Fewer financial accountability obligations for companies
Fewer companies are required to have an accountant audit their annual reports and to prepare a management report and fewer businesses are required to prepare comprehensive financial statements. The government has taken this decision in order to implement a European Directive.
The decision means the government is reducing both the burden on companies and the pressure on accountants' auditing capacity. The reduction in the number of accountability obligations is a result of inflation being included over the past ten years as one of the criteria used to categorise companies. These categories determine how much accountability a company must provide annually.
Fewer companies are required to have audits performed and a management report compiled because they fall into a smaller category of companies. These categories are established on the basis of balance sheet total and net turnover. There are four categories of companies: micro, small, medium and large. The smaller the category a company falls into, the fewer obligations that company has in terms of accountability. The threshold amounts defining the categories have been increased by 25%. Although the increase takes effect from the 2024 financial year, the increased threshold amounts may also be used for the 2023 financial year, in line with the wishes of the business community and accountancy firms.
The cabinet has approved the order in council regulating the increase in the threshold amounts. By taking this decision the government is following a European Commission directive published on 19 October. The decision will be published shortly in the Bulletin of Acts and Decrees.