Legal changes concerning the compilation and publication of annual financial statements


A new Accountancy Act was promulgated in Official Journal 95/2015. The same introduces the requirements of Directive 2013/34 / EU of the European Parliament and Council, dated from 26 June 2013, based on the annual financial statements, the consolidated financial statements and the related reports of certain types of undertakings аs well as amending Directive 2006/43 / EC of the European Parliament and Council as well as repealing Directive 78/660/ EEC and 83/349 / EEC (OB, L 182/19, dated from 29 June 2013) and Directive 2014/95/EU of the European Parliament and Council, dated from 22 October 2014, amending Directive 2013/34, grounded on non-financial information disclosure and such about the large enterprises and groups diversity (OB, L 330/1, dated from 15 November 2014). The legal act entered into force on January 1, 2016, whereas its previous and final provisions stipulate that the financial statements and activity reports preparation and auditing, in terms of the year of 2015, shall be carried out pursuant to the repealed Accounting Act, but the publication of the same is to  be carried out in accordance with the new one.


Types of enterprises

The legal act establishes the EU enterprises categorization. The last one lays down the obligations in terms of financial statements and business reports drawing up as well as the enterprises reports, regarding governmental payments [1], together with their publicity. The enterprises have been divided into the following categories:


– not exceeding at least two of the following indicators

Small enterprises
– not exceeding at least two of the following indicators

Medium enterprises
– not exceeding at least two of the following indicators

Large enterprises
– exceeding at least two of the following indicators

Net book value of assets

BGN 700 000

BGN 8 000 000

BGN 38 000 000

BGN 38 000 000

Net sales revenue

BGN 1 400 000

BGN 16 000 000

BGN 76 000 000

BGN 76 000 000

Average staff number for the reporting period

10 people

50 people

250 people

250 people

Those categories are not applicable to the so-called “public interest entities” to which particular legal rules are relevant, regarding the constituent parts of the annual financial statements, the applicable accounting basis and the activity report content. Such undertakings are the credit institutions, the insurers, the reinsurers and the commercial entities which main activity is to provide water, sewage services and others.


Annual financial statements – content, deadlines and audit

Regarding the annual financial statement, the legal act provides that the medium and large enterprises, as well as the public interest entities shall draw up the annual financial statement in its fullest pursuant to the applicable accounting standards. It is required the annual financial statements and the activity report to be published in the form and with the exact text on the basis of which the registered auditor expressed their opinion, together with the full content of the auditor’s report. Large enterprises and public interest entities, operating in the extractive industry or primary forests logging shall draw up and publish an annual report on governmental payments together with their annual activity report.

The law allows exceptions to the above requirements, concerning the annual financial statement preparation and publishing:

  • Regarding microenterprises – the annual financial statement is provided to consist only of a condensed balance sheet, a condensed revenue statement and expenditure by section;
  • Regarding small enterprises, not being a subject to mandatory independent financial audit, it is possible their revenue and expenditure accounts, together with the activity reports, not to be publish

The new legal act introduces a requirement regarding the fact the information in the activity report to include also an analysis of financial and non-financial key performance indicators, relevant to the business activity, together with information on environmental issues and employees and while analysis preparation, the same ones could be used, together with references to the expenditure amounts, reported in the annual financial statements and the additional explanations in relation to the same. An exception for micro, small and medium-sized enterprises is provided. The same ones are not obliged to include non-financial information in the activity report.

The legal act also provides the possibility for micro and small enterprises, not being a subject to mandatory independent financial audit, not to draw up an activity report, provided that the  acquisition information of their own shares is to be disclosed in the notes to the annual financial statements or in a footnote. This exemption does not apply to investment companies and financial holding companies, categorized as microenterprises or small enterprises.

What is more important is the change that the law introduces on the deadline regarding annual financial statements publication, the consolidated financial statements and the annual reports of all enterprises – the deadline is 30 June,  the following year. The new law clarifies the ambiguities in the cases of annual reports, filed for announcement within a period of time, when there were registered entry refusals by officials from the Commercial Register. Thus, the financial statement is deemed to have been filed within the time limit if it was originally filed for announcement within the stipulated period until 30 June, the following year, the refusal under Art. 22, para. 5 of the Commercial Register Act had been granted and within 14 days from its entry into force, a re-application for publication had been submitted.


Other highlights

The new law amends the statutory independent financial audit scope by providing that the entities below are required to draw annual and consolidated financial statements:

  • Small enterprises, which at 31 December of the current reporting period exceed at least two of the following indicators: net book value of assets: BGN 2 000 000; net sales revenue: BGN 4 000 000; average staff number for the reporting period: 50 people;
  • Medium and large enterprises;
  • Public interest enterprises;
  • Medium and large groups and groups in which there is at least one public interest enterprise;
  • Enterprises for which such a requirement has been established by law;
  • Joint-stock companies and limited partnerships, except cases in which the companies had not operated during the reporting period;
  • Entities included in the consolidation;
  • Non-profit legal entities designated for carrying out public benefit activities, in case during the current year one of the following indicators has been exceeded: net book value of assets: BGN 1 000 000; the net income amount, out of economic activity as well as the non-profit activity income for the current year – BGN 2 000 000; total amount of funding, received and not used as well as been received in previous reporting periods, during the current year,: BGN 1 000 000;
  • Non-profit legal entities, designated for carrying out socially useful activities and performing activities under Art. 116, Family Code.

The order and method of making an inventory has been amended by requiring undertakings to make a mandatory assets and liabilities inventory at least annually in order to ensure their fair presentation in the financial statements if the net sales revenue exceeds BGN 200 000.


[1] “Governmental payment” means a payment in cash by an undertaking operating in the extractive industry or by an enterprise, engaged in the primary forests logging, for its debts to the Government.

“Government” means a national, regional or local authority of a state member of the European Union or a of third country. The term “government” includes a directorate, agency or an enterprise, controlled by state authorities.