On 2 September 2025, Act No. 316/2025 Coll. was published in the Collection of Laws. Among other things, it amends the existing Accounting Act (the “Accounting Act”). This amendment brings three changes, two of which are significant and affect most reporting entities. Although the amendment to the Accounting Act generally takes effect from 1 January 2026, the transitional provisions and the wording of certain sections make it less than straightforward to determine the exact date from which the amended provisions should be applied. Let us therefore look at when each change becomes effective.
As we have previously detailed in April article, the amendment to the Accounting Act primarily brings three changes.
The turnover and total assets indicators have seen a 20% increase in the limit (the employee count indicator remains unchanged) – amendment to Section 1b and Section 1c of the Accounting Act:
It follows from the transitional provisions, in simple terms, that these increased values will be first used for assessing the categorisation of reporting entities in the reporting period starting from January 2024.
How will the categorisation look in practice if a company has a reporting period that matches the calendar year? Section 1e of the Accounting Act defines that the categorisation of a reporting entity or group of reporting entities will change if, on two consecutive balance sheet dates, it exceeds or ceases to exceed 2 threshold values for categorisation. Therefore, for correct categorisation, it is necessary to determine to which category the reporting entity or group belonged in the previous 2 periods. For the reporting period of 2025, the reporting entity will proceed as follows: For determining the category for the year 2023, the original, non-increased limits will be used, while for the year 2024, the increased limits will already be applied. Therefore, you must have both the original and the amended versions at hand. It is only for determining the categorisation in the reporting period of 2026 that the increased criteria alone will apply.
For example, Company A, a.s., which has a turnover of CZK 220 million and assets of CZK 110 million from 2022 to 2025, will proceed as follows. For the preparation of the financial statements for the year 2024, it was a medium reporting entity. For the preparation of the financial statements for the year 2025, it remains the medium reporting entity because the criteria for categorisation as small were first met on 31 December 2024 (due to the application of the increased criteria). It will become a small reporting entity only for the reporting period of 2026.
Effective from 1 January 2026, only medium and large reporting entities are required to have their financial statements audited by an auditor. This change will be first applied to financial statements for reporting periods starting from 1 January 2026 and later.
Therefore, Company B, s.r.o., which was a small reporting entity in 2025 but met the criteria for mandatory audit (assets exceeding CZK 40 million, turnover was over CZK 80 million) will have to have its financial statements for 2025 audited. The financial statements for 2026 will no longer be subject to mandatory audit.
Similarly, Company A from the example above will not need to have its financial statements audited starting with 2026, when it becomes a small reporting entity.
The obligation for auditing the consolidated financial statements remains unchanged; therefore, the consolidated financial statements are subject to audit (Section 22 of the Accounting Act), and the obligation to prepare consolidated financial statements generally applies to medium and large groups of reporting entities.
For the assessment of the obligation to prepare a sustainability report, the employee count criterion was increased from 500 to 1,000. This increase is effective for reporting periods starting 1 January 2025, and later.
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