Accountancy

Accrual based accounting is organized according to the arrangements stipulated in the Accountancy Act and established by the management of the entity in company’s chart of accounts.

In the process of developing and maintaining their accounting system, entities should provide for:

1. a comprehensive chronological recording of accounting operations;
2. systematic accounting registers for the purpose of summarizing accounting information created at the beginning of the accounting period and closed at its expiration;
3. aggregate and detailed accounting registers, as well as their interrelation and equation;
4. interim and annual closing of accounting registers, drawing up of a trial balance;
5. changes to the accounting entries through reversing ones;
6. application of company’s chart of accounts.

Inventory counting of assets and liabilities is usually performed in each accounting period for the purpose of their faithful representation in the annual financial statements.Inventory counting is performed in accordance with the manner and order determined by the management body of the entity.

Annual financial statements are prepared and presented basing on the National Financial Reporting Standards for Small and Medium Enterprises by the entities which, at least for one of the latest two years, do not exceed the indicators of two of the following criteria:

1. net book value of assets at 31 December - 8 million levs;
2. net sales for the year - 15 million levs;
3. average number of employees for the year - 250 people.

Newly created entities prepare and present their annual financial statements basing on the National Financial Reporting Standards for Small and Medium Enterprises for the year of establishment and for the following year.

National Financial Reporting Standards for Small and Medium Enterprises are adopted by the Council of Ministers and comply with the acts of the European Union and the national specificities.

The managing body of the entity is responsible for the timely preparation of financial statements, their substance and publication.

The information presented in the financial statements has to meet the following requirements:

1. understandability – it should be useful for the users in the process of decision making;
2. relevance – to enable the users to assess past, current or future events and to confirm or amend their previous assessments in the process of decision-making;
3. reliability – that it does not contain significant misstatement or partiality;
4. comparability – to enable users compare company information from various years, as well as compare it with the information of other companies, in order to assess the effectiveness, financial status and the changes in it.

Financial statements (interim, annual and consolidated) are prepared by issuers of financial statements.

An issuer of financial statements could be any physical person or specialized accounting enterprise if it meets the requirements of the law.

The financial statements of the entity are signed by:

1. физическите лица, които управляват и представляват предприятието, и физическото лице, което:
   1. the physical persons managing and representing the entity and
   2. the physical person which:
      • has made the financial statements – in cases when the financial statements have been prepared directly by the physical person, or
      • is managing and representing the entity which is the issuer of the financial statements – in cases when the financial statements have been prepared by a specialized accounting enterprise.

The following are also specified/placed in the financial statements:

1. full names of the persons stated above;
2. the stamp of the entity;
3. the stamp of the specialized accounting enterprise.

In the events when the financial statements have been prepared directly by the physical person, that person has to be engaged under employment or contractual relations with the respective entity.

An issuer of financial statements could be any person which meets the specified requirements regarding the mandatory minimum degree of education completed and the corresponding professional experience referred to hereunder:

1. having a degree in accounting and economics and experience in the field of accounting, external and internal audit and financial inspection, tax audits, or which has worked as a lecturer of accounting and control, respectively:
   1. Master’s degree - 2 years professional experience;
   2. Bachelor’s degree - 3 years professional experience;
   3. Specialist’s degree - 4 years professional experience;
2. other higher economic education and 5 years experience in the field of accountancy, internal, external audit and financial inspection, tax audits, or as a lecturer of accounting and control;
3. secondary economic education and 8 years of experience as an accountant.

Issuers of financial statements could be only persons that haven’t been convicted for criminal offence of general character under chapter five and under section I of chapter six of the Specific part of the Criminal Code.

Issuers of financial statements are responsible for the organization of accounting activity in the entity.

Any person which prepares financial statements without meeting the requirements on issuers of financial statements shall be imposed a fine or a property sanction to an amount ranging from 1500 to 3000 levs. Should that violation be made another time, the property sanction shall be doubled.