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Financial Statements

A company must prepare financial statements for each accounting period. Even if financial statements are prepared by professional accountants, i.e. either your accounting firm or accountant, a company’s management is responsible for the business decisions made during the accounting period as well as the financial statements. Experts in financial administration may give advice on the basis of which the financial statements are prepared, but the responsibility always lies with the corporate management. Therefore, the signatories of financial statements must understand the documents they are signing.

Content of financial statements

Financial statements must include:

  1. balance that illustrates the financial status on the closing date

  2. profit and loss account that illustrates result formation

  3. financing calculation including an adequate account on the acquisition and use of funds during the accounting period and

  4. information appended to the balance, profit and loss account and financing calculation (notes to the accounts).

Next to each item in the profit and loss account, balance and possible financing calculation for an accounting period, the equivalent reference data for the previous accounting period must be provided. For the notes to the accounts, it is not mandatory to provide reference data for the previous accounting period.

An annual report must also be appended to the financial statements. A small entity subject to accountability is not obligated to prepare annual reports or financing calculations.

A small entity subject to accountability refers to a company that exceeds no more than one of the following limits in the last financial year and in the financial year directly preceding it:

  • net sales EUR 7.3 million

  • balance sheet total EUR 3.650 million

  • personnel on average max. 50 people.

The financial statements and annual report must provide correct and adequate information on the results of operations and the financial status of the company. The information must be supplemented with notes to the accounts. The obligation to provide notes depends on the size and form of the company, as small entities subject to accountability have been exempted from some of the notes requirements of the Accounting Ordinance.

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