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Checklist for the preparation of the annual financial reports
A financial report is a document that contains basic information about the company's annual financial activity. A day for which the financial statements are prepared is called the balance-sheet date.
Companies that are registered in the National Court Register have 3 months to prepare the financial statements from the given balance sheet date. If the financial year coincides with the calendar year, the deadline for making the report is March 31. However, this and the previous year due to the outbreak of the pandemic, the deadline was extended to June 30, 2022 for financial sector entities, August 31, 2022 for public finance sector entities and August 31, 2022 for taxpayers related to income tax of physical persons who keep the accounting books. Once the report is made, the company has 3 months to approve it. The final closure of the accounting books of the individuals who continue to operate must take place not later than 15 days after the approval of the financial reports for the fiscal year.
The preparation of the annual financial reports is the responsibility of a given entity's managers, that is:
- members of the management department of capital companies
- partners conducting the partnership's affairs in a general partnership, civil partnership and professional partnership
- general partners managing the partnership's affairs in a limited partnership and limited joint-stock partnership
- liquidators, receivers or insolvency practitioners
- members of management departments of other units (to which the regulations of the Accounting Act can apply).
In the financial reports for micro and small entities, some simplifications in relation to larger entities are allowed. The balance sheet and the profit and loss account for micro and small entities presents data with less distinction. The content should, however, be consistent with the version of the report in Annex 1 to the Accounting Act. The legislator has stipulated that micro and small entities can benefit from the simplifications only if the approval authority pass a resolution concerning their application in the financial reports. This form requires as well its consideration in the accounting policy.
The audit of the financial reports is the basic way to objectively confirm the economic condition of the company, to check the status of assets and the amount of turnover in a given fiscal year. They are executed by a statutory auditor. The audit should be executed prior to the approval of the report - not later than 15 days before the shareholders' meeting. Once the audit is done, the auditor prepares a written report that includes, for instance, the statutory auditor's opinion about whether the financial reports of the audited entity:
- present the view of the financial situation and the financial outcome with the applicable regulations concerning accounting and financial reporting as well as with the adopted accounting policy
- are consistent in terms of form and content with the legislation, statute or contract.
Below we present the original check list that may be useful while preparing the annual financial report as well as closure of the financial year for reporting purposes, which will facilitate the preparation of the document.
1. Balance sheet continuity check: whether the OB has been transferred and if so - whether it is correct;
2. Checking whether all the documents from the purchase and sale registers are credited.
3. Verification of settlements (whether there are no cash and bank operations without invoices and whether all invoices have been delivered) and potential information delivery to the customer about missing documentation.
4. Verification of settlements (whether all unpaid invoices appear as unpaid) and potential discussion about their status with the client.
5. Checking the balance of Ma on account 201 (203) and Wn on 202 (204) - not always everything can be found in the accounts.
6. Comparison of the compliance of bank account balances at the end of a given financial year with the balances visible in the bank statements in pdf and verification whether each bank statement has been credited.
7. Comparison of the compliance of cash register balances at the end of a given financial year with the cash register inventory sent by the Client. Verification whether each cash statement has been credited.
8. Derecognition of penny differences from the turnover in order to eliminate micro balances at the end of the financial year (this does not concern the balances on settlements of remuneration and settlements with public administration).
9. Comparison of account balances with offices with submitted declarations as well as outgoing and incoming transfers.
10. Checking the salaries with employees - whether we have booked/accrued all payrolls or whether the salary payments have been correctly introduced.
11. Reclassification of wages as well as salaries and social security contributions in nkup and making an off-balance sheet entry in the accounts of team 9 in order to post non-tax costs from the previous year to purchase in the next financial year.
12. Comparison of the compliance of balance and settlement with confirmation of balance sent at the end of the year.
13. Generating annual CIT, verification of CIT-R payments with actual payments, verification of the last prepayment with a payment after the new year (especially if the client is with us only until the end of the year as in this case we do not see whether it has been paid or not) and comparing it with the turnover . Before submitting the CIT, we have to confirm all the transfers concerning the prepayment. If there are some unpaid accounts, it is advised to agree it with the client in order to make sure that it really has not been paid.
14. Posting the CIT declaration and verification of the balance with the turnover.
15. Posting the JPK V7 declaration and verifying the balance with the turnover.
16. Checking whether depreciation for the entire year has been calculated and posted, and then comparing the net present value of fixed assets with the turnover to see whether they have the same balances.
17. Verification of the cost accounts, whether they have no Ma turnover. If they have, then it is advised to execute the derecognition in accordance to the accounting policy.
18. Verification of income accounts - whether they have Wn turnover or not. If they have, it is advised to execute the derecognition in accordance with the accounting policy.
19. Whether the sums in dues are significant (and potential information to the client), whether they are not very old (write-downs).
20. Checking equity capital: the amount of share capital with information from the National Court Register; checking whether the outcome of previous years is booked in accordance with the act.
21. Verification of the off-balance sheet accounts, RMK and RMP that were transferred from the previous year - whether there are any balances on them and whether they should be re-booked.
22. Verification of periodic bookings - whether they have been accrued and posted (we do not use the periodic booking module for now).
23. Verification of the condition of currency settlement accounts and potential derecognition of exchange rate differences. Check whether they have been correctly calculated and booked.
24. Verification of the currency storage - whether it has been properly settled and posted.
25. Balance sheet valuation of foreign currency accounts (bank accounts, settlements with recipients/suppliers)
26. Inventory: If it is a trading company, then it is necessary to confirm the status of the storage of commodities at the end of the year. In addition to this, it should be verified whether the prepayments for goods and services should not be included in the closing year costs. What one has to do is to check the account balance and confirm with the client whether the given service/goods have been executed/delivered in the current period;
27. If the company has used the so-called anti-crisis shields or government support - check whether the loan/subsidy has been fully/partially redeemed in accordance with the decision of the district office, PFR or other unit responsible for their settlement;
28. Reconciliation of the warehouse and production with the inventory - the actual condition and writing off the differences.
29. When it comes to the liabilities that are expired for more than two years, they must be entered into the books as income for taxation (in accordance with tax regulations);
30. Preparation of profit and loss account and its comparison with the turnover.
31. Preparation of the balance sheet and comparing it with the turnover and with the profit and loss account.
32. Preparation of income tax calculation and comparison of its result with the CIT declaration.
33. Preparation of a report presenting the activities of the management department.
34. Preparation of additional information.
35. Preparation of resolutions (a resolution on profit distribution/resolution on loss coverage and resolution on approval of the financial statements.
36. Generating the xml file with the financial statement and signing it by the accountant before submitting it to the to the management department in order to its being signed there.
37. Saving the already signed reporting files, printing them and storing them in a binder with other documents of a given fiscal year.
38. Once the report is approved by the National Court Register, we should transfer the turnover from profit and loss accounts to the financial result and then close the accounting year in the books.
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