Who is obliged to publish accounting information?

The methods of publishing accounting information are governed by Section 21a of the Accounting Act. The obligation to publish financial statements or the annual report rests only with  reporting entities incorporated in the Public Register or to those in respect of which the obligation is stipulated by a special legal regulation. The obligation to publish financial statements or the annual report from 1 January 2016 also applies to Societies, Foundations, Institutions, Associations of Apartment Unit Owners and Public Service Organisations.

The Public Register is maintained by the Registry Court in an electronic form.

How is the information published?

The reporting entities incorporated in the Public Register publish relevant documents by filing them in the Collection of Deeds of the Public Register (the “Collection of Deeds”). The documents are to be sent to the relevant Registry Court in an electronic form in the PDF format. Each deed is filed as a single PDF document. One deed thus cannot be divided into several documents, nor is it possible to combine multiple deeds into a single PDF document. Documents may be sent to the Registry Court via a data box, e-mail, in the form of on-line filing, via a web application and on technical data media. More information is available here.

The Accounting Act provides an exemption for certain reporting entities that submit the annual report in the Collection of Deeds via the Czech National Bank.

What information is published?

Reporting entities are obliged to publish the following documents by submitting them to the Collection of Deeds:

• Financial Statements (ordinary, extraordinary and consolidated) or a summary statement of assets and liabilities (in the case of single-entry bookkeeping);
• Annual Report or a similar document if its preparation is required by the Accounting Act or a special legal regulation. Pursuant to Section 21 of the Accounting Act, the preparation of the annual report is required of the reporting entities the financial statements of which must be subject to audit.

In respect of financial statements for the period starting in 2016 or later:

• Reporting entities are also obliged to publish a Report on Payments to Governments and a consolidated report on payments to governments. The reports are prepared only by large reporting entities engaged in the mining and lumbering industries;
• Small and micro reporting entities that are not subject to mandatory audit may prepare a summarised version of financial statements and do not need to publish the profit and loss account. Therefore, they are only obliged to publish the balance sheet and the notes to the financial statements.

The financial statements may be filed as part of the annual report.

Pursuant to Section 66 (c) of the Registers Act, the Collection of Deeds also contains Proposals for the Distribution of Profit or the settlement of loss and their final wording (unless they form part of the financial statements).

Reporting entities are to publish the financial statements in the scope in which they prepared them. Reporting entities which are obliged to subject their financial statements to audit publish them in the scope and wording in which they were audited by the auditor.

When is the information to be published?

a) The reporting entities which are obliged to subject their financial statements to audit are to publish their financial statements and annual report:

• After they have been audited by the auditor; and
• After they have been approved by the relevant body; and
• Within 30 days from meeting the two conditions stated above (unless special legal regulations stipulate otherwise); however,
• No later than within 12 months from the balance sheet date of the financial statements to be published regardless of whether the financial statements were approved in the stated manner.

The reporting entities are also obliged to publish the Auditor’s Report and, if applicable, the information stating that the accounting records have not been approved. In addition, they must not publish previously unaudited information in a manner that might mislead the user into believing that it had been audited.

b) The reporting entities which are not obliged to subject their financial statements to audit are to publish their financial statements as well as annual report no later than within 12 months from the balance sheet date of the financial statements to be published. Given the unclear guidance in the amendment to the Accounting Act, certain lawyers believe that the obligation to publish the financial statements or annual report within 30 days from their approval by the relevant body also applies to the reporting entities that are not obliged to have their financial statements audited by independent auditors.

How is the selected information of the financial statements presented?

In the situation where the reporting entity only presents selected information from its financial statements, the reporting entity is to state that only selected details from the financial statements are disclosed and where the financial statements are kept. The auditor’s report on the financial statements is not appended to the selected information; only the type of auditor’s opinion on the financial statements and reference to any matters specifically emphasised by the auditor are disclosed.

What are the sanctions for breaching the obligations?

The sanctions for breaching the obligation to publish accounting information are stipulated by the Accounting Act as well as the Registers Act.

The Accounting Act from 1. 7. 2017 considers the violation of the obligation to duly submit the financial statements, annual report or report on payments to governments to the Collection of Deeds to be an offence on the part of the reporting entity.

The sanction pursuant to Section 37a is a fine of up to 3% of the total value of assets. In the first instance, the administrative offences of this sort are heard by the tax authority.

Pursuant to Section 72 (2) of the Registers Act, if the relevant document is not filed in the Collection of Deeds, the Registry Court will call on the incorporated entity to submit the document without unnecessary delay. If it fails to respond to the call, a disciplinary penalty of up to CZK 100 thousand may be imposed. However, if the incorporated entity repeatedly fails to meet its obligation to submit the required documents or if the failure to do so has serious consequences for third parties and if there is a legal interest in it, the Registry Court may, of its own motion, initiate the proceedings for the dissolution of the incorporated entity including its liquidation pursuant to Section 105 of the Registers Act. However, should this be the case, the Registers Court will notify the incorporated entity of this and will provide it with a reasonable deadline for remedying the deficiencies.

Furthermore, pursuant to Section 106 (2) of the Registers Act, the member of the statutory body of the legal entity which failed to meet its obligations pursuant to Section 105 of the Registers Act is in breach of due managerial care.

The article is part of dReport – May 2018, Accounting news