Financial statement – annual statement of accounts

The annual statement of accounts is a regular financial statement on the company’s business operations in the preceding year, submitted by all legal entities and entrepreneurs who are obliged to keep double-entry bookkeeping.

The annual financial statement, the regular annual statement of accounts, depicts the company at the end of the fiscal year, ending on December 31, while the supplemental one is submitted on any date, that is, on the date determined by the decisions regarding the start and end of winding-up or bankruptcy.

By preparing the financial statement, the company provides all the necessary information about the results of the business transactions, which are chronologically recorded through the journal and the general ledger.

                  Who is obliged to submit the financial statements

Companies, state owned companies, banks, insurance companies, financial leasing providers, voluntary pension funds and cooperatives, branches, entrepreneurs, cooperative funds, or more precisely, all those who keep their business records using the double-entry bookkeeping system, are required to prepare a financial statement.

  Classification of legal entities

Legal entities and entrepreneurs can be classified based on their size into micro, small, medium or large legal entities, in accordance with the criteria and limit values prescribed by Article 6 of the Law on Accounting (the Law).

Classification by size is conducted based on the data on:

– average number of employees,

– business income and

– the total asset value calculated as of the balance sheet date for the regular annual financial statement (Serbian: RGFI) and the statistical report for the year 2022, and the determined size is then used for the year 2023.

Legal entities and entrepreneurs established in 2022 (newly-established taxpayers), i.e. entrepreneurs who have started keeping the business records using the double-entry bookkeeping system in that year, use the size determined based on the data from the regular annual financial statement for 2022 and the number of months of conducting business for both the year 2022 and 2023.

        Determining the audit obligation

Pursuant to the Law on Auditing, all legal entities and entrepreneurs whose total income generated in the prior fiscal year exceeded 4.4 million euros in dinar equivalent are required to have their regular annual financial statement audited, with the exception of those that are classified as large or medium-sized legal entities and public companies, regardless of size. Therefore, if the taxpayers who create the financial statements on December 31, 2022 obtained a total income of more than RSD 516,219 in 2022, they will be obliged to audit their financial statements for the year 2023.

The Business Registers Agency has provided a calculator available at https://fin.apr.gov.rs/JavnaPretraga/Calculator which can be used to classify legal entities and entrepreneurs, and groups of legal entities by size, as well as to determine the obligation for auditing the RGFI for the year 2023, based on the data from financial statements for 2022. Taxpayers who failed to submit or have submitted incorrect RGFI for the year 2021, can use the same calculator to determine their size and audit obligation for 2022, based on the data for the previous year 2021 presented in the RGFI for 2022.

Financial statements are created at least once a year, but they can also be created semi-annually, quarterly or even in a shorter period of time. In the event of a business entity deviating from the established period for submitting the statement (if it shortens or extends the period for submitting the statement), it is required to publish information regarding the reason for the deviation, as well as the fact that statements in a shorter or longer time interval of one year cannot be compared with the data from the annual financial statement.

The balance sheet is the basis for evaluating the financial state of the business entity in terms of its assets and financial position.

The Income statement shows the income and expenditures during a certain period of time, usually for one business year, but it can also be in shorter time intervals, and describes the profitability of the business entity for the period for which it is created.

Only when the balance sheet and the income statement are treated as a single entity for the purposes of accounting reporting do they have their full significance.

The Law stipulates that the financial statements and tax basis balance sheet must only be submitted electronically, signed with a qualified electronic signature of the legal representative. Legal entities that did not record turnover in the relevant year nor have assets and liabilities in the business records must instead submit a report on inactivity with the signature of the legal representative. Submission of the annual statement of accounts for 2022 is also not possible without a person authorized to create financial statements, who must be registered in the Register of Accounting Services Providers. To view the Register of Accounting Services Providers, click on the link: https://rpru.apr.gov.rs/PretragaRPRU

The annual statement of accounts in the electronic form is submitted to the Business Registers Agency, the submission deadline being March 31, 2023.

                  It should be borne in mind

that if it is determined, during the verification procedure, that the financial statements for 2022 were created by a legal entity or an entrepreneur which are not registered in the Register of Accounting Services Providers, such financial statements will not be processed and published publicly. This is due to the fact that such financial statements are thought to have not been created in accordance with the legal requirements.