Ensuring the accuracy and reliability of financial statements
The closing of the fiscal year presents an opportunity to thoroughly evaluate business operations and set a solid foundation for the coming year. It is therefore essential to focus on the key aspects that affect the accuracy and reliability of your financial reports.
The annual financial statements must provide a fair and precise reflection of the company’s financial position. This aspect is crucial for any stakeholders making informed decisions based on this data. Each accounting entry should therefore be harmonized with the applicable accounting standards, as errors can have negative impact on both business performance and reputation.
Key focus areas for preparing reliable Financial statements
- Recognition of Income and Expenses
Properly recording revenues and expenses in the period in which they were incurred (cut-off date) is essential for a true representation of financial performance. Misaligned timing recognition can lead to distorted data in the financial statements, therefore income and expenses must be in accordance with accounting standards to ensure a fair presentation of the business.
- Correct classification of assets and liabilities
The correct division of assets and liabilities into short- and long-term provides a clearer view of the company's liquidity position, offering a more accurate assessment of the company's ability to settle its obligations.
- Review of open receivables and liabilities
The review of receivables and payables at the end of the year is important, as it enables the company to verify the true status of outstanding receivables and debts. Issuing statements of open items with customers and suppliers helps confirm these balances, reducing the risk of inaccuracies regarding registrations and facilitating timely resolution of any discrepancies.
- Review and Reimbursement of State Aid and Subsidies
For companies that received state aid in previous years, now is the time to review compliance with any conditions associated with receiving these funds. If any requirements prove not to be met or the aid was not used properly, this should be recorded, and if necessary, repayment of these funds should be arranged.
- Calculation and Documentation preparation on Transfer Prices at the end of the year
Year-end calculation of transfer prices is crucial, as it ensures that transactions between related companies consistently follow the transfer pricing policy, minimizing the risk of tax discrepancies. Through consistent adjustments, the company also ensures compliance with transfer pricing documentation, which contributes to the transparency and credibility of its financial statements.
- Review of the conditions for the implementation of Tax Reliefs
State Tax Reliefs allow companies to reduce their tax base, which encourages investment in R&D, employment, environmental projects, and other important activities. Reviewing the conditions for applying year-end tax credits is important, as it allows the company to take advantage of all available tax benefits.
- Fixed Assets Register Review
It is important to ensure the use of appropriate depreciation rates and an accurate calculation of depreciation in the register of fixed assets, which affects the real value of the assets in the business books. At the same time, assessing the actual state of fixed assets is crucial for ensuring consistent compliance with accounting standards and tax regulations.
The year-end Inventory allows the company to reconcile physical asset balances with the accounting records. It also helps detect potential discrepancies, losses, or damage to assets, enabling timely adjustments and improvements in operations.
- Preparation of Annual Reports
Annual reports must include and disclose all mandatory information in line with accounting standards. Reports must reflect the true business operations and financial status of the company. Incomplete or misleading reports can lead to poor decision- making and business risks.
The close of the year is a strategic moment to assess the company’s operations, and presents excellent position for new opportunities in 2025.
By addressing these core areas of preparation of financial statements, your company will enhance its financial reliability and reinforce the foundation for growth in the coming years.
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