Amendment to the Accounting Act and its contribution to digital transition in accounting

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On 18 November 2021, the President of the Slovak Republic signed an amendment to Act No. 431/2002 on accounting, effective from 1 January 2022. The amendment to the Accounting Act, which we have already informed you about in the previous issue of our Newsletter, mainly adopted changes in the area of digitalisation of accounting, aiming to reduce the administrative burden of bookkeeping for businesses.

The main changes are as follows:

  • The amendment provides a more accurate definition of electronic, as well as hardcopy, accounting records. It also defines the requirements for accounting records, namely in terms of the credibility of its origin, content integrity, and legibility.
  • The amendment introduces the possibility of transforming an accounting record from hardcopy to an electronic form and vice versa. The accounting entity may only perform this transformation once and only with the identical content.
  • The Act permits scanning accounting documents without the use of guaranteed conversion, which will significantly streamline the electronic archiving of accounting documents. The accounting unit itself chooses the method of keeping accounting documents, i.e. in hardcopy or electronic form, by its internal regulation, and it may also apply this method to accounting documents created before the effective date of the amendment.
  • The handwritten signature of the person responsible for the accounting record may be replaced with any verifiable electronic signature, electronic data exchange, or an internal control system. At the same time, the required particulars of an accounting record no longer include the identification of the accounts in which the accounting event is to be booked and the signature of the person responsible for the entry. Saying this, the identification of the accounts in which the accounting records are recognised must be accessible in the accounting software.
  • All accounting documents, i.e. financial statements, audit reports, annual reports, and financial statement approval notices, will be entered in the financial statements register in electronic form only.

The authors of the amendment take into consideration the current state of affairs and the fact that it is demanding to store quantity of paper documents; the digitalisation of accounting is, therefore, an essential part of modern business. While the adopted changes will help businesses, accountants and inspection authorities alike, they also bring about the need to improve the quality of the accounting software used.

In addition to the topic of digitalisation, the amendment to the Accounting Act also includes changes and additions in the following areas:

  • Extending the scope of the act applicable to persons other than the accounting entities;
  • Defining the content of the annual report for non-profit entities;
  • Extending the public section of the financial statements register to include other legal forms of legal entities;
  • Clarification of the terms used for assessing of the company in crisis;
  • Lower limits for fines imposed for administrative offences under the Accounting Act.

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