanditgesellschaft (KG) Cooperative : Genossenschaft (Gen) EU Micro-size II entities correspond to small-size entities in the local General Partnership : Société en nom collectif/vennootschap onder firma (VOF/SNC) Limited Partnership : Société en commandite simple / gewone comanditaire vennootschap (Comm. V/SCS) Cooperative : Société cooperative / coöperatieve vennootschap (CV/SC) : 2 types with (un)limited liabilities EU Micro-size II entities correspond to small-size entities in the local General Partnership : Събирателно дружество Limited Partnership : Командитно дружество Limited liability or joint stock companies : Кооперативни предприятия Cooperative Unions : Кооперативни съюзи EU Micro-size II entities correspond to small-size entities in the local General Partnership : Javno trgovačko društvo Limited Partnership : Komanditno društvo EU Micro-size II entities correspond to small-size entities in the local General partnership : Veřejná obchodní společnost, (VOS) Limited partnership : Komanditní společnost (KS) Cooperative : Družstvo EU Micro-size II entities correspond to small-size entities in the local General Partnership : Interessentskaber (I/S) Limited Partnership : Kommanditselskaber (K/S) Cooperative : Andelsselskaber med begrænset ansvar (AMBA) EU Micro-size II entities correspond to small-size entities in the local General partnership : Täisühing (TÜ) Limited partnership : Usaldusühing (UÜ) Cooperative : Tulundusühistu (TuÜ) General partnership : Société en nom collectif (SNC) Limited parternship : Société en commandite simple (SCS) Cooperative : Société coopérative (SC) Civil society : Société civile General partnership : Offene Handelsgesellschaft (OHG) Limited partnership : Kommanditgesellschaft (KG) Cooperative : Genossenschaft (Gen) No size regulation No size regulation EU Micro-size II entities correspond to small-size entities in the local 1) Internal accounting Not Not Not Not Not Not Not Not Not 2) External accounting OG, KG, Gen Single entry is enough. 3) Tax accounting VOF/SNC & Comm. V/SCS : if net turnover (excl. VAT) > 500K -> double entry and preparation of fin. (abbreviated) CV/SC: double entry system used at least on a monthly basis (sub ledgers centralized in the ledgers). Exhaustive chronological registration Systematic accounting ledgers Synthetic and analytical accounting ledgers, and reconciliation among them Interim and annual closing -> journal Change in book by adjustment Individual chart of accounts but separate VAT ledger and fixed assets tax depreciation plans. Keep accounting books: journal entry book, general ledger and auxiliary books (double entry ) Need to prepare financial Double entry Not Local GAAP based on IFRS SME s (double entry ) Double entry and : Chronological accounting Supporting document evidences Value and existence of assets and liabilities 2 different taxes: corporate tax or individual income tax Cooperatives: in general corporate tax General partnership: individual income tax Limited partnership: Income tax Civil society: depends of the nature of the enterprise Personal enterprise with limited liability: individual income tax 4) Other accounting systems None None None None None None None None None Accounting framework 1) Accounting principles 1.a) Cash basis 1.b) Accrual basis 1.c) Other accounting principles 2) Principles for external financial for single-entry for double-entry Allowed for single-entry for double entry Not allowed Not allowed Not allowed If exempted from preparation of : allowed BUT have tobe according to DBA and double- entry Allowed to use simplified method Double entry used by means of a set of ledgers, subledgers and accounts Separate accounting for tax (e.g. expenses for accrued pending losses not accepted by the tax authority) Not allowed Not allowed Allowed for entities not listed in the commercial register and earnings after tax < 50 k None None None None None None None None None OG, KG, cooperatives : format described but not Not : notes (simplified for cooperatives) management report Financial : Abbreviated financial : allowed Financial for all type I enterprises SME : full financial in accordance with NFRSSME or IFRS If IFRS not applied, abridged financial with NFRSSME (without management report, CF statement, statement of equity or disclosures required by NFRSSME) 2.a) True and fair view Fair : if contents of individual items correspond to respective facts and comply with applicable accounting principles and accounting policies True : if FS prepared using accounting principles and policies Obligation of establishing financial 2.b) Going concern 2.c) Prudence (prudence, sincerity and good faith) (prudence, sincerity and good faith) No prudence principle but neutrality principle (any change in value shown irrespective of the effect on equity and profit and loss account) (+ imparity : unrealized losses must be accounted, but not unrealized profits) 32

33 33 Type I : micro-size II Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) (based on inventory) (specific requirement when liquidation, merger, ) 2.e) Consistency (primarily to classification and format) (fixity principle & Nominalism principle - historical cost) 2.f) Separate valuation As per Art. Accountancy Act Measurement requirement under HSFI (similar to IFRS) Small entities (for which simplified accounting methods are allowed): no need to follow strict accrual principle of accounting (creation of reserve, provisions) no need to reflect value adjustments depreciate assets in line with general rules no need to use fair value for valuation of assets and liabilities Valuation rules: idem Medium (compensation 2.g) Materiality Yes Yes ( all relevant matters ) Immaterial items recorded with simplified method Relative importance principle (compensation Other measurement rules as per HGB 2.h) Other principles 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions Goodwill capitalised and amortised over useful life (max 15 years) Internally developed intangibles not capitalised 1) Financial records Single entry-: Financial ledger Purchase ledger Fixed assets ledger 2) Double-entry vs. Singleentry None None HSFI prescribe following principles : Understandability Importance Reliability Comparability Completeness None Clarity Substance over form Materiality Accrual accounting Yes Relevance Understandability Substance over form OG, KG, Gen single entry is enough. Single entry : Transactions booked without delay, accurately, complete and chronologically in financial ledger, purchase ledger and sales ledger. Double entry: Set of ledgers, sub ledgers and accounts (satisfied criteria of timely, completeness, correct and systematic recording) -> justification doc Original documents kept for 7 years VOF/SNC & Comm. V/SCS : if net turnover (excl. VAT) > 500K -> double entry CV/SC: double entry Set of ledgers, sub ledgers and accounts (satisfied criteria of timely, completeness, correct, chronological and systematic recording) -> justification document Original documents kept for 5 years (for tax audit) (10 years for FS). Keep accounting books: journal entry book, general ledger and auxiliary books Keep accounting books : General journal (chronological order) General ledger (synthetic accounts) Set of ledgers, sub ledgers and accounts (satisfied criteria of completeness, traceability, systematic recording) Original documents kept for 5 years Accounting registers Chronological order Original documents kept for 7 years None Keep accounting books : general journal (chronological order) general ledger (synthetic accounts) Inventory book Determined by management Double-entry Double-entry Double-entry Double-entry Double-entry Double-entry Principle of imparity Consequences of changes in accounting principles and corrections for the previous year Hedging principle: under strict assumptions Set of ledgers, sub ledgers and accounts (satisfied criteria of systematic recording) Original documents kept for 10 years (6 for secondary documentation) 3) Chart of accounts Prescribed (not mandatory) Prescribed Not prescribed Not prescribed Prescribed Not prescribed Not prescribed Prescribed Partnerships and associations: No statutory chart of accounts Coop.: Statutory Chart of acc. 4) Other None None None None None None None None None Components of financial Single-entry : Free scheme 1) Profit & loss account Single-entry : Free scheme 2) Balance sheet Single-entry : Free scheme Balance sheet Profit and loss account Abbreviated financial allowed Abbreviated financial allowed Required full financial 2 formats P&L : two-sides P&L (turnover and expenses listed in 2 columns) or one-side P&L (like IAS 1) Required full financial (scheme prescribed by NFRSSME) If abridged financial, shortened version of BS allowed 3) Cash flow statement Not Not Scheme prescribed by NFRSSME Not if abridged financial Balance sheet Profit and loss account Scheme prescribed by law Scheme prescribed by law Required : grouping of costs by nature or by function (min. details prescribed) Scheme prescribed by law Scheme prescribed by law Required Different schemes prescribed by law BS P&L Appendix Tabular form or as a list Described separately assets and liabilities and equity Scheme prescribed by law Not Not (no layout) Not (excepted for conso) Cooperatives: abridged version optional Partnerships: No mandatory format Cooperatives: abridged version optional Partnerships: No mandatory format Not

34 Type I : micro-size II Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany 4) Notes to financial Not Abbreviated financial allowed (form as per NFRSSME) Less disclosure requirements if abridged financial statement (scheme prescribed by HFSI) and contain : application of the accounting principle accounting policies suppl. information other events not presented in balance sheet which affect the financial position and contain : applicable financial reporting framework accounting principle detailed information on figures other circumstances that affect the position (to complete the figures) Generally for cooperatives Generally not required for partnerships 5) Consolidated financial Not No requirement Requirements : P&L, BS, notes, cash flow statement and statement of changes in equity Exemptions : negligible or no publicly traded debt Requirement Exemption : if min. 90% owned by another enterprise which makes consolidated financial and if there is no opposition No requirement No requirement No requirement No requirement No requirement 6) Other financial 7) Statement of equity Required Only required for consolidation Management report Not Not Not Not Not Not Cooperative : Partnership : usually not Auditing 1) Appointment of auditor No requirement No requirement (unless workers council exists) No requirement Limited partnerships whose total turnover in previous financial year > 3.950K : auditor required Micro entities exempted from audit No requirement N/A Not No requirement Partnership : No requirement Cooperative : Auditor required at 2 yearly interval with respect to the orderly nature of management with list of members of the cooperative 2) Scope of audit Statutory audit N/A Financial + management report + members of the cooperative 3) Content of the audit report As per ISA 700 N/A Audit engagement General findings Scope of audit Findings on the financial reporting / on group financial reporting Overall picture conveyed by FS / consolidated FS (significant valuation basis, overall assessment) Audit opinion 4) External audit / internal audit / other Publication of financial External audit: None Not External audit: not required VOF / SNC, Comm.V / SCS, CVOA / SCRI: Not when at least one of the unlimited liability partners is incorporated. Not later than 30 days after approval of financial, and within 7 months after yearend close External audit : not required Other : None External audit : statutory audit on financial Other : None statutory : at latest 6 months after year end consolidated : at latest 9 months after year end External audit : Not required (FS, auditors report, management report and report on relations), at latest 30 days after approval, and at latest at end of following accounting period N/A Not External audit : not required, with management reports no later than 6 months after the end of the financial year Sole proprietorship: Seizure of the principal residence and any land not used in professional case within one month following the approval of the financial by shareholders External audit: statutory audit (including management report & list of members) + consolidation Partnership : not Cooperative : (in German) 34

35 35 Type I : micro-size II Greece Hungary Ireland Italy Lithuania Norway Poland Portugal Legal entity name General Partnership : Omorythmi Eteria (OE) Limited Partnership : Eterorythmi Eteria (EE) Civil Law Company : Astiki Eteria Cooperative : Syneterismos Joint venture : Koinopraksia Undisclosed Partnership : Afanis Eteria General partnershup : Közkereseti társaság (Kkt) Limited partnership : Betéti társaság (Bt) Cooperative : Szövetkezet (Szöv) Size thresholds No size regulation EU Micro-size II entities correspond principally to micro-size entities in the local Accounting Systems Unlimited companies Partnerships Charities EU Micro-size II entities correspond to small-size entities in the local General partnership : Società in Nome Collettivo (SNC) Limited partnership : Società in Accomandita Semplice (SAS) No size regulation General partnership : Tikroji ùkine bendrija (TUB) Limited partnership : Komanditiné ùkiné bendrija (KUB) Small partnership : Mažoji bendrija (MB) EU Micro-size II entities correspond to small-size entities in the local General partnership : Ansvarlige selskaper (ANS) and Deltakerlignet selskap (DA) Limited partnership : Kommandittselskap (KS) EU Micro-size II entities correspond to small-size entities in the local General partnership : Spółka jawna (s.j.) osób fizycznych and Pozostałe spółki jawne Limited partnership : Spolka komandytowa (sp.k) Cooperative : Spółdzielnia socjalna and Inne spółdzielnie Civil partnership : spółka cywilna (s.c.) osób fizycznych and Pozostałe spółki cywilne No size regulation 1) Internal accounting Not Not Not Not Not Not Not Not 2) External accounting Not Double entry No specific obligation SNC, SAS : double entry if turnover (services) > 400k or turnover (goods) > 516k Recording of financial transactions 3) Tax accounting Net turnover (excl. VAT) < K -> single entry allowed (nevertheless there can be differences between tax values and accounting values of assets and/or liabilities) NOTE: Partnerships subject to EVA may use simplified taxation methods Double entry Double entry (set of ledgers, sub-ledgers and accounts) at least on a monthly basis -> centralization of sub ledgers 4) Other accounting systems None None None None None None (except for specific requirement in the construction industry to install project accounting) Accounting framework 1) Accounting principles 1.a) Cash basis Not allowed Allowed for partnerships subject to EVA 1.b) Accrual basis for double-entry Double entry General partnership / Civil law : Accounting records are based on selected tax settlements Separate tax registers kept for VAT and excise taxes. For CIT s the entity is obliged to carry out separate ledgers for fixed assets. General partnership / Civil law with net turnover < K : Prepare accounting documentation relevant to form of taxation chosen: Tax register of turnover and expenses Fixed amount tax (applicable only to limited scope of operations) Flat-Rate Income Tax on Selected Incomes (available only for taxpayers whose income in previous year < 150 K Not allowed Not allowed TUB, KUB: Allowed in certain cases MB: Not allowed Not allowed Allowed for: tax regulations for interest income and costs, F/X differences, payroll costs paid after maturity date and rental payments None General partnership : Sociedade em nome colectivo Limited partnership : Sociedade em comandita simples Cooperative : Cooperativas Associations : Associações Civil partnership : Sociedade Civil Associations of business enterprises : Agrupamentos complementares de empresas (ACE) EU Micro-size II entities correspond to small-size entities in the local All transactions supported by documentation satisfied criteria of chronological, correct and timely rec. (within 90 days) permanent inventory system None Not allowed Not always 1.c) Other accounting principles None None None None None None None None 2) Principles for external financial SCN, SAS, Cooperatives: Italian GAAP Entities applying accounting act -> IFRS or PGAAP 2.a) True and fair view Not (generally accepted accounting principle) (information : existence, tenable and verifiable) 2.b) Going concern Not The notion exists but there is not an explicit requirement 2.c) Prudence Not Unrealized losses shall be recognized 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) Not (exception for mergers, demergers, ) 2.e) Consistency Not 2.f) Separate valuation Not Not (compensation 2.g) Materiality Principle of materiality Yes (prudence, sincerity and good faith) Not Not (compensation possible), measurement base are: historical cost current cost realizable value present value fair value

36 Type I : micro-size II Greece Hungary Ireland Italy Lithuania Norway Poland Portugal 2.h) Other principles 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions Historical cost principle Single currency principle; Entries have to be supported by appropriate documentation. 1) Financial records Based on appropriate supporting documents 2) Double-entry vs. Single-entry Net turnover < K -> Single-entry Principle of completeness Principle of clarity Principle of accruals Principle of cost-benefit None None Enterprise s principle Periodic information Currency unit Neutrality Congruence principle Hedging principle A double entry : set of ledgers, sub ledgers and accounts (satisfied criteria of systematic recording) Original documents kept for 8 years Unlimited companies : keep proper books of accounts (satisfied criteria of timely, correct, complying with requirements recording) Partnership : no requirement Charities : no requirement SCN, SAS: (original documents kept for 10 years) Double-entry Not prescribed by the law SNC, SAS : double entry if turnover (services) > 400k or turnover (goods) > 516k Cooperative : double-entry All transactions supported by accounting documents. Every economic transaction has to be registered not later than after 4 months. The form, contents and number of the accounting registers shall be set by an economic entity according to its needs (satisfied criteria of chronological and systematic rec.) 3) Chart of accounts Not prescribed Prescribed Not prescribed Not prescribed Prescribed (the management prepares its own chart based on chart approved by government) Double entry (set of ledgers, sub ledgers and accounts satisfied criteria of timely, completeness, systematic recording) -> accompanied by justification document. Original documents kept for 10 years (3.5 years for secondary documentation) None Books of accounts include: journal general ledger subsidiary ledgers trial balances of general and subsidiary ledger accounts list of assets, liabilities and equity (inventory) Double-entry Double-entry Double-entry Single-entry under tax regulations in case: flat rate income tax fixed amount tax.. (double entry for a tax register of turnover and expenses) Compensation Comparative information Double entry (set of ledgers, sub ledgers and accounts which satisfies criteria of timely, chronological, correct, completeness and systematic recording) All transactions supported by documentation original documentation kept for 10 years Double-entry Prescribed (but not mandatory) Not prescribed Prescribed 4) Other None None None None None None None None Components of financial Abridged statutory FS Abbreviated FS allowed For entities applying accounting act : Abbreviated fin. 1) Profit & loss account Not Abbreviated fin. allowed Unlimited companies : required Partnership : not required Charities : required but abbreviated 2) Balance sheet No requirement Abbreviated fin. allowed Unlimited companies : required Partnership : not required Charities : required but abbreviated 3) Cash flow statement Not Not required Unlimited companies : generally others : not 4) Notes to financial Not Act on Accounting limited disclosures required 5) Consolidated financial 6) Other financial 7) Statement of equity Micro-accounting government decree Not required Unlimited companies: others : generally not No requirement Not required Unlimited companies : requirement others : no requirement Management report Not Not Unlimited partnership : Others : not Auditing 1) Appointment of auditor No specific obligation by Greek law Auditor required if for 2 consecutive years : Net turnover > 685K or Employees > 50 2) Scope of audit N/A Fin. + specific legal engagement audit (mergers, ) Unlimited companies : auditor required Partnership : no requirement Charities : auditor required Require full financial TUB, KUB: Not Required full financial Abbreviated financial MB: Abbreviated fin. allowed General partnership / Civil law : no requirement Required full/abbreviated annual accounts TUB, KUB: Not Required full financial Abbreviated financial MB: Abbreviated fin. allowed General partnership / Civil law : no requirement Not No requirement Not Not Not TUB, KUB: Not (simplified requirements) General partnership / Civil law : -> MB: No requirement Other entities applying accounting act -> Required full/abbreviated financial Abbreviated financial allowed Abbreviated financial allowed No requirement No requirement No requirement No requirement Partnership : not Not General partnership and civil partnership : not Limited partnership and cooperative : Not No requirement No requirement No requirement No requirement No requirement 36

37 37 Type I : micro-size II Greece Hungary Ireland Italy Lithuania Norway Poland Portugal 3) Content of the audit report N/A As per ISA 700 Unlimited companies: introduction, financial reporting framework, audit scope, identification of auditing standards, opinion, responsibility of the management, 4) External audit / internal audit / other N/A External audit: statutory audit (including business report) + consolidation External audit: for unlimited companies and charities External audit : not required Others : None External audit : not required Others : None External audit: not required Publication of financial Not within 5 months from year-end close for statutory accounts (including audit report) EVA Kkt-s and Bt-s: Not relevant no external financial reporting obligation Unlimited companies : (exemption under certain conditions) Partnership : not Charities : not SNC, SAS : not KUB, TUB: Not MB: within 1 month after FS is set, including the management report and the auditors report For entities subject to Accounting Act and thus publication is : annual financial statement, management report, auditors report, resolutions approving the financial and details of profit distribution and loss absorption before the 15th day of the 7th month following the year-end

38 Type I : micro-size II Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK Legal entity name Size thresholds Accounting Systems General partnership : Societate in nume colectiv (SNC) Limited partnership : Societate in comandita simpla (SCS) Cooperative : Cooperativa EU Micro-size II entities correspond to micro-size entities in the local General partnership : verejná obchodná spoločnosť (v.o.s.) Limited partnership : komanditná spoločnosť (k.s.) Cooperative : družstvo EU Micro-size II entities correspond to small-size entities in the local General Partnership : Družba z neomejeno odgovornostjo (d.n.o.) Limited Partnership : Komanditna družba (k.d.) Cooperative : Zadruga EU Micro-size II entities correspond to micro-size entities in the local General partnership : Sociedad colectiva Limited partnership : Sociedad comanditaria simple Cooperative : Sociedades cooperativas (S.Coop) EU Micro-size II entities correspond to micro-size entities in the local General partnership : Handelsbolag, HB Limited partnership : Kommanditbolag, KB EU Micro-size II entities correspond to small-size entities in the local General partnership : Maatschap and Vennootschap onder firma (VOF) and maatschappij Limited partnership : Commanditaire Vennootschap (CV) Cooperative : Cooperatie (COOP) Association : Vereniging Fondation : Stichting EU Micro-size II entities correspond to small-size entities in the local 1) Internal accounting According to management needs Not Not Not Not Incorporated entities must maintain financial information 2) External accounting Double entry Double entry Double entry used by means of a set of ledgers, subledgers and accounts 3) Tax accounting. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Double entry. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. All legal forms of business entities are required to maintain accounting records according to the Book Keeping Act chapter 2, 1 (double entry ). Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Corporations subject to Title 9 Book 2 DCC -> preparation of FS Corporations NOT subject to Title 9 Book 2 DCC -> preparation on basis of tax accounting sufficient Partnerships: Not Separate accounting for tax General partnership : Kolektif Şirket Limited partnership : Komandit Şirket Cooperative : Kooperatif Şirket EU Micro-size II entities correspond to micro-size entities in the local Not In terms of. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. 4) Other accounting systems None None None None None None None None Accounting framework 1) Accounting principles 1.a) Cash basis Not allowed Not allowed Allowed for single entry Not allowed Allowed for current recording if net turnover < 357 K HOWEVER financial -> accrual based Companies not subject to Title 9 Book 2 DCC + partnerships -> no requirements Companies subject to Title 9 Book 2 DCC -> not allowed 1.b) Accrual basis Companies not subject to Title 9 Book 2 DCC + partnerships -> no requirements Companies subject to Title 9 Book 2 DCC -> 1.c) Other accounting principles None None None In case of conflict between several principles, true and fair view of the assets, financial position and results of the enterprise prevail. 2) Principles for external financial Management report with at least statement of financial position and P&L statement Abbreviated financial allowed 2.a) True and fair view (Principle that prevails in case of conflict) Not allowed None None None None Balance sheet Profit and loss account Management report Less disclosures than Medium Sized Companies not subject to Title 9 Book 2 DCC + partnerships -> no requirements Companies subject to Title 9 Book 2 DCC -> 2.b) Going concern Companies not subject to Title 9 Book 2 DCC + partnerships -> no requirements Companies subject to Title 9 Book 2 DCC -> 2.c) Prudence Companies not subject to Title 9 Book 2 DCC + partnerships -> no requirements Companies subject to Title 9 Book 2 DCC -> 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) Obligation of establishing financial Unlimited companies Partnerships (personally owned Unlimited liability) Limited partnership Charities EU Micro-size II entities correspond to small-size entities in the local Not Partnership : no specific requirement Others : comply with UK GAAP or IFRS Not Not Allowed Allowed Unlimited companies, limited partnership and charities : Partnership : not 2.e) Consistency Unlimited companies, limited partnership and charities : Partnership : not 2.f) Separate valuation (compensation 2.g) Materiality Yes Yes (compensation (compensation Companies not subject to Title 9 Book 2 DCC + partnerships -> no requirements Companies subject to Title 9 Book 2 DCC -> (compensation 2.h) Other principles Independence None None None None None None 38

39 39 Type I : micro-size II Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions 1) Financial records Double entry accounting (journal ledger, inventory ledger, general ledger) -> Trial Balance monthly prepared based on movements in General Ledger. Bookkeeping should satisfy criteria of systematic recording and all transactions must be accompanied by justification document. Original documentation kept for 10 years Double-entry (general journal and general ledger satisfied criteria of chronological, systematic recording) Double entry (set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness and systematic recording). All transactions must be accompanied by a justification document. The financial records should be kept permanently. Accounting books kept (journal book, inventory book and financial, satisfying criteria of chronological, and clear, recording without blank spaces, no abbreviation) Double entry book (set of ledgers, sub ledgers and accounts satisfying criteria of timely and completeness). All transactions should refer to a justification document. Original documents kept for 7 years Original documents kept for 7 years Double entry (set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness and systematic recording). All transactions must be accompanied by justification document. Original documents are kept for 10 years. Keep books Unlimited companies : original documents kept for 10 years Charities : original documents kept for 6 years 2) Double-entry vs. Single-entry Double-entry Double-entry Double-entry Double entry or single entry book but double entry is recommended 3) Chart of accounts Prescribed Prescribed Prescribed (no requirement for single entry ) Double-entry Double entry or single book Double-entry Unlimited companies : doubleentry Others : double-entry or singleentry Prescribed (but not mandatory) Not prescribed Not prescribed Prescribed Not prescribed 4) Other None None None None None None None None Components of financial BS P&L Changes in equity CFS notes BS P&L 1) Profit & loss account Abbreviated fin. allowed Required full fin. and structured (no change possible) 2) Balance sheet Abbreviated fin. allowed Required full fin. and structured (no change possible) Double entry : abridged Single entry : free scheme BS P&L (not for abbreviated) Special auditors report + management report notes Abbreviated fin. allowed Abbreviated fin. allowed Abbreviated fin. allowed Depending on the legal type Required Require abbreviated P&L under different circumstances Abbreviated fin. allowed Abbreviated fin. allowed Abbreviated fin. allowed Companies not subject to Title 9 Book 2 DCC: No requirement Companies subject to Title 9 Book 2 DCC: Require abbreviated annual account Required Required full balance sheet 3) Cash flow statement Not Not Not Not Not Not Not Limited partnership, unlimited companies, charities: Partnership: not 4) Notes to financial (accounting principles and accounting policies, other events) 5) Consolidated financial 6) Other financial No requirement No requirement Requirement and contains : P&L BS 7) Statement of equity Not Required Management report Not Management report with at least statement of financial position and P&L statement Auditing 1) Appointment of auditor No requirement (but may be appointed on shareholders decision) No requirement (except for abbreviated forms Abbreviated fin. allowed No requirement (except for micro sized companies whose securities are traded on regulated market) Companies not subject to Title 9 Book 2 DCC: Not Companies subject to Title 9 Book 2 DCC: (simplified relating to medium sized) Requirement (notion of control) No requirement Companies not subject to Title 9 Book 2 DCC + partnerships: No requirement Companies subject to Title 9 Book 2 DCC: Requirement (notion of control) Not Abbreviated BS: no requirement Full BS: auditor required Not for: General partnership (HB) that is only owned by physical persons Limited partnership (KB) that is owned only by physical persons Cooperative: Auditor required Rest: No requirement Not for: Associations / Cooperations that are not subject to Title 9 Book 2 DCC Unlimited companies, partnerships, charities: No requirement Requirement unless exemption (BS + P&L + notes) Unlimited companies, limited partnerships: General partnerships : Not No requirement No requirement Auditor required for: Charities if: Gross income > 583 K Gross assets > K No requirement: Unlimited companies, Limited partnerships General partnerships Cooperatives if: BS < K Net turnover < 408 K

40 Type I : micro-size II Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK 2) Scope of audit Not mentioned (consolidated) financial + specific engagements audits + management report (consolidated) financial 3) Content of the audit report Not mentioned As per ISA 700 Unlimited companies : Identification of FS and financial reporting framework Audit scope Statement as opinion prepared in accordance with the Companies Act 2006 Opinion if enterprise does not keep adequate accounting records if enterprise does not provide the auditors with all the information they need 4) External audit / internal audit / other Publication of financial External audit : not required Internal audit : for audited entities Other : None < 150 days after close of financial year External audit : not required Other : None < 30 days after approval Internal audit is not regulated < 3 months after close of financial year Other : None not External audit :(consolidated) Fin. + management report + specific legal engagements audits Other : None HB/KB which closes financial with management report: when asked by interested party No requirement Corporations not subject to Title 9 Book 2 DCC: not Corporations subject to Title 9 Book 2 DCC: within 8 days of adoption of FS External audit : not required Other : None not External audit : (consolidated) financial Others : None Unlimited companies : if subsidiary undertaking or a parent of a limited undertaking Limited partnership : Charities : not 40

41 41 5. Type II - Medium Sized Type II : medium-size Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany Legal entity name Sole propriertorship/natural persons : Einzelunternehmer Sole propriertorship/natural persons : Independent / Zelfstandige Sole propriertorship/natural persons : Едноличен търговец Size thresholds No size regulation for type II No size regulation for type II EU Medium-size entities correspond principally to medium-size entities in the local (+ part of small entities) Accounting Systems Sole propriertorship/natural persons : Obrtnik Sole propriertorship/natural persons : Živnost Sole propriertorship/ Natural persons : Enkeltmandsvirksomhed Sole propriertorship/natural persons : Füüsilisest isikust ettevõtja (FIE) Sole propriertorship/natural persons : Entrepreneur individuel Sole propriertorship/natural persons : Eingetragener Kaufmann No size regulation for type II No size regulation for type II No size regulation for type II No size regulation for type II No medium-size for type II No size regulation for type II 1) Internal accounting Not Not Not Not Not Not Not Not 2) External accounting Keep books (double entry ) and record all transactions Exceptions: independent profession, farmers, lumberjacks also if they operate in the legal form of a partnership 3) Tax accounting Double entry unless if net turnover < 500K (single entry based on receipts and expenditures). In this last case, all transactions need to be recorded without delay, accurately, complete and chronologically in at least 3 journal ledgers: financial ledger purchase ledger sales ledger -> required to centralize each 3 months in case of use of sub ledgers. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Exhaustive chronological registration Systematic accounting ledgers Interim and annual closing of accounting ledgers, generation of a journal Possibility to make changes in the book entries made, by way of making adjustment accounting entries Application of an individual chart of accounts. Keep accounting records: book of cash receipts and expenditures, non-current asset book, turnover book and book of receivables and liabilities. -> not required to prepare FS unless : select to pay income tax instead of personal income tax if exceed at least 1 of te 3 criteria for the last period : Receipts > 263K Income > 53K non-current asset >263K employees > 15 Must keep books of received and issued invoices if obliged to register to VAT Keep accounting records if annual turnover exceed 976K (double entry ) Not but a tax income statement needs to be prepared If cash-based accounting : FS not required If accrual based accounting: accounting required in accordance with local GAAP or IFRS For tax, the entity must use cash-based accounting so when the entity use accrual base accounting, it has to keep a separate accounting for tax (cash-based) 4) Other accounting systems None None None None None None None None Accounting framework 1) Accounting principles 1.a) Cash basis Not allowed for single entry 1.b) Accrual basis for double entry 1.c) Other accounting principles 2) Principles for external financial Not allowed for book of cash receipts and expenditures for turnover book and book of receivables and liabilities and book of received and issued invoices Not allowed Allowed Allowed Not allowed Allowed Allowed None None None None None None None None No financial obligation Full financial in accordance to local GAAP or IFRS No financial obligation 2.a) True and fair view No FS No FS Fair : if contents of individual items correspond to respective facts and comply with applicable accounting principles and accounting policies True : if FS prepared using accounting principles and policies No financial obligation When use cash based accounting -> no requirement When use accrual based accounting -> following principles apply No FS 2.b) Going concern No FS No FS No FS 2.c) Prudence No FS No FS No FS 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) No FS No FS No FS 2.e) Consistency No FS No FS No FS 2.f) Separate valuation No FS No FS Valuation performed : as at the date of accounting transaction (acquisition cost, conversion cost, nominal value, replacement cost or fair value) as at the balance sheet date (for securities, derivatives, financial allocations and accounts receivables for trading) as at another date if required by special No FS Double entry (set of ledgers, sub-ledgers and accounts) (e.g. expenses for accrued pending losses not accepted by the tax authority). Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements.

42 Type II : medium-size Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany 2.g) Materiality 2.h) Other principles None None None None Understandability Materiality (relevance) Substance over form 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions 1) Financial records Double entry (set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness, correct and systematic recording). All transactions should be accompanied by a justification document. Original documents kept for 7 years 2) Double-entry vs. Singleentry Double entry if : Turnover > 700K /an Balance sheet > 1.000K during 2 consecutive years otherwise -> single entry enough 3) Chart of accounts Prescribed by Section 198 of the Austrian Commercial Code For double entry : set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness, correct and systematic rec. All transactions should be accompanied by a justification document. Original documents kept for 7 years (3 for secondary documentation) For single entry : all transactions need to be recorded without delay, accurately, complete and chronologically in at least 3 journal ledgers: financial ledger purchase ledger sales ledger -> required to centralize each 3 months in case of use of subledgers Double entry if turnover > 500K and single entry if turnover < 500K Prescribed for double entry but not prescribed for single entry Sets of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness, chronological order, systematic recording and accuracy. All transactions should be accompanied by a justification document. Original documentation kept for 5 years (10 years for FS and 50 for salary recapitulation) Determined by management (double or single entry) Keep accounting records: book of cash receipts and expenditures non-current asset book turnover book and overview of receivables and liabilities + books of received and issued invoices if obliged to register to VAT General ledger showing the following information in particular: the states of accounts as at the opening date of the general ledger the turnovers of the Credit and Debit sides in individual accounts, summarized at least every month, balances and states of accounts as at the date of preparation of the financial Set of ledgers, sub ledgers and accounts (satisfied criteria of completeness, traceability, systematic recording) Original documents kept for 5 years Hard copies electronic form satisfying criteria of chronological recording and reports for each account separately, original documentation kept for 7 years. Single entry Double entry Double entry Single-entry when cash based accounting Double-entry when accrual based accounting Principle of imparity Set of ledgers, sub ledgers and accounts (satisfied criteria of systematic recording) Original documents kept for 10 years (6 for secondary documentation) Generally double entry Not prescribed Not prescribed Not prescribed Not prescribed Not prescribed Not prescribed 4) Other None None None None None None None None Components of financial 1) Profit & loss account Not in report form (Staffelform) using either the total-cost format (Gesamtkostenverfahren) or the cost-of-sales format (Umsatzkostenverfahren) 2) Balance sheet Not in accounts format No FS No FS Abbreviated accounts 2 types of format : two-sided P&L: turnover and expenses listed in two columns next to each other One-sided P&L : similar to IAS 1 Abbreviated accounts Balance sheet P&L For cash-based accounting : no FS For accrual-based accounting: the following apply: No FS Scheme prescribed by law No FS : grouping of costs by nature or by function (min. details prescribed) No FS Scheme prescribed by law No FS Different schemes prescribed by law 3) Cash flow statement Not No FS As per NFRSSME No FS Not No FS (no layout) Not 4) Notes to financial 5) Consolidated financial Not No FS As per NFRSSME No FS and contain : application of the accounting principle accounting policies suppl. information other events not presented in balance sheet which affect the financial position Not No FS Requirements : P&L, BS, notes, cash flow statement and statement of changes in equity Exemptions : negligible or absorption could affect the fair image No FS Requirement if exceeded 2 out of 3 criteria: Net turnover (excl. VAT) > K Balance sheet > K Employees > 50 Exemption : sub-consolidation No FS and contain : applicable financial reporting framework accounting principle detailed information on figures other circumstances that affect the position (no mandatory format) (no mandatory format) Not No FS Not Not 6) Other financial None None None None None None None None 7) Statement of equity Management report Not Not if audited Not Not Not For cash-based accounting : not For accrual-based accounting : but simplified and no obligation of publication of the management report Not 42

43 43 Type II : medium-size Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany Auditing 1) Appointment of auditor Not Not Auditor required if 2 of 3 criteria exceeded during 2 consecutive years : Balance sheet > 767K Net turnover > 1.278K Average personnel > 50 Not Not Not For cash-based accounting : not For accrual-based accounting : when exceeded 2 out of 3 criteria : Turnover > 2.000K Assets > 1.000K Employees > 30 or exceeded 1 of the 3 criteria: Turnover > 6.000K Assets > 3.000K Employees > 90 2) Scope of audit (consolidated) fin. + Statutory audit 3) Content of the audit report management report + specific legal engagements audits (takeover, merger, splitting, spin-off, ) As per ISA 700 Identification of FS and applicable accounting framework Management s and auditors Responsibility Emphasis of Matter (if applicable) Basis for Qualified Opinion (Qualified) Opinion 4) External audit / internal audit / other Publication of financial External audit : (consolidated) fin. + management report + specific legal engagements audits Internal audit : Not regulated Others : None Not Not when auditor required : until the 31st May each year Not (FS, auditors report, management report and report on relations), at latest 30 days after approval, and at latest at end of following accounting period External audit : generally not Others : None Not Not Not N/A

44 Type II : medium-size Greece Hungary Ireland Italy Lithuania Norway Poland Portugal Legal entity name Atomiki Epihirisi Sole propriertorship/natural persons : Egyéni cég Private Entrepreneur : Egyéni vállalkozó Size thresholds No size regulation for type II EU Medium-size entities correspond principally to medium-size entities in the local (+ part of large entities) Accounting Systems Soler trader Ditta Individuale Individuali įmonė Enkeltpersonforetak (EPF) No size regulation for type II No size regulation for type II No size regulation for type II EU Medium-size entities correspond principally to medium-size entities in the local (+ part of small entities) Sole propriertorship/natural persons : indywidualna działalność gospodarcza/ osoby fizyczne No size regulation for type II 1) Internal accounting Not Not Not Not Not Not Not Not 2) External accounting If turnover > 1.500K : double entry. 3) Tax accounting Accounting is relevant only for taxation s (accounting is relevant only for taxation s) Double entry Double-entry unless if not VAT payer and no employees in current and prior financial year (single ) (accounting is relevant only for taxation s) Double entry (set of ledgers, sub-ledgers and accounts) at least on a monthly basis -> centralisation of sub ledgers 4) Other accounting systems None None None None None None (except for specific requirement in the construction industry to install project accounting) Accounting framework 1) Accounting principles Double entry Separate tax registers kept for VAT and excise taxes. For CIT s the entity is obliged to carry out separate ledgers for fixed assets. 1.a) Cash basis Not allowed Allowed Not allowed Not allowed Not allowed Not allowed Not allowed 1.b) Accrual basis Not allowed Allowed 1.c) Other accounting principles None None None None None None None None Empresário em nome individual EU Medium-size entities correspond to large-size entities in the local All transactions supported by documentation satisfied criteria of chronological, correct and timely rec. (within 90 days) permanent inventory system None 2) Principles for external financial No financial obligation No financial obligation No FS 2.a) True and fair view No FS No FS No FS No FS 2.b) Going concern No FS No FS No FS No FS 2.c) Prudence 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) (prudence, sincerity and good faith) No FS No FS No FS No FS Unrealized losses shall be recognized No FS No FS No FS No FS (exception for mergers, demergers, ) 2.e) Consistency No FS No FS No FS No FS 2.f) Separate valuation No FS No FS No FS No FS (compensation 2.g) Materiality 2.h) Other principles 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions historical cost principle matching principle single currency principle entries supported by appropriate documentation 1) Financial records Double entry accounting : Daily journal(s) General and analytical ledgers - - Trial Balance Fixed Assets register Book of Inventory Accounts and Balance Sheets -> entries supported by documents None None No FS No FS Congruence principle: all turnover and costs shall be recognized Hedging principle: gains and losses are recognized in the same period No FS Cash-book/record on turnover and expenses (single-entry ) and other records, documents required by tax laws Not except for tax s, turnover requires that full and accurate records of any business are kept from the start. The records a sole traders keeps must be sufficient to enable the business to make a proper return of income for tax s. Any system that provide all the information necessary to be compliant with tax authority All transactions supported by accounting documents. Every economic transaction has to be registered not later than after 4 months. The form, contents and number of the accounting registers shall be set by an economic entity according to its needs (satisfied criteria of chronological and systematic rec.) Double entry (set of ledgers, sub ledgers and accounts satisfied criteria of timely, completeness, systematic recording) -> accompanied by justification document. Original documents kept for 10 years (3.5 years for secondary documentation) None Books of accounts include: journal general ledger subsidiary ledgers trial balances of general and subsidiary ledger accounts list of assets, liabilities and equity (inventory) (prudence, sincerity and good faith) Not Not (compensation possible), measurement base are: historical cost current cost realizable value present value fair value Yes Aggregation Comparative information Double entry (set of ledgers, sub ledgers and accounts which satisfies criteria of timely, chronological, correct, completeness and systematic recording) All transactions supported by documentation original documentation kept for 10 years 44

45 45 Type II : medium-size Greece Hungary Ireland Italy Lithuania Norway Poland Portugal 2) Double-entry vs. Single-entry Double entry Single entry Double or single entry Double entry Double-entry unless if not VAT payer and no employees in current and prior financial year (single entry) 3) Chart of accounts Prescribed by GGCA Not prescribed Not prescribed Not prescribed Prescribed (the management prepares its own chart based on chart approved by government) Double entry Double entry Double entry Prescribed (but not mandatory) Not prescribed Prescribed 4) Other None None None None None None None None Components of financial No FS 1) Profit & loss account No FS For tax s, turnover requires that full and accurate records of any business are kept from the start. 2) Balance sheet No FS For tax s, turnover requires that full and accurate records of any business are kept from the start. No FS No FS Required full financial Required full financial Required full financial No FS No FS Required full financial Required full financial Required full financial 3) Cash flow statement Not No FS Not No FS No FS (small entities exempted) (direct or indirect method) 4) Notes to financial Not No FS Not No FS No FS 5) Consolidated financial 6) Other financial If turnover > 5.000K, obliged to keep account 94 of the GGCA (i.e. a stock book), where the quantities / dispatches, sales and purchases are monitored per storing space (branch, head office etc.) Inventory register updated at end of each year Fixed assets are monitored separately (fixed assets register, where depreciations are monitored) 7) Statement of equity Not No FS Not No FS No FS Requirement : if 2 out of 3 criteria : Net turnover > K Balance sheet > K Employees > 250 Exemption : immaterial, restrictions to the information, # costs, held for sale Conso contains : P&L BS CFS Changes in equity None None None None None None None Management report Not Not Not Not Not Not Auditing 1) Appointment of auditor Not Not Not Not Not Auditor required if 2 out of 3 criteria exceeded during 2 consecutive years : Net turnover > 634 K Balance sheet > 2.537K Employees > 10 2) Scope of audit Turnover audit possible (Consolidated) financial + management report 3) Content of the audit report Introduction over FS Responsibility of management Opinion about the FS FS determined in accordance with laws and regulations Opinion about management report Audit being in accordance with laws, regulations, and auditing standards Specific matters on which auditor want to bring attention Auditor required Financial + management report (if applicable) + specific engagements audits ((de)merges, contribution in kind,...) Introduction over FS and applicable accounting framework Responsibilities of management and auditors Audit scope Bookkeeping established in accordance with legal and management regulation applicable Opinion on FS Reference to management report (if applicable) Requirement : if 2 out of 3 criteria exceeded : Net turnover > K Balance sheet > K Employees > 250 Auditor required if 2 out of 3 criteria exceeded : Balance sheet > 1.500K Net turnover > 3.000K Employees > 50 Statutory audit + specific legal engagements audits (contribution in kind, merger or demerger, proposal to dissolution, issuance of shares without nominal value below listing value, call on public savings, ) Introduction over financial and applicable accounting framework Audit scope Description of liabilities Opinion Reference to specific matters on which the auditor want to bring attention

46 Type II : medium-size Greece Hungary Ireland Italy Lithuania Norway Poland Portugal 4) External audit / internal audit / other External audit : (consolidated) annuals accounts + management report Others : None Publication of financial Not Not Not Not Not within 1 month after FS is set, including the management report and the auditors report External audit: statutory audit on FS + specific legal engagements audits (contributions in kind, mergers, demergers,...) : annual financial statement, management report, auditors report, resolutions approving the financial and details of profit distribution and loss absorption External audit : statutory audit + specific legal engagements audits Others : None beofre the 15th day of the 7th month following the year-end 46

47 47 Type II : medium-size Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK Legal entity name Intreprinderi individuale Živnostník samostojni podjetnik Size thresholds No size regulation for type II No size regulation for type II EU Medium-size entities correspond principally to medium-size entities in the local (+ part of large entities) Accounting Systems Empresario individual No size regulation for type II Enskild firma EU Medium-size entities correspond principally to large-size entities in the local (+ part of small entities) Eenmanszaak No size regulation for type II Tek kişi işletmesi EU Medium-size entities correspond principally to medium-size entities in the local (+ part of large entities) 1) Internal accounting Not Not Not Not Not Not Not Not 2) External accounting Single entry Double entry (or single entry for entities which are not registered to Commercial Register) 3) Tax accounting Double entry used by means of a set of ledgers, subledgers and accounts Double entry accounting but no specific accounting system All legal forms of business entities are required to maintain accounting records according to the Book Keeping Act (double entry ). Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Sole trader No size regulation for type II Not Double entry Not subject to any accounting or auditing requirements Separate accounting for tax. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. 4) Other accounting systems None None None None None None None None Accounting framework 1) Accounting principles aside from the s of having to complete a tax return 1.a) Cash basis for single entry 1.b) Accrual basis Not allowed for double entry Not allowed Not allowed Not allowed Not specified Not allowed Not specified Not specified Not specified 1.c) Other accounting principles None None None None None None None None 2) Principles for external financial Obligation for establishing : Statement of financial position P&L Cash flow statement Capital flow statement Management report 2.a) True and fair view No FS (principle that prevails in case of conflict) No FS No FS 2.b) Going concern No FS No FS No FS 2.c) Prudence No FS No FS No FS 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) No FS Not Not No FS No FS 2.e) Consistency No FS same accounting rules during the accounting period (accounting rules can be changed only at the first date of the accounting period) No FS No FS 2.f) Separate valuation No FS (compensation 2.g) Materiality (compensation 2.h) Other principles None None None Relevance : those amounts with less relevance can be grouped with other of similar nature or function 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions 1) Financial records Original documentation kept for 10 years. Inventory at the beginning of the activities and after : once a year (+ in case of merger, spin-off or dissolution) For double entry : general journal and general ledger satisfied criteria of chronological, systematic recording For single entry : cash receipts journal, receivables, payables and subsidiary ledgers 2) Double-entry vs. Single-entry Single entry Double entry (or single entry for entities which are not registered to Commercial Register) 3) Chart of accounts Not prescribed Double entry : prescribed Single entry : not prescribed Double entry (set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness and systematic recording). All transactions must be accompanied by a justification document. The financial records should be kept permanently. Double-entry Yes Accounting books kept (journal book, inventory book and financial, satisfying criteria of chronological, and clear, recording without blank spaces, no abbreviation) Double entry or single entry book but double entry is recommended (compensation No FS (compensation None None None None Double entry book (set of ledgers, sub ledgers and accounts satisfying criteria of timely and completeness). All transactions should refer to a justification document. Original documents kept for 7 years Original documents kept for 7 years Double entry (set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness and systematic recording). All transactions must be accompanied by justification document. Original documents are kept for 10 years. Double entry Double or single entry Double entry No FS Prescribed Prescribed (but not mandatory) Not prescribed Not prescribed Prescribed No FS 4) Other None None None None None None None None No FS No FS but must keep details of all financial transactions

48 Type II : medium-size Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK Components of financial prepare FS not later than 6 months after balance sheet date 1) Profit & loss account No FS Required full financial and structured (no change possible) 2) Balance sheet No FS Required full financial and structured (no change possible) BS P&L CFS Capital flow statement notes management report Require abbreviated financial Require abbreviated financial Require abbreviated financial Require abbreviated financial FS, double entry and management report if 2 out of 3 criteria exceeded : Balance sheet > 4.650K Net turnover > 9.300K Employees > 50 Required full financial No FS No FS Required full financial No FS No FS 3) Cash flow statement No FS Not Not No FS Not No FS 4) Notes to financial No FS Double entry : Single entry : not 5) Consolidated financial No FS Not Requirement and contains : P&L BS 6) Other financial None For single entry, entity has to prepare in addition : income and expenses statement assets and liabilities statement 7) Statement of equity Required No FS No FS Requirement (notion of control) Not No FS Not No FS None None None None None None Management report Not Not Not Not Not Not Auditing 1) Appointment of auditor Not Not Auditor required Not Not Not No requirement Not 2) Scope of audit (consolidated) fin. Management report Specific legal engagements audits (contribution in kind, quasi contribution, merger or demerger, proposal to dissolution, ) 3) Content of the audit report Identification of the FS and applicable accounting framework Audit scope Opinion Reference to specific matters on which the auditor want to bring attention irrespective of an emphasis paragraph Opinion on business report Description of any act or decision taken by the Companies in breach of the Companies Act 4) External audit / internal audit / other External audit :(consolidated) fin. + managem. report + specific legal engagements audits Other : None Publication of financial Not Not < 8 months after close of financial year External audit : not required Others : None Not Not Not Not Not 48

49 49 6. Type II - Small Sized Type II : small-size Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany Legal entity name Sole propriertorship/natural persons : Einzelunternehmer Sole propriertorship/natural persons : Independent / Zelfstandige Sole propriertorship/natural persons : Едноличен търговец Size thresholds No size regulation for type II No size regulation for type II EU small-size entities correspond principally to medium-size entities in the local (+ part of small entities) Accounting Systems Sole propriertorship/natural persons : Obrtnik Sole propriertorship/natural persons : Živnost Sole propriertorship/ Natural persons : Enkeltmandsvirksomhed Sole propriertorship/natural persons : Füüsilisest isikust ettevõtja (FIE) Sole propriertorship/natural persons : Entrepreneur individuel Sole propriertorship/natural persons : Eingetragener Kaufmann No size regulation for type II No size regulation for type II No size regulation for type II No size regulation for type II No small-size for type II No size regulation for type II 1) Internal accounting Not Not Not Not Not Not Not Not 2) External accounting Keep books (double entry ) and record all transactions Exceptions: independent profession, farmers, lumberjacks also if they operate in the legal form of a partnership 3) Tax accounting Double entry unless if net turnover < 500K (single entry based on receipts and expenditures). In this last case, all transactions need to be recorded without delay, accurately, complete and chronologically in at least 3 journal ledgers: financial ledger purchase ledger sales ledger -> required to centralize each 3 months in case of use of subledgers. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Exhaustive chronological registration Systematic accounting ledgers Interim and annual closing of accounting ledgers, generation of a journal Possibility to make changes in the book entries made, by way of making adjustment accounting entries Keep accounting records: book of cash receipts and expenditures, non-current asset book, turnover book and book of receivables and liabilities. -> not required to prepare FS unless : select to pay income tax instead of personal income tax if exceed at least 1 of the 3 criteria for the last period : Receipts > 263K Income > 53K non-current asset >263K employees > 15 Must keep books of received and issued invoices if obliged to register to VAT Keep accounting records if annual turnover exceed 976K (double entry ) Not No separate accounting for fax but a tax income statement needs to be prepared If cash-based accounting : FS not required If accrual based accounting: accounting required in accordance with local GAAP or IFRS For tax, the entity must use cash-based accounting so when the entity use accrual base accounting, it has to keep a separate accounting for tax (cash-based) 4) Other accounting systems None None None None None None None None Accounting framework 1) Accounting principles 1.a) Cash basis Not allowed for single entry 1.b) Accrual basis 1.c) Other accounting principles 2) Principles for external financial for double entry for double entry Not allowed for book of cash receipts and expenditures for turnover book and book of receivables and liabilities and book of received and issued invoices Not allowed Allowed Allowed Not allowed Allowed Allowed None None None None None None None None No financial obligation required for independent, natural persons. Full financial in accordance to local GAAP or IFRS 2.a) True and fair view No FS No FS Fair : if contents of individual items correspond to respective facts and comply with applicable accounting principles and accounting policies True : if FS prepared using accounting principles and policies When use cash based accounting -> no requirement When use accrual based accounting -> following principles apply No FS 2.b) Going concern No FS No FS No FS 2.c) Prudence No FS No FS No FS 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) No FS No FS No FS 2.e) Consistency No FS No FS No FS 2.f) Separate valuation No FS No FS Valuation performed : as at the date of accounting transaction (acquisition cost, conversion cost, nominal value, replacement cost or fair value) as at the balance sheet date (for securities, derivatives, financial allocations and accounts receivables for trading) as at another date if required by special 2.g) Materiality No FS Double entry (set of ledgers, sub-ledgers and accounts) (e.g. expenses for accrued pending losses not accepted by the tax authority). Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements.

50 Type II : small-size Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany 2.h) Other principles Purchased goodwill : capitalised and amortised over its estimated useful life (for tax s over 15 years) Internally developed intangibles may not be capitalised 2.i) Matching income and expenses None None None None Understandability Materiality (relevance) Substance over form Principle of imparity 2.j) Precedence of substance over form Recording of financial transactions 1) Financial records Double entry (set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness, correct and systematic recording). All transactions should be accompanied by a justification document. Original documents kept for 7 years 2) Double-entry vs. Singleentry Double entry if : Turnover > 700K /an Balance sheet > 1.000K during 2 consecutive years otherwise -> single entry enough 3) Chart of accounts Prescribed by Section 198 of the Austrian Commercial Code For double entry : set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness, correct and systematic recording All transactions should be accompanied by a justification document. Original documents kept for 7 years (3 for secundary documentation).for single entry : all transactions need to be recorded without delay, accurately, complete and chronologically in at least 3 journal ledgers: financial ledger, purchase ledge, sales ledger -> required to centralize each 3 months in case of use of subledgers Double entry if turnover > 500K and single entry if turnover < 500K Prescribed for double entry but not prescribed for single entry Sets of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness, chronological order, systematic recording and accuracy. All transactions should be accompanied by a justification document. Original documentation kept for 5 years (10 years for FS and 50 for salary recapitulation) Determined by management (double or single entry) Keep accounting records: book of cash receipts and expenditures non-current asset book turnover book and overview of receivables and liabilities + books of received and issued invoices if obliged to register to VAT General ledger showing the following information in particular: the states of accounts as at the opening date of the general ledger the turnovers of the Credit and Debit sides in individual accounts, summarized at least every month, balances and states of accounts as at the date of preparation of the financial Set of ledgers, sub ledgers and accounts (satisfied criteria of completeness, traceability, systematic recording) Original documents kept for 5 years Hard copies electronic form satisfying criteria of chronological recording and reports for each account separately, original documentation kept for 7 years. Single entry Double entry Double entry Single-entry when cash based accounting Double-entry when accrual based accounting Set of ledgers, sub ledgers and accounts (satisfied criteria of systematic recording) Original documents kept for 10 years (6 for secondary documentation) Generally double entry Not prescribed Not prescribed Not prescribed Not prescribed Not prescribed Not prescribed 4) Other None None None None None None None None Components of financial 1) Profit & loss account Not in report form (Staffelform) using either the total-cost format (Gesamtkostenverfahren) or the cost-of-sales format (Umsatzkostenverfahren) 2) Balance sheet Not in accounts format No FS No FS Abbreviated accounts 2 types of format : two-sided P&L: turnover and expenses listed in two columns next to each other One-sided P&L : similar to IAS 1 Abbreviated accounts Balance sheet P&L For cash-based accounting : no FS For accrual-based accounting : the following apply : No FS Scheme prescribed by law No FS Required : grouping of costs by nature or by function (min. details prescribed) No FS Scheme prescribed by law No FS Different schemes prescribed by law 3) Cash flow statement Not No FS As per NFRSSME No FS Not No FS (no layout) Not 4) Notes to financial 5) Consolidated financial Not No FS As per NFRSSME No FS and contain : application of the accounting principle accounting policies suppl. information other events not presented in balance sheet which affect the financial position Not No FS Requirements : P&L, BS, notes, cash flow statement and statement of changes in equity Exemptions : negligible or absorption could affect the fair image No FS and contain : applicable financial reporting framework accounting principle detailed information on figures other circumstances that affect the position Not No FS No requirement No FS Not Not 6) Other financial None None None None None None None None 7) Statement of equity Management report Not Not if audited Not Not Not For cash-based accounting : not For accrual-based accounting : but simplified and no obligation of publication of the management report Not 50

51 51 Type II : small-size Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany Auditing 1) Appointment of auditor Not Not Auditor required if 2 of 3 criteria exceeded during 2 consecutive years : Balance sheet > 767K Net turnover > 1.278K Average personnel > 50 2) Scope of audit (consolidated) fin. + management report + specific legal engagements audits (takeover, merger, splitting, spin-off, ) Not Not Not For cash-based accounting : not For accrual-based accounting : when exceeded 2 out of 3 criteria : Turnover > 2.000K Assets > 1.000K Employees > 30 or exceeded 1 of the 3 criteria: Turnover > 6.000K Assets > 3.000K Employees > 90 Statutory audit 3) Content of the audit report As per ISA 700 Identification of FS and applicable accounting framework Management s and auditors Responsibility Emphasis of Matter (if applicable) Basis for Qualified Opinion (Qualified) Opinion 4) External audit / internal audit / other Publication of financial External audit : (consolidated) fin. + management report + specific legal engagements audits Internal audit : Not regulated Others : None Not Not when auditor required : until the 31st May each year Not (FS, auditors report, management report and report on relations), at latest 30 days after approval, and at latest at end of following accounting period External audit : generally not Others : None Not Not Not N/A

52 Type II : small-size Greece Hungary Ireland Italy Lithuania Norway Poland Portugal Legal entity name Atomiki Epihirisi Sole propriertorship/natural persons : Egyéni cég Private Entrepreneur : Egyéni vállalkozó Size thresholds No size regulation for type II EU small-size entities correspond principally to small-size entities in the local (+ part of micro entities) Accounting Systems Soler trader Ditta Individuale Individuali įmonė Enkeltpersonforetak (EPF) No size regulation for type II No size regulation for type II No size regulation for type II EU small-size entities correspond principally to medium-size entities in the local (+ part of small entities) Sole propriertorship/natural persons : indywidualna działalność gospodarcza/ osoby fizyczne No size regulation for type II 1) Internal accounting Not Not Not Not Not Not Not Not 2) External accounting If turnover > 1.500K : double entry If turnover < 1.500K : single entry 3) Tax accounting Accounting is relevant only for taxation s (accounting is relevant only for taxation s) Double entry Double-entry unless if not VAT payer and no employees in current and prior financial year (single ) (accounting is relevant only for taxation s) Double entry (set of ledgers, sub-ledgers and accounts) at least on a monthly basis -> centralisation of sub ledgers 4) Other accounting systems None None None None None None (except for specific requirement in the construction industry to install project accounting) Accounting framework 1) Accounting principles Double entry Separate tax registers kept for VAT and excise taxes. For CIT s the entity is obliged to carry out separate ledgers for fixed assets. 1.a) Cash basis Not allowed Allowed Not allowed Not allowed Not allowed Allowed for: tax regulations for interest income and costs, F/X differences, payroll costs paid after maturity date and rental payments 1.b) Accrual basis Not allowed Allowed 1.c) Other accounting principles None None None None None None None None Empresário em nome individual EU small-size entities correspond principally to large-size entities in the local (+ part of small entities) All transactions supported by documentation satisfied criteria of chronological, correct and timely rec. (within 90 days) None Not allowed 2) Principles for external financial No financial obligation No financial obligation No FS 2.a) True and fair view 2.b) Going concern 2.c) Prudence 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) If turnover > 1.500K : If turnover < 1.500K : not If turnover > 1.500K : If turnover < 1.500K : not (prudence, sincerity and good faith) No FS No FS No FS No FS If net turnover < 1.200K : not If net turnover > 1.200K : No FS No FS No FS No FS If net turnover < 1.200K : not If net turnover > 1.200K : No FS No FS No FS No FS Unrealized losses shall be recognized No FS No FS No FS No FS (exception for mergers, demergers, ) If net turnover < 1.200K : not If net turnover > 1.200K : If net turnover < 1.200K : not If net turnover > 1.200K : 2.e) Consistency No FS No FS No FS No FS If net turnover < 1.200K : not If net turnover > 1.200K : 2.f) Separate valuation No FS No FS No FS No FS (compensation 2.g) Materiality 2.h) Other principles 2.i) Matching income and expenses 2.j) Precedence of substance over form Historical cost principle Single currency principle; Entries have to be supported by appropriate documentation. None None No FS No FS Congruence principle: all turnover and costs shall be recognized Hedging principle: gains and losses are recognized in the same period If net turnover < 1.200K : not If net turnover > 1.200K : None (prudence, sincerity and good faith) Not Not (compensation possible), measurement base are: historical cost current cost realizable value present value fair value Yes Aggregation Comparative information 52

53 53 Type II : small-size Greece Hungary Ireland Italy Lithuania Norway Poland Portugal Recording of financial transactions 1) Financial records If turnover > 1.500K : double entry accounting, Daily journal(s) General and analytical ledgers - - Trial Balance Fixed Assets register Book of Inventory Accounts and Balance Sheets -> entries supported by documents If turnover < 1.500K : single entry accounting Cash-book/record on turnover and expenses (single-entry ) and other records, documents required by tax laws Not except for tax s, turnover requires that full and accurate records of any business are kept from the start. The records a sole traders keeps must be sufficient to enable the business to make a proper return of income for tax s. Any system that provide all the information necessary to be compliant with tax authority All transactions supported by accounting documents. Every economic transaction has to be registered not later than after 4 months. The form, contents and number of the accounting registers shall be set by an economic entity according to its needs (satisfied criteria of chronological and systematic rec.) Double entry (set of ledgers, sub ledgers and accounts satisfied criteria of timely, completeness, systematic recording) -> accompanied by justification document. Original documents kept for 10 years (3.5 years for secondary documentation) Books of accounts include: journal general ledger subsidiary ledgers trial balances of general and subsidiary ledger accounts list of assets, liabilities and equity (inventory) Double entry (set of ledgers, sub ledgers and accounts which satisfies criteria of timely, chronological, correct, completeness and systematic recording) All transactions supported by documentation original documentation kept for 10 years 2) Double-entry vs. Single-entry If turnover> 1.500K : double entry If turnover < 1.500K : single entry 3) Chart of accounts If turnover> 1.500K : prescribed If turnover < 1.500K : not prescribed Single entry Double or single entry Double entry Double-entry unless if not VAT payer and no employees in current and prior financial year (single entry) Not prescribed Not prescribed Not prescribed Prescribed (the management prepares its own chart based on chart approved by government) Double entry Double-entry Single-entry under tax regulations in case: flat rate income tax fixed amount tax. (double entry for a tax register of turnover and expenses) Double entry Prescribed (but not mandatory) Not prescribed Prescribed 4) Other None None None None None None None None Components of financial No FS If more than one criteria exceeded: BS: K Net turnover: K Avg number of employees: 50 -> Full FS OTHERWISE: -> Abbreviated FS allowed 1) Profit & loss account Net turnover > K : Net turnover < K : not 2) Balance sheet Net turnover > K : Net turnover < K : not No FS No FS For tax s, turnover requires that full and accurate records of any business are kept from the start. For tax s, turnover requires that full and accurate records of any business are kept from the start. No FS No FS Required full financial If net turnover > 1.200K : required full/abbreviated financial If net turnover < 1.200K : not No FS No FS Required full financial If net turnover > 1.200K : required full/abbreviated financial If net turnover < 1.200K : not 3) Cash flow statement Not No FS Not No FS No FS Not If net turnover > 1.200K : when audit is If net turnover < 1.200K : not 4) Notes to financial Not No FS Not No FS No FS (abbreviated) If net turnover > 1.200K : required full/abbreviated financial If net turnover < 1.200K : not 5) Consolidated financial Not No FS Not No FS No FS No requirement No requirement 6) Other financial None None None None None None None None 7) Statement of equity Management report Not Not Not Not Not Not Not Auditing 1) Appointment of auditor Not Not Not Not Not Auditor required if 2 out of 3 criteria exceeded during 2 consecutive years : Net turnover > 634 K Balance sheet > 2.537K Employees > 10 2) Scope of audit Turnover audit possible (Consolidated) financial + Managem. report If turnover < 1.200K : not If turnover > 1.200K : Auditor required if2 out of 3 criteria exceeded during 2 consecutive years : Net turnover > 5.000K Balance sheet > 2.500K Employees > 50 Financial + management report (if applicable) + specific engagements audits ((de)merges, contribution in kind,...) Small entities if 2 out of 3 criteria exceeded : Balance sheet < 1.500K Net turnover < 3.000K Employees < 50 -> required abbreviated financial Others : require full annual account Small entities : required abbreviated financial Others : require full annual account Small entities : not Others : Auditor required if 2 out of 3 criteria exceeded : Balance sheet > 1.500K Net turnover > 3.000K Employees > 50 Statutory audit + specific legal engagements audits (contribution in kind, merger or demerger, proposal to dissolution, issuance of shares without nominal value below listing value, call on public savings, )

54 Type II : small-size Greece Hungary Ireland Italy Lithuania Norway Poland Portugal 3) Content of the audit report 4) External audit / internal audit / other Introduction over FS Responsibility of management Opinion about the FS FS determined in accordance with laws and regulations Opinion about management report Audit being in accordance with laws, regulations, and auditing standards Specific matters on which auditor want to bring attention External audit : (consolidated) annuals accounts + management report Others : None Publication of financial Not Not Not Not Not within 1 month after FS is set, including the management report and the auditors report Introduction over FS and applicable accounting framework Responsibilities of management and auditors Audit scope Bookkeeping established in accordance with legal and management regulation applicable Opinion on FS Reference to management report (if applicable) External audit: statutory audit on FS + specific legal engagements audits (contributions in kind, mergers, demergers,...) If turnover < 1.200K : not If turnover > 1.200K : Annual financial statement, management report, auditors report, resolutions approving the financial and details of profit distribution and loss absorption Introduction over financial and applicable accounting framework Audit scope Description of liabilities Opinion Reference to specific matters on which the auditor want to bring attention External audit : statutory audit + specific legal engagements audits Others : None before the 15th day of the 7th month following the year-end 54

55 55 Type II : small-size Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK Legal entity name Intreprinderi individuale Živnostník samostojni podjetnik Size thresholds No size regulation for type II No size regulation for type II EU Medium-size entities correspond principally to medium-size entities in the local (+ part of large and small entities) Accounting Systems Empresario individual No size regulation for type II Enskild firma EU small-size entities correspond principally to small-size entities in the local Eenmanszaak No size regulation for type II Tek kişi işletmesi EU small-size entities correspond principally to small-size entities in the local 1) Internal accounting Not Not Not Not Not Not Not 2) External accounting Single entry Double entry (or single entry for entities which are not registered to Commercial Register) 3) Tax accounting Double entry used by means of a set of ledgers, subledgers and accounts Double entry accounting but no specific accounting system All legal forms of business entities are required to maintain accounting records according to the Book Keeping Act (double entry ). Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Sole trader No size regulation for type II Not Double entry Not subject to any accounting or auditing requirements Separate accounting for tax. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. 4) Other accounting systems None None None None None None None None Accounting framework 1) Accounting principles 1.a) Cash basis for single entry 1.b) Accrual basis Not allowed for double entry Not allowed Not allowed If net turnover < 357K a year, be cash based allowed. However, the financial need to be based on accrual accounting Not specified Not allowed Not specified Generally Not specified Not specified 1.c) Other accounting principles None None None None None None None None 2) Principles for external financial Obligation for establishing : Statement of financial position P&L -> abbreviated accounts 2.a) True and fair view No FS (principle that prevails in case of conflict) No FS No FS 2.b) Going concern No FS No FS No FS 2.c) Prudence No FS No FS No FS 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) No FS Not Not No FS No FS 2.e) Consistency No FS same accounting rules during the accounting period (accounting rules can be changed only at the first date of the accounting period) 2.f) Separate valuation No FS (compensation 2.g) Materiality No FS No FS (compensation 2.h) Other principles None None None Relevance : those amounts with less relevance can be grouped with other of similar nature or function 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions 1) Financial records Original documentation kept for 10 years. Inventory at the beginning of the activities and after : once a year (+ in case of merger, spin-off or dissolution) For double entry : general journal and general ledger satisfied criteria of chronological, systematic recording For single entry : cash receipts journal, receivables ledger, payables ledger, subsidiary ledgers 2) Double-entry vs. Single-entry Single entry Double entry (or single entry for entities which are not registered to Commercial Register) 3) Chart of accounts Not prescribed Double entry : prescribed Single entry : not prescribed Double entry (set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness and systematic). All transactions must be accompanied by a justification document. The financial records should be kept permanently. Double-entry Yes Accounting books kept (journal book, inventory book and financial, satisfying criteria of chronological, and clear, recording without blank spaces, no abbreviation) Double entry or single entry book but double entry is recommended (compensation No FS (compensation None None None None Double entry book (set of ledgers, sub ledgers and accounts satisfying criteria of timely and completeness). All transactions should refer to a justification document. Original documents kept for 7 years Original documents kept for 7 years Double entry (set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness and systematic recording). All transactions must be accompanied by justification document. Original documents are kept for 10 years. Double entry Double or single entry Double entry No FS Prescribed Prescribed (but not mandatory) Not prescribed Not prescribed Prescribed No FS 4) Other None None None None None None None None Components of financial prepare FS not later than 6 months after balance sheet date Statement of financial position P&L aside from the s of having to complete a tax return No FS No FS but must keep details of all financial transactions

56 Type II : small-size Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK 1) Profit & loss account No FS Required full financial and structured (no change possible) 2) Balance sheet No FS Required full financial and structured (no change possible) Require abbreviated financial Require abbreviated financial Require abbreviated financial Require abbreviated financial If net turnover < 357K -> required abbreviated financial If not -> required full annual accounts If net turnover < 357K -> required abbreviated financial If not -> required full annual accounts No FS No FS No FS No FS 3) Cash flow statement No FS Not Not Not Not No FS Not No FS 4) Notes to financial No FS Double entry : Single entry : not 5) Consolidated financial Require abbreviated financial No FS Not Requirement and contains : P&L BS 6) Other financial None For single entry, entity has to prepare in addition : income and expenses statement assets and liabilities statement 7) Statement of equity Required If net turnover < 357K -> not If not -> No FS No FS Requirement (notion of control) Not No FS Not No FS None None None None None None Management report Not Not Not Not Not Not Not Auditing 1) Appointment of auditor Not Not Not Not Not Not No required Not 2) Scope of audit 3) Content of the audit report 4) External audit / internal audit / other Publication of financial Not Not within 3 months after year-end close External audit : not required Others : None Not Not Not Not Not 56

57 57 7. Type II - Micro Entity I Type II : micro I Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany Legal entity name Sole propriertorship/natural persons : Einzelunternehmer Sole propriertorship/natural persons : Independent / Zelfstandige Sole propriertorship/natural persons : Едноличен търговец Size thresholds No size regulation for type II No size regulation for type II EU micro-size I entities correspond principally to medium-size entities in the local (+ part of small entities) Accounting Systems Sole propriertorship/natural persons : Obrtnik Sole propriertorship/natural persons : Živnost Sole propriertorship/ Natural persons : Enkeltmandsvirksomhed Sole propriertorship/natural persons : Füüsilisest isikust ettevõtja (FIE) Sole propriertorship/natural persons : Entrepreneur individuel No size regulation for type II No size regulation for type II No size regulation for type II No size regulation for type II No size regulation for type II (All Entrepreneur individuel are micro) 1) Internal accounting Not Not Not Not Not Not Not Not Not 2) External accounting Single entry enough Double entry unless if net turnover < 500K (single entry based on receipts and expenditures). In this last case, all transactions need to be recorded without delay, accurately, complete and chronologically in at least 3 journal ledgers: financial ledger purchase ledger sales ledger -> required to centralize each 3 months in case of use of subledgers 3) Tax accounting. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Exhaustive chronological registration Systematic accounting ledgers Interim and annual closing of accounting ledgers, generation of a journal Possibility to make changes in the book entries made, by way of making adjustment accounting entries Keep accounting records: book of cash receipts and expenditures, non-current asset book, turnover book and book of receivables and liabilities. -> not required to prepare FS unless : select to pay income tax instead of personal income tax if exceed at least 1 of the 3 criteria for the last period : Receipts > 263K Income > 53K non-current asset >263K employees > 15 Must keep books of received and issued invoices if obliged to register to VAT Single entry Not If cash-based accounting : FS not required If accrual based accounting: accounting required in accordance with local GAAP or IFRS No separate accounting for fax but a tax income statement needs to be prepared For tax, the entity must use cash-based accounting so when the entity use accrual base accounting, it has to keep a separate accounting for tax (cash-based) Under Régime simplifié d imposition tax system, double entry. If net sales<153 k (sales) or < 54 k (services) : Super-simplified accounting allowed Under Régime des Micro entreprises tax system: keep book of recipes and purchases supported by vouchers 4) Other accounting systems None None None None None None None None Accounting framework 1) Accounting principles 1.a) Cash basis Allowed for single entry 1.b) Accrual basis Allowed for double entry 1.c) Other accounting principles 2) Principles for external financial Not allowed for book of cash receipts and expenditures for turnover book and book of receivables and liabilities and book of received and issued invoices Sole propriertorship/natural persons : Eingetragener Kaufmann No size regulation for type II Double entry (set of ledgers, sub-ledgers and accounts) Exemption for microentrepreneurs (both turnover and profits not more than respectively 500 KEUR and 50 KEUR). (e.g. expenses for accrued pending losses not accepted by the tax authority). Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Allowed Allowed Allowed Allowed for entities not listed in the commercial register and earnings after tax < 50 K N/A Allowed Allowed for double entry None None None None None None None None No financial obligation required for independent, natural persons. Full fin. in accordance to NFRSSME or IFRS (abridged allowed if IFRS not applied). Entities with turnover < => Only P&L Entities with turnover < => Special registers which give true and fair view of financial result When use cash based accounting -> no requirement When use accrual based accounting -> following principles apply 2.a) True and fair view No FS Not No FS Not No FS 2.b) Going concern No FS Not No FS Not No FS 2.c) Prudence No FS No FS Not No FS 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) No FS No FS Not No FS 2.e) Consistency No FS No FS Not No FS (Fixity principle and nominalism principle) 2.f) Separate valuation No FS No FS Fixed assets, inventories, accounts receivables, other assets are valued as follows: At their acquisition cost At their conversion costs At their nominal value No FS (non-compensation principle) 2.g) Materiality Exemption for microentrepreneurs (both turnover and profits not more than respectively 500 KEUR and 50 KEUR).

58 Type II : micro I Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany 2.h) Other principles Purchased goodwill : capitalised and amortised over its estimated useful life (for tax s over 15 years) Internally developed intangibles may not be capitalised None None None None Understandability Materiality (relevance) Substance over form None Principle of imparity 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions 1) Financial records Single entry (transactions recorded without delay, accurately, completely and chronologically at least in financial ledger, purchase ledger and fixed assets register). 2) Double-entry vs. Singleentry Single entry is enough 3) Chart of accounts Prescribed by Austrian chart of accounts For double entry : set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness, correct and systematic rec. All transactions should be accompanied by a justification document. Original documents kept for 7 years (3 for secondary documentation) For single entry : all transactions need to be recorded without delay, accurately, complete and chronologically in at least 3 journal ledgers: financial ledger purchase ledger sales ledger -> required to centralize each 3 months in case of use of subledgers Double entry if turnover > 500K and single entry if turnover < 500K Prescribed for double entry but not prescribed for single entry Sets of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness, chronological order, systematic recording and accuracy. All transactions should be accompanied by a justification document. Original documentation kept for 5 years (10 years for FS and 50 for salary recapitulation) Determined by management (double or single entry) Keep accounting records: book of cash receipts and expenditures non-current asset book turnover book and overview of receivables and liabilities + books of received and issued invoices if obliged to register to VAT Keep accounting records: Set of ledgers, sub ledgers - Financial and and accounts (satisfied criteria annual reports (10 years) of completeness, traceability, - Accounting records in the systematic recording) form of ledgers, depreciation Original documents kept for 5 policies, inventory lists, and years list of accounts (5years) Hard copies electronic form satisfying criteria of chronological recording and reports for each account separately, original documentation kept for 7 years. Single entry Single entry Double entry Single-entry when cash based accounting Double-entry when accrual based accounting Keeping a chronologically numbered book of payments and a register of purchases. Double entry Set of ledgers, sub ledgers and accounts (satisfied criteria of systematic recording) Original documents kept for 10 years (6 for secondary documentation) Generally double entry Not prescribed Not prescribed Not prescribed Not prescribed Not prescribed Prescribed Not prescribed 4) Other None None None None None None None None Components of financial 1) Profit & loss account Single entry => Free scheme 2) Balance sheet Single entry => Free scheme No FS No FS Abbreviated accounts 2 types of format : two-sided P&L: turnover and expenses listed in two columns next to each other One-sided P&L : similar to IAS 1 Abbreviated accounts 3) Cash flow statement Not No FS As per NFRSSME Not for SME preparing abridged FS in accordance with NFRSSME 4) Notes to financial 5) Consolidated financial Not No FS As per NFRSSME Lesser disclosure requirements for SME preparing abridged FS in accordance with NFRSSME Entities with turnover < => Only P&L Entities with turnover < => Special registers which give true and fair view of financial result Not No FS Requirements : P&L, BS, notes, cash flow statement and statement of changes in equity Exemptions : negligible or absorption could affect the fair image For cash-based accounting : no FS For accrual-based accounting : the following apply : No FS No FS No FS Required : grouping of costs by nature or by function (min. details prescribed) No FS No FS No FS Different schemes prescribed by law Under Régime simplifié d imposition tax system : required Under Régime des Micro entreprises tax system: not required Under Régime simplifié d imposition tax system : required Under Régime des Micro entreprises tax system: not required Exemption for microentrepreneurs (both turnover and profits not more than respectively 500 KEUR and 50 KEUR). (no mandatory format) (no mandatory format) No FS No FS No FS (no layout) Not Not No FS No FS No FS and contain : applicable financial reporting framework accounting principle detailed information on figures other circumstances that affect the position Under Régime simplifié d imposition tax system : required Under Régime des Micro entreprises tax system: not required Not No FS No FS No FS Not Not Not 6) Other financial None None None None None None None None 58

59 59 Type II : micro I Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany 7) Statement of equity Not for SME preparing abridged FS in accordance with NFRSSME Required Management report Not Not if audited Not Not Not For cash-based accounting : not For accrual-based accounting : but simplified and no obligation of publication of the management report Auditing Not Not 1) Appointment of auditor Not Not Not Not Not Not Not N/A 2) Scope of audit 3) Content of the audit report 4) External audit / internal audit / other Publication of financial External audit : no required Internal audit : Not regulated Others : None External audit : not required Others : None To protect the personal assets of the sole proprietorship, a statement of seizure of the principal residence and any land not used in professional case (second home, golf...) should be done with a notary. Not Not Not Not Not Not Not Not Not

60 Type II : micro I Greece Hungary Ireland Italy Lithuania Norway Poland Portugal Legal entity name Atomiki Epihirisi Sole propriertorship/natural persons : Egyéni cég Private Entrepreneur : Egyéni vállalkozó Size thresholds No size regulation for type II EU micro-size I entities correspond principally to micro-size entities in the local Accounting Systems Soler trader Ditta Individuale Individuali įmonė Enkeltpersonforetak (EPF) No size regulation for type II No size regulation for type II No size regulation for type II EU micro-size I entities correspond principally to small-size entities in the local Sole propriertorship/natural persons : indywidualna działalność gospodarcza/ osoby fizyczne No size regulation for type II 1) Internal accounting Not Not Not Not Not Not Not Not 2) External accounting Single entry Accounting is relevant only for taxation s 3) Tax accounting (accounting is relevant only for taxation s) Single entry allowed Double-entry unless if not VAT payer and no employees in current and prior financial year (single ) (accounting is relevant only for taxation s) Double entry (set of ledgers, sub-ledgers and accounts) at least on a monthly basis -> centralisation of sub ledgers 4) Other accounting systems None None None None None None (except for specific requirement in the construction industry to install project accounting) Accounting framework 1) Accounting principles Applying accounting act : => Double entry Not applying accounting act : => Records based on tax settlements Separate tax registers kept for VAT and excise taxes. For CIT s the entity is obliged to carry out separate ledgers for fixed assets. 1.a) Cash basis Not allowed Allowed Allowed Not allowed Allowed in certain cases Not allowed Allowed for: tax regulations for interest income and costs, F/X differences, payroll costs paid after maturity date and rental payments 1.b) Accrual basis Not applicable Allowed 1.c) Other accounting principles None None None None None None None None Empresário em nome individual EU micro-size I entities correspond principally to micro-size entities in the local All transactions supported by documentation satisfied criteria of chronological, correct and timely reco. (within 90 days) None Not allowed 2) Principles for external financial No financial obligation No financial obligation No FS 2.a) True and fair view No FS No FS No FS No FS No FS Not applying accounting act : not Applying accounting act : 2.b) Going concern No FS No FS No FS No FS No FS Not applying accounting act : not Applying accounting act : 2.c) Prudence No FS No FS No FS No FS No FS Unrealized losses shall be recognized 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) No FS No FS No FS No FS No FS (exception for mergers, demergers, ) Not applying accounting act : not Applying accounting act : Not applying accounting act : not Applying accounting act : 2.e) Consistency No FS No FS No FS No FS No FS Not applying accounting act : not Applying accounting act : 2.f) Separate valuation No FS No FS No FS No FS No FS (compensation Not applying accounting act : not Applying accounting act : (prudence, sincerity and good faith) Not Not (compensation possible), measurement base are: historical cost current cost realizable value present value fair value 60

61 61 Type II : micro I Greece Hungary Ireland Italy Lithuania Norway Poland Portugal 2.g) Materiality 2.h) Other principles No FS None None No FS No FS Congruence principle: all turnover and costs shall be recognized Hedging principle: gains and losses are recognized in the same period 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions 1) Financial records Single entry accounting Cash-book/record on turnover and expenses (single-entry ) and other records, documents required by tax laws Not except for tax s, turnover requires that full and accurate records of any business are kept from the start. The records a sole traders keeps must be sufficient to enable the business to make a proper return of income for tax s. Any system that provide all the information necessary to be compliant with tax authority All transactions supported by accounting documents. Every economic transaction has to be registered not later than after 4 months. The form, contents and number of the accounting registers shall be set by an economic entity according to its needs (satisfied criteria of chronological and systematic rec.) 2) Double-entry vs. Single-entry Single entry Single entry Double or single entry Single entry allowed Double-entry unless if not VAT payer and no employees in current and prior financial year (single entry) 3) Chart of accounts Not prescribed Not prescribed Not prescribed Not prescribed Prescribed (the management prepares its own chart based on chart approved by government) Double entry (set of ledgers, sub ledgers and accounts satisfied criteria of timely, completeness, systematic recording) -> accompanied by justification document. Original documents kept for 10 years (3.5 years for secondary documentation) Double entry None Applying the accounting act : Books of accounts include: journal general ledger subsidiary ledgers trial balances of general and subsidiary ledger accounts list of assets, liabilities and equity (inventory) Double-entry Single-entry under tax regulations in case: flat rate income tax fixed amount tax.. (double entry for a tax register of turnover and expenses) Yes Aggregation Comparative information Double entry (set of ledgers, sub ledgers and accounts which satisfies criteria of timely, chronological, correct, completeness and systematic recording ) All transactions supported by documentation original documentation kept for 10 years Double entry Prescribed (but not mandatory) Not prescribed Prescribed 4) Other None None None None None None None None Components of financial No FS Not applying accounting act : => No FS Applying accounting act : => Abridged financial 1) Profit & loss account Not No FS For tax s, turnover requires that full and accurate records of any business are kept from the start. 2) Balance sheet Not No FS For tax s, turnover requires that full and accurate records of any business are kept from the start. No FS No FS No FS No FS Required full financial Abridged financial Required abbreviated fin. Required full financial Abridged financial Required abbreviated fin. 3) Cash flow statement Not No FS Not No FS No FS Not Not Not 4) Notes to financial Not No FS Not No FS No FS (abbreviated) Required full/abridged annual account 5) Consolidated financial (abbreviated) Not No FS Not No FS No FS No requirement Not 6) Other financial None None None None None None None None 7) Statement of equity Management report Not Not Not Not Not Not Not Auditing 1) Appointment of auditor Not Not Not Not Not Not Not Not 2) Scope of audit Turnover audit possible (Consolidated) financial + Managem. report

62 Type II : micro I Greece Hungary Ireland Italy Lithuania Norway Poland Portugal 3) Content of the audit report 4) External audit / internal audit / other Introduction over FS Responsibility of management Opinion about the FS FS determined in accordance with laws and regulations Opinion about management report Audit being in accordance with laws, regulations, and auditing standards Specific matters on which auditor want to bring attention External audit : (consolidated) annuals accounts + management report Others : None Publication of financial Not Not Not Not Not within 1 month after FS is set, including the management report and the auditors report External audit: not required Not applying accounting act: not Applying accounting act : Annual financial statement, management report, auditors report, resolutions approving the financial and details of profit distribution and loss absorption beofore the 15th day of the 7th month following the year-end 62

63 63 Type II : micro I Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK Legal entity name Intreprinderi individuale Živnostník samostojni podjetnik Size thresholds No size regulation for type II No size regulation for type II EU micro-size I entities correspond principally to micro-size entities in the local Accounting Systems Empresario individual No size regulation for type II Enskild firma EU micro-size I entities correspond principally to small-size entities in the local Eenmanszaak No size regulation for type II Tek kişi işletmesi EU micro-size I entities correspond principally to micro-size entities in the local 1) Internal accounting Not Not Not Not Not Not Not 2) External accounting Single entry Double entry (or single entry for entities which are not registered to Commercial Register) 3) Tax accounting Double entry used by means of a set of ledgers, subledgers and accounts. Single entry allowed if entity meets 2 out of 3 criteria : < 3 employees Turnover < Assets < or if entity employees < 3 employees in the first year. Double entry accounting but no specific accounting system All legal forms of business entities are required to maintain accounting records according to the Book Keeping Act (double entry ). Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Sole trader No size regulation for type II Not Double entry Not subject to any accounting or auditing requirements Separate accounting for tax. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. 4) Other accounting systems None None None None None None None None Accounting framework 1) Accounting principles 1.a) Cash basis Allowed for single entry 1.b) Accrual basis Not applicable for double entry Allowed for single entry Not allowed Allowed Not specified Not allowed Not specified for double entry Generally Not specified Not specified 1.c) Other accounting principles None None None None None None None None 2) Principles for external financial Obligation for establishing : Statement of financial position P&L -> abbreviated accounts Abbreviated fin. allowed aside from the s of having to complete a tax return 2.a) True and fair view No FS (principle that prevails in case of conflict) No FS No FS 2.b) Going concern No FS No FS No FS 2.c) Prudence No FS No FS No FS 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) No FS Not Not No FS No FS 2.e) Consistency No FS same accounting rules during the accounting period (accounting rules can be changed only at the first date of the accounting period) No FS No FS 2.f) Separate valuation No FS (compensation 2.g) Materiality (compensation 2.h) Other principles None None None Relevance : those amounts with less relevance can be grouped with other of similar nature or function 2.i) Matching income and expenses 2.j) Precedence of substance over form Yes (compensation No FS (compensation None None None None No FS

64 Type II : micro I Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK Recording of financial transactions 1) Financial records Original documentation kept for 10 years. Inventory at the beginning of the activities and after : once a year (+ in case of merger, spin-off or dissolution) For double entry : general journal and general ledger satisfied criteria of chronological, systematic recording For single entry : cash receipts journal, receivables ledger, payables ledger, subsidiary ledgers 2) Double-entry vs. Single-entry Single entry Double entry (or single entry for entities which are not registered to Commercial Register) 3) Chart of accounts Not prescribed Double entry : prescribed Single entry : not prescribed Single entry : => all transactions need to be recorded without delay, accurately, complete and chronologically in at least 4 journal ledgers: financial ledger purchase ledger sales ledger fixed assets ledger Double entry : (set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness and systematic recording). All transactions must be accompanied by a justification document. The financial records should be kept permanently. Double-entry or single-entry Prescribed for double entry Accounting books kept (journal book, inventory book and financial, satisfying criteria of chronological, and clear, recording without blank spaces, no abbreviation) Double entry or single entry book but double entry is recommended Double entry book (set of ledgers, sub ledgers and accounts satisfying criteria of timely and completeness). All transactions should refer to a justification document. Original documents kept for 7 years Original documents kept for 7 years Double entry (set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness and systematic recording). All transactions must be accompanied by justification document. Original documents are kept for 10 years. Double entry Double or single entry Double entry No FS Prescribed (but not mandatory) Not prescribed Not prescribed Prescribed No FS 4) Other None None None None None None None None Components of financial prepare FS not later than 6 months after balance sheet date 1) Profit & loss account No FS Required full fin. and structured (no change possible) 2) Balance sheet No FS Required full fin. and structured (no change possible) Require abbreviated fin. Single entry : => Free scheme Require abbreviated fin. Single entry : => Free scheme Require abbreviated fin. Require abbreviated fin. Required abbreviated annual accounts Required abbreviated annual accounts No FS No FS No FS No FS 3) Cash flow statement No FS Not Not Not Not No FS Not No FS 4) Notes to financial No FS Double entry : Single entry : not 5) Consolidated financial Require abbreviated fin. Single entry : => Free scheme No FS Not Requirement and contains : P&L BS 6) Other financial None For single entry, entity has to prepare in addition : income and expenses statement assets and liabilities statement 7) Statement of equity Required Not No FS No FS Requirement (notion of control) Not No FS Not No FS None None None None None None Management report Not Not Not Not Not Not Not Auditing 1) Appointment of auditor Not Not Not Not Not Not Not Not 2) Scope of audit 3) Content of the audit report 4) External audit / internal audit / other Publication of financial Not to the tax administration (no other publication) within 3 months after year-end close Not Not Not Not Not No FS but must keep details of all financial transactions 64

65 65 8. Type II - Micro Entity II Type II : micro II Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany Legal entity name Sole propriertorship/natural persons : Einzelunternehmer Sole propriertorship/natural persons : Independent / Zelfstandige Sole propriertorship/natural persons : Едноличен търговец Size thresholds No size regulation for type II No size regulation for type II EU micro-size II entities correspond principally to medium-size entities in the local (+ part of small entities) Accounting Systems Sole propriertorship/natural persons : Obrtnik Sole propriertorship/natural persons : Živnost Sole propriertorship/ Natural persons : Enkeltmandsvirksomhed Sole propriertorship/natural persons : Füüsilisest isikust ettevõtja (FIE) Sole propriertorship/natural persons : Entrepreneur individuel No size regulation for type II No size regulation for type II No size regulation for type II No size regulation for type II No size regulation for type II (All Entrepreneur individuel are micro) 1) Internal accounting Not Not Not Not Not Not Not Not Not 2) External accounting Single entry enough Double entry unless if net turnover < 500K (single entry based on receipts and expenditures). In this last case, all transactions need to be recorded without delay, accurately, complete and chronologically in at least 3 journal ledgers: financial ledger purchase ledger sales ledger -> required to centralize each 3 months in case of use of subledgers 3) Tax accounting. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Exhaustive chronological registration Systematic accounting ledgers Interim and annual closing of accounting ledgers, generation of a journal Possibility to make changes in the book entries made, by way of making adjustment accounting entries Keep accounting records: book of cash receipts and expenditures, non-current asset book, turnover book and book of receivables and liabilities. -> not required to prepare FS unless : select to pay income tax instead of personal income tax if exceed at least 1 of the 3 criteria for the last period : Receipts > 263K Income > 53K non-current asset >263K employees > 15 Must keep books of received and issued invoices if obliged to register to VAT Single entry Not If cash-based accounting : FS not required If accrual based accounting: accounting required in accordance with local GAAP or IFRS No separate accounting for fax but a tax income statement needs to be prepared For tax, the entity must use cash-based accounting so when the entity use accrual base accounting, it has to keep a separate accounting for tax (cash-based) Under Régime simplifié d imposition tax system, double entry. If net sales<153 k (sales) or < 54 k (services) : Super-simplified accounting allowed Under Régime des Micro entreprises tax system: keep book of recipes and purchases supported by vouchers 4) Other accounting systems None None None None None None None None None Accounting framework 1) Accounting principles 1.a) Cash basis Allowed for single entry 1.b) Accrual basis Not allowed for double entry 1.c) Other accounting principles 2) Principles for external financial Not allowed for book of cash receipts and expenditures for turnover book and book of receivables and liabilities and book of received and issued invoices Allowed Allowed for double entry Not allowed Allowed Allowed for double entry None None None None None None None None None No financial obligation required for independent, natural persons. Full fin. in accordance to NFRSSME or IFRS (abridged allowed if IFRS not applied). Entities with turnover < => Only P&L Entities with turnover < => Special registers which give true and fair view of financial result When use cash based accounting -> no requirement When use accrual based accounting -> following principles apply 2.a) True and fair view No FS Not No FS Not No FS 2.b) Going concern No FS Not No FS Not No FS 2.c) Prudence No FS No FS Not No FS 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) No FS No FS Not No FS 2.e) Consistency No FS No FS Not No FS (Fixity principle and nominalism principle) 2.f) Separate valuation No FS No FS Fixed assets, inventories, accounts receivables, other assets are valued as follows: At their acquisition cost At their conversion costs At their nominal value No FS (non-compensation principle) 2.g) Materiality Sole propriertorship/natural persons : Eingetragener Kaufmann No size regulation for type II Double entry (set of ledgers, sub-ledgers and accounts) Exemption for microentrepreneurs (both turnover and profits not more than respectively 500 KEUR and 50 KEUR). (e.g. expenses for accrued pending losses not accepted by the tax authority). Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. Allowed for entities not listed in the commercial register and earnings after tax < 50 K Exemption for microentrepreneurs (both turnover and profits not more than respectively 500 KEUR and 50 KEUR).

66 Type II : micro II Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany 2.h) Other principles Purchased goodwill : capitalised and amortised over its estimated useful life (for tax s over 15 years) Internally developed intangibles may not be capitalised None None None None Understandability Materiality (relevance) Substance over form None Principle of imparity 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions 1) Financial records Single entry (transactions recorded without delay, accurately, completely and chronologically at least in financial ledger, purchase ledger and fixed assets register). 2) Double-entry vs. Singleentry Single entry is enough 3) Chart of accounts Prescribed by Austrian chart of accounts For double entry : set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness, correct and systematic rec. All transactions should be accompanied by a justification document. Original documents kept for 7 years (3 for secondary documentation) For single entry : all transactions need to be recorded without delay, accurately, complete and chronologically in at least 3 journal ledgers: financial ledger purchase ledger sales ledger -> required to centralize each 3 months in case of use of sub ledgers Double entry if turnover > 500K and single entry if turnover < 500K Prescribed for double entry but not prescribed for single entry Sets of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness, chronological order, systematic recording and accuracy. All transactions should be accompanied by a justification document. Original documentation kept for 5 years (10 years for FS and 50 for salary recapitulation) Determined by management (double or single entry) Keep accounting records: book of cash receipts and expenditures non-current asset book turnover book and overview of receivables and liabilities + books of received and issued invoices if obliged to register to VAT Keep accounting records: Set of ledgers, sub ledgers - Financial and and accounts (satisfied criteria annual reports (10 years) of completeness traceability, - Accounting records in the systematic recording) form of ledgers, depreciation Original documents kept for 5 policies, inventory lists, and years list of accounts (5years) Hard copies electronic form satisfying criteria of chronological recording and reports for each account separately, original documentation kept for 7 years. Single entry Single entry Double entry Single-entry when cash based accounting Double-entry when accrual based accounting Keeping a chronologically numbered book of payments and a register of purchases. Double entry Set of ledgers, sub ledgers and accounts (satisfied criteria of systematic recording) Original documents kept for 10 years (6 for secondary documentation) Generally double entry Not prescribed Not prescribed Not prescribed Not prescribed Not prescribed Prescribed Not prescribed 4) Other None None None None None None None None None Components of financial 1) Profit & loss account Single entry => Free scheme 2) Balance sheet Single entry => Free scheme No FS No FS Abbreviated accounts 2 types of format : two-sided P&L: turnover and expenses listed in two columns next to each other One-sided P&L : similar to IAS 1 Abbreviated accounts 3) Cash flow statement Not No FS As per NFRSSME Not for SME preparing abridged FS in accordance with NFRSSME 4) Notes to financial 5) Consolidated financial Not No FS As per NFRSSME Lesser disclosure requirements for SME preparing abridged FS in accordance with NFRSSME Entities with turnover < => Only P&L Entities with turnover < => Special registers which give true and fair view of financial result Not No FS Requirements : P&L, BS, notes, cash flow statement and statement of changes in equity Exemptions : negligible or absorption could affect the fair image For cash-based accounting : no FS For accrual-based accounting : the following apply : No FS No FS No FS Required : grouping of costs by nature or by function (min. details prescribed) No FS No FS No FS Different schemes prescribed by law Under Régime simplifié d imposition tax system : required Under Régime des Micro entreprises tax system: not required Under Régime simplifié d imposition tax system : required Under Régime des Micro entreprises tax system: not required Exemption for microentrepreneurs (both turnover and profits not more than respectively 500 KEUR and 50 KEUR). (no mandatory format) (no mandatory format) No FS No FS No FS (no layout) Not Not No FS No FS No FS and contain : applicable financial reporting framework accounting principle detailed information on figures other circumstances that affect the position Under Régime simplifié d imposition tax system : required Under Régime des Micro entreprises tax system: not required Not No FS No FS No FS Not Not Not 6) Other financial None None None None None None None None None 66

67 67 Type II : micro II Austria Belgium Bulgaria Croatia The Czech Republic Denmark Estonia France Germany 7) Statement of equity Not for SME preparing abridged FS in accordance with NFRSSME Required Management report Not Not if audited Not Not Not For cash-based accounting : not For accrual-based accounting : but simplified and no obligation of publication of the management report Auditing Not Not 1) Appointment of auditor Not Not Not Not Not Not Not N/A 2) Scope of audit 3) Content of the audit report 4) External audit / internal audit / other Publication of financial External audit : no required Internal audit : Not regulated Others : None External audit : not required Others : None To protect the personal assets of the sole proprietorship, a statement of seizure of the principal residence and any land not used in professional case (second home, golf...) should be done with a notary. Not Not Not Not Not Not Not Not Not

68 Type II : micro II Greece Hungary Ireland Italy Lithuania Norway Poland Portugal Legal entity name Atomiki Epihirisi Sole propriertorship/natural persons : Egyéni cég Private Entrepreneur : Egyéni vállalkozó Size thresholds No size regulation for type II EU micro-size II entities correspond principally to micro-size entities in the local Accounting Systems Soler trader Ditta Individuale Individuali įmonė Enkeltpersonforetak (EPF) No size regulation for type II No size regulation for type II EU micro-size II entities correspond principally to small-size entities in the local Sole propriertorship/natural persons : indywidualna działalność gospodarcza/ osoby fizyczne 1) Internal accounting Not Not Not Not Not Not Not Not 2) External accounting Single entry Accounting is relevant only for taxation s 3) Tax accounting (accounting is relevant only for taxation s) Single entry allowed Double-entry unless if not VAT payer and no employees in current and prior financial year (single ) (accounting is relevant only for taxation s) Double entry (set of ledgers, sub-ledgers and accounts) at least on a monthly basis -> centralisation of sub ledgers 4) Other accounting systems None None None None None None (except for specific requirement in the construction industry to install project accounting) Accounting framework 1) Accounting principles Applying accounting act : => Double entry Not applying accounting act : => Records based on tax settlements Separate tax registers kept for VAT and excise taxes. For CIT s the entity is obliged to carry out separate ledgers for fixed assets. 1.a) Cash basis Not allowed Allowed Not allowed Allowed in certain cases Not allowed Allowed for: tax regulations for interest income and costs, F/X differences, payroll costs paid after maturity date and rental payments 1.b) Accrual basis Not allowed Allowed 1.c) Other accounting principles None None None None None None None None Empresário em nome individual EU micro-size II entities correspond principally to micro-size entities in the local All transactions supported by documentation satisfied criteria of chronological, correct and timely rec. (within 90 days) None Not allowed 2) Principles for external financial No financial obligation No financial obligation No FS 2.a) True and fair view Not No FS No FS No FS No FS Not applying accounting act : not Applying accounting act : 2.b) Going concern Not No FS No FS No FS No FS Not applying accounting act : not Applying accounting act : 2.c) Prudence 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) (prudence, sincerity and good faith) No FS No FS No FS No FS Unrealized losses shall be recognized No FS No FS No FS No FS (exception for mergers, demergers, ) Not applying accounting act : not Applying accounting act : Not applying accounting act : not Applying accounting act : 2.e) Consistency No FS No FS No FS No FS Not applying accounting act : not Applying accounting act : 2.f) Separate valuation No FS No FS No FS No FS (compensation 2.g) Materiality 2.h) Other principles Historical cost principle Single currency principle; Entries have to be supported by appropriate documentation. None None No FS No FS Congruence principle: all turnover and costs shall be recognized Hedging principle: gains and losses are recognized in the same period Not applying accounting act : not Applying accounting act : None (prudence, sincerity and good faith) Not Not (compensation possible), measurement base are: historical cost current cost realizable value present value fair value Yes Aggregation Comparative information 68

69 69 Type II : micro II Greece Hungary Ireland Italy Lithuania Norway Poland Portugal 2.i) Matching income and expenses 2.j) Precedence of substance over form Recording of financial transactions 1) Financial records Single entry accounting Cash-book/record on turnover and expenses (single-entry ) and other records, documents required by tax laws Not except for tax s, turnover requires that full and accurate records of any business are kept from the start. The records a sole traders keeps must be sufficient to enable the business to make a proper return of income for tax s. Any system that provide all the information necessary to be compliant with tax authority All transactions supported by accounting documents. Every economic transaction has to be registered not later than after 4 months. The form, contents and number of the accounting registers shall be set by an economic entity according to its needs (satisfied criteria of chronological and systematic rec.) 2) Double-entry vs. Single-entry Single entry Single entry Double or single entry Single entry allowed Double-entry unless if not VAT payer and no employees in current and prior financial year (single entry) 3) Chart of accounts Not prescribed Not prescribed Not prescribed Not prescribed Prescribed (the management prepares its own chart based on chart approved by government) Double entry (set of ledgers, sub ledgers and accounts satisfied criteria of timely, completeness, systematic recording) -> accompanied by justification document. Original documents kept for 10 years (3.5 years for secondary documentation) Double entry Applying the accounting act : Books of accounts include: journal general ledger subsidiary ledgers trial balances of general and subsidiary ledger accounts list of assets, liabilities and equity (inventory) Double-entry Single-entry under tax regulations in case: flat rate income tax fixed amount tax.. (double entry for a tax register of turnover and expenses) Double entry (set of ledgers, sub ledgers and accounts which satisfies criteria of timely, chronological correct, completeness and systematic recording) All transactions supported by documentation original documentation kept for 10 years Double entry Prescribed (but not mandatory) Not prescribed Prescribed 4) Other None None None None None None None None Components of financial 1) Profit & loss account Not No FS For tax s, turnover requires that full and accurate records of any business are kept from the start. 2) Balance sheet Not No FS For tax s, turnover requires that full and accurate records of any business are kept from the start. No FS No FS Obligation to prepare FS only if determined under by-laws of entity No FS No FS Not applying accounting act : => No FS Applying accounting act : => Abridged financial Required full financial Abridged financial Required abbreviated fin. Required full financial Abridged financial Required abbreviated fin. 3) Cash flow statement Not No FS Not No FS No FS Not Not Not 4) Notes to financial Not No FS Not No FS No FS (abbreviated) Required full/abridged annual account 5) Consolidated financial (abbreviated) Not No FS Not No FS No FS No requirement Not 6) Other financial None None None None None None None None 7) Statement of equity Management report Not Not Not Not Not Not Not Auditing 1) Appointment of auditor Not Not Not Not Not Not Not Not 2) Scope of audit Turnover audit possible (Consolidated) financial + Managem. report

70 Type II : micro II Greece Hungary Ireland Italy Lithuania Norway Poland Portugal 3) Content of the audit report 4) External audit / internal audit / other Introduction over FS Responsibility of management Opinion about the FS FS determined in accordance with laws and regulations Opinion about management report Audit being in accordance with laws, regulations, and auditing standards Specific matters on which auditor want to bring attention External audit : (consolidated) annuals accounts + management report Others : None Publication of financial Not Not Not Not Not within 1 month after FS is set, including the management report and the auditors report External audit: not required Not applying accounting act: not Applying accounting act : Annual financial statement, management report, auditors report, resolutions approving the financial and details of profit distribution and loss absorption before the 15th day of the 7th month following the year-end 70

71 71 Type II : micro II Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK Legal entity name Intreprinderi individuale Živnostník samostojni podjetnik Empresario individual Enskild firma Eenmanszaak Tek kişi işletmesi Sole trader Size thresholds No size regulation for type II No size regulation for type II No size regulation for type II EU micro-size II entities correspond principally to small-size entities in the local Accounting Systems No size regulation for type II EU micro-size II entities correspond principally to micro-size entities in the local 1) Internal accounting Not Not Not Not Not Not Not 2) External accounting Single entry Double entry (or single entry for entities which are not registered to Commercial Register) 3) Tax accounting Double entry used by means of a set of ledgers, sub ledgers and accounts. Single entry allowed if entity meets 2 out of 3 criteria : < 3 employees Turnover < Assets < or if entity employees < 3 employees in the first year. Double entry accounting but no specific accounting system All legal forms of business entities are required to maintain accounting records according to the Book Keeping Act (double entry ). Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. No size regulation for type II Not Double entry Not subject to any accounting or auditing requirements Separate accounting for tax. Tax result is determined based on accounting result adjusted with tax adjustments following from tax and requirements. 4) Other accounting systems None None None None None None None None Accounting framework 1) Accounting principles 1.a) Cash basis for single entry 1.b) Accrual basis Not allowed for double entry Allowed for single entry Not allowed Allowed Not specified Not allowed Not specified for double entry Generally Not specified Not specified 1.c) Other accounting principles None None None None None None None None 2) Principles for external financial Obligation for establishing : Statement of financial position P&L -> abbreviated accounts Abbreviated fin. allowed 2.a) True and fair view No FS (principle that prevails in case of conflict) No FS No FS 2.b) Going concern No FS No FS No FS 2.c) Prudence No FS No FS No FS 2.d) Opening balance (opening balance of the year correspond to last balance of prior year) No FS Not Not No FS No FS 2.e) Consistency No FS same accounting rules during the accounting period (accounting rules can be changed only at the first date of the accounting period) 2.f) Separate valuation No FS (compensation 2.g) Materiality No FS No FS (compensation 2.h) Other principles None None None Relevance : those amounts with less relevance can be grouped with other of similar nature or function 2.i) Matching income and expenses 2.j) Precedence of substance over form Yes (compensation No FS (compensation None None None None aside from the s of having to complete a tax return No FS

72 Type II : micro II Romania Slovakia Slovenia Spain Sweden The Netherlands Turkey The UK Recording of financial transactions 1) Financial records Original documentation kept for 10 years. Inventory at the beginning of the activities and after : once a year (+ in case of merger, spin-off or dissolution) For double entry : general journal and general ledger satisfied criteria of chronological, systematic recording For single entry : cash receipts journal, receivables ledger, payables ledger, subsidiary ledgers 2) Double-entry vs. Single-entry Single entry Double entry (or single entry for entities which are not registered to Commercial Register) 3) Chart of accounts Not prescribed Double entry : prescribed Single entry : not prescribed Single entry : => all transactions need to be recorded without delay, accurately, complete and chronologically in at least 4 journal ledgers: financial ledger purchase ledger sales ledger fixed assets ledger Double entry : (set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness and systematic rec). All transactions must be accompanied by a justification document. The financial records should be kept permanently. Double-entry or single-entry Prescribed for double entry Accounting books kept (journal book, inventory book and financial, satisfying criteria of chronological, and clear, recording without blank spaces, no abbreviation) Double entry or single entry book but double entry is recommended Double entry book (set of ledgers, sub ledgers and accounts satisfying criteria of timely and completeness). All transactions should refer to a justification document. Original documents kept for 7 years Original documents kept for 7 years Double entry (set of ledgers, sub ledgers and accounts satisfying criteria of timely, completeness and systematic recording). All transactions must be accompanied by justification document. Original documents are kept for 10 years. Double entry Double or single entry Double entry No FS Prescribed (but not mandatory) Not prescribed Not prescribed Prescribed No FS 4) Other None None None None None None None None Components of financial prepare FS not later than 6 months after balance sheet date 1) Profit & loss account No FS Required full fin. and structured (no change possible) 2) Balance sheet No FS Required full fin. and structured (no change possible) Require abbreviated fin. Single entry : => Free scheme Require abbreviated fin. Single entry : => Free scheme Require abbreviated fin. Require abbreviated fin. Required abbreviated annual accounts Required abbreviated annual accounts No FS No FS No FS No FS 3) Cash flow statement No FS Not Not Not Not No FS Not No FS 4) Notes to financial No FS Double entry : Single entry : not 5) Consolidated financial Require abbreviated fin. Single entry : => Free scheme No FS Not Requirement and contains : P&L BS 6) Other financial None For single entry, entity has to prepare in addition : income and expenses statement assets and liabilities statement 7) Statement of equity Required Not No FS No FS Requirement (notion of control) Not No FS Not No FS None None None None None None Management report Not Not Not Not Not Not Not Auditing 1) Appointment of auditor Not Not Not Not Not Not Not Not 2) Scope of audit 3) Content of the audit report 4) External audit / internal audit / other Publication of financial Not to the tax administration (no other publication) within 3 months after year-end close Not Not Not Not Not No FS but must keep details of all financial transactions 72

73 HOW TO OBTAIN EU PUBLICATIONS Free publications: one copy: via EU Bookshop ( more than one copy or posters/maps: from the European Union s representations ( from the delegations in non-eu countries ( by contacting the Europe Direct service ( or calling (freephone number from anywhere in the EU) (*). (*) The information given is free, as are most calls (though some operators, phone boxes or hotels may charge you). Priced publications: via EU Bookshop ( Priced subscriptions: via one of the sales agents of the Publications Office of the European Union (

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