What will the new Accounting Act bring? An overview of 5 key changes

The current accounting rules are based on legislation that was introduced in 1991. Although there have been a number of amendments to the Act itself and the related implementing decrees, they are often no longer sufficient for the current economic reality. The State is aware of this and is therefore preparing a completely new Accounting Act. Find out when it is due to come into force and what changes it contains.

Main changes from the new Accounting Act

The long-awaited draft of the new Accounting Act appeared in the VeKLEP database of upcoming legislation on 16 January 2024. What are the most important changes it includes?

Emphasis on financial statements

The new accounting should focus more on what information it provides to users. Thus, the law will not place as much emphasis on the accounting itself, but instead on a true and fair view of the financial statements.

Fewer accounting units

The new rules will reduce the number of entities required to keep accounts. This obligation should now not apply to organisational units of foreign entities or natural persons. However, they will still have to keep records for the purpose of calculating tax liabilities.

Inclusion of international accounting standards

The new law will introduce principles into bookkeeping that previously applied only to entities accounting according to international accounting standards. An example is the recognition of an asset acquired under a finance lease as an asset owned by the entity.

Mandatory audit for fewer companies

There will be a significant increase in the limits for the mandatory audit of financial statements, up to 3 times the current ones (except for the number of employees). Only entities meeting 2 of the 3 criteria will now be audited:

• turnover over CZK 240 million,
• value of assets above CZK 120 million,
• and/or more than 50 employees.

Accounting in foreign currency

Thanks to the new law, accounting entities will be able to keep their accounts in a selected foreign, so-called functional currency (US dollar, euro or British pound) under certain conditions.

When will we see the new law?

It is still a draft law, so its form may change significantly during the legislative process. In addition, there are no implementing decrees - only a brief description of the basic principles of these decrees is annexed to the draft. Their finalisation and subsequent publication should take place during the course of this year.

The new Accounting Act is due to enter into force on 1 January 2025, but we expect that the deadline will be postponed to 1 January 2026. We will keep you informed of further developments.

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