Accounting, bookkeeping, income statements, Accountancy Act, (In force from 1 January 2016 / Extract)
Article 2. For the purposes of this Act enterprises shall be:
1. merchants within the meaning of the Commerce Act;
2. local legal entities other than merchants;
3. budget-funded enterprises;
4. unincorporated companies;
5. the insurance funds under Article 8 of the Social Insurance Code;
6. trade representations;
7. foreign legal entities engaged in business activities in the Republic of Bulgaria through a place of business, except where the business is carried out by a non-resident of a Member State of the European Union or of another country – a signatory to the Agreement on the European Economic Area, only under the conditions of freedom to provide services, income statements.
Bookkeeping, accounting documents, accounting information and accounting systems
Accountancy Act – Article 3. (1) Bookkeeping shall be organised in accordance with this Act and shall be carried out under the double-entry accounting method.
(2) Enterprises shall keep income statements and accounts of all business transactions resulting in changes in their property and financial position, the financial results from operations, the cash flows and equity, in a chronological order.
(3) Enterprises shall keep their accounts on the basis of documentary justification of business transactions and facts while observing the requirements for drawing up documents hereunder.
(4) Sole traders with net sales revenue for the previous period not exceeding BGN 50,000 may account for their operations applying the single-entry accounting method.
Article 4. (1) An bookkeeping document shall be any paper or technical carrier of accounting information, classified as primary, secondary and a ledger.
(2) A primary bookkeeping document and income statements shall carry information about a business transaction recorded for the first time.
(3) A secondary document shall carry processed (summarised or differentiated) information derived from primary accounting documents.
(4) A ledger shall carry chronologically systematised information about business transactions derived from primary and/or secondary accounting documents.
(5) An accounting document under paragraph (1) may be an electronic document containing the information required under this Act, issued and obtained in any electronic format subject to the requirements of the Electronic Document and Electronic Signature Act.
Article 5. (1) Primary bookkeeping documents of enterprises shall be drawn up in the Bulgarian language, in Arabic numerals and in Bulgarian levs (BGN). Accounting documents may also be drawn up in the respective foreign language and in foreign currency in cases of transactions negotiated in foreign currency with foreign contractors. When the transaction is negotiated in foreign currency, its BGN equivalent amount shall be determined by applying the central exchange rate of the Bulgarian National Bank to the foreign currency amount as of the date of the transaction.
(2) The accounting documents received at the enterprise in a foreign language shall be translated in Bulgarian in the cases set forth by law, income statements.
Article 6. (1) A primary accounting document addressed to an external recipient shall contain at least the following information:
1. name and number of the document, including only Arabic numerals;
2. date of issue;
3. company name or name, address and identification code from the Commercial Register or unified identification code under BULSTAT or personal identification number or serial number of foreigner of the issuer and the recipient;
4. subject, physical and value expression of the business transaction.
(2) The address under paragraph (1), item 3 shall be the address for correspondence referred to in Article 28 (1) of the Tax-Insurance Procedure Code.
Article 8. No corrections or additions shall be allowed in the primary bookkeeping documents. Any primary accounting documents that have been erroneously drawn up shall be cancelled and new ones shall be drawn up.
Article 10. The persons who have drawn up and signed the accounting documents and technical information carriers shall be liable for the authenticity of the information contained therein.
Accountancy Act – Article 11. (1) In establishing and maintaining its accounting system, an enterprise shall ensure:
1. a comprehensive chronological registration of the accounting transactions;
2. receipt of analytical and summary information through accounting means, representing most accurately and appropriately the annual financial statements of the enterprise;
3. interim and annual closing of accounting records, and income statements;
4. making changes in the book entries made, by making adjusting accounting entries;
5. application of an individual chart of accounts as approved by the manager of the enterprise;
6. application of an accounting policy as approved by the manager of the enterprise.
(2) Where accounting software is used for the purposes of bookkeeping, such software must have been developed in compliance with the requirements of this Act and shall support data processed by means thereof and the output documents shall be in the Bulgarian language.
Storage of accounting information
Article 12. (1) Bookkeeping information shall be stored on paper and/or technical carrier in the enterprise within the following time limits:
1. payrolls – 50 years from 1 January of the reporting period, following the accounting period to which they refer;
2. accounting records and financial statements, including documents for tax control, audit and subsequent financial inspections – 10 years from 1 January of the reporting period, following the accounting period to which they refer;
3. all the other carriers of accounting information – three years from 1 January of the reporting period, following the accounting period to which they refer.
Rights and obligations of the manager of the enterprise
Article 16. (1) The manager of the enterprise shall:
1. approve the individual chart of accounts of the enterprise;
2. arrange the bookkeeping in accordance with the provisions of this Act;
3. approve the accounting form that shall ensure the synchronised execution of the chronological and systematic (analytical and synthetic) accounting;
4. be responsible for the preparation, content and publication of the annual financial statements and reports required under this Act;
5. determine the frequency of financial statements for the purposes of the management of the enterprise;
6. be responsible for the conduct of an independent financial audit by registered auditors;
7. determine the terms and procedure for inventory taking;
8. be responsible for the storage of accounting information under the procedure and within the time limits set out in Section III;
9. determine the procedure for and the flow of accounting documents from their generation or receipt at the enterprise to their destruction or submission as required hereunder.
(2) The manager and the members of the management and supervisory bodies of the enterprise shall be responsible for the preparation, the conduct of an independent financial audit by registered auditors and the publication of the annual financial statements, the consolidated financial statements and the annual reports under Chapter Seven in accordance with the requirements hereunder and in accordance with their powers set out in the Commerce Act.
Drawers of financial statements
Accountancy Act – Article 18. Individuals under Article 17 (1) who draw up the financial statements, and the managers and/or the representatives of accounting firms who sign the financial statements when the financial statements are drawn up by accounting firms, shall meet the following requirements:
1. shall have acquired compulsory minimum degree of completed education and practical experience corresponding to it, as follows:
a) higher education in accounting and economics, and previous employment in the area of accounting, external and internal audit and financial inspection, tax audits or as an educator in accounting and control, as follows:
aa) for the master’s degree, two years;
bb) for the bachelor’s degree, three years;
cc) for the professional bachelor’s degree, 4 years;
b) other tertiary economic education and 5 years of previous employment in the area of accounting, external and internal audit and financial inspection, tax audits or as an educator in accounting and control;
c) secondary economic education and 8 years of previous employment as an accountant;
2. shall have not been convicted of an indictable offence under Chapter Five and Chapter Six, Section I of the Special Part of the Criminal Code.
Categories of enterprises
Accountancy Act – Article 19. (1) For the purposes of this Act, the following categories of enterprises shall exist:
2. small enterprises;
3. medium-sized enterprises;
4. large enterprises.
(2) Micro-enterprises shall be enterprises which at 31 December of the current reporting period do not exceed at least two of the following criteria:
1. book value of the assets – BGN 700,000;
2. net sales revenue – BGN 1,400,000;
3. employees for the reporting period: 10.
(3) Small enterprises shall be …….
General requirements to the financial statements
Accountancy Act – Article 23. The financial statements, income statements shall be drawn up in the Bulgarian language, with Arabic numerals and in thousands of levs (BGN).
Annual financial statements / Income statements
Accountancy Act – Article 29. (1) The annual financial statements for all enterprises shall comprise at least a balance sheet, an income statement income statements and notes.
(2) The format, structure and content of the full set of the financial statements shall be defined by the applicable accounting standards.
(3) The annual financial statements of sole traders whose net sales revenues for the current reporting period do not exceed BGN 200,000 and are not subject to financial audit may consist only of an income statement.
APPLICABLE BASIS OF ACCOUNTING
Accountancy Act – Article 34. (1) The annual financial statements of public interest enterprises shall be drawn up on the basis of the International Accounting Standards, income statements.
(2) The annual financial statements of micro-enterprises, small, medium-sized and large enterprises shall be drawn up on the basis of the National Accounting Standards.
(3) The enterprises under paragraph (2) may choose to compile their annual financial statements based on the International Accounting Standards, provided that no change in the basis of accounting has occurred.
INDEPENDENT FINANCIAL AUDIT
Accountancy Act – Article 37. (1) Subject to statutory independent financial audit by registered auditors shall be the annual and consolidated financial statements of:
1. small enterprises which at 31 December of the current reporting period exceed at least two of the following indicators:
a) book value of the assets – BGN 2,000,000;
b) net sales revenue – BGN 4,000,000;
c) average number of employees for the reporting period: 50;
2. medium-sized and large enterprises;
3. public interest enterprises;
4. medium-sized and large groups and groups in which there is at least one public interest enterprises;
5. enterprises for which this requirement is established by law.
PUBLICITY OF THE FINANCIAL STATEMENTS
Accountancy Act – Article 38. (1) Enterprises shall publish the annual financial statements, the consolidated financial statements and the annual reports under Chapter Seven, adopted by the general meeting of partners or shareholders or by the appropriate body, as follows:
1. all merchants within the meaning of the Commerce Act – upon application for recording and submission for announcement in the commercial register, by 30 June of the following year;
2. non-profit legal entities designated as operating for the public benefit – upon application for recording and submission thereof to the Central Register with the Ministry of Justice under the terms and procedure of the Non-Profit Legal Entities Act, by 30 June of the following year;
3. the other enterprises shall publish their statements and reports in a business publication or Internet, by 30 June of the following year.
(2) When the financial statements were originally requested for publication in the period referred to in paragraph (1) and a denial for publication under Article 22 (5) of the Commercial Register Act is issued and within 14 days from the date of its entry into force a new application for publication is submitted, it shall be deemed that the financial statements are submitted on time.
(3) The annual financial statements and the management report shall be published in the form and with the text on the basis of which the registered auditor has expressed his/her opinion. The full text of the audit report shall also be subject to publication, bookkeeping.
(4) Small enterprises not subject to audit are not required to publish their income statements and management reports, bookkeeping.
(7) Where the statements and reports of the enterprises referred to in paragraph (1), item (3) are published in Internet, free and free of charge access shall be ensured to them for a period not shorter that three years following the date of their publication, bookkeeping.
(8) Upon request, the enterprises referred to in paragraph (1), item (3) shall provide information about the site where their statements and reports are published.
Annual management report
Accountancy Act – Article 42. (1) Micro- and small enterprises which are not subject to statutory financial audit are not required to draw up a management report, provided that the information regarding the acquisition of their own shares, as required by Article 187e of the Commerce Act, is disclosed in the notes to the annual financial statements or in a footnote to the compiled balance sheet.
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