We have already written about the new Accounting Act, which was passed on 10 June 2021 and comes into force on 1 January 2022. The old Accounting Act and the Cabinet of Ministers’ Rule No. 585 of 21 October 2003, Bookkeeping and Accounting (“Rule 585”) will cease to apply as a result. New accounting rules will be issued to accompany the new Accounting Act. This article explores the content of the proposed rules and the time frame for adoption.
The new rules will eventually replace Rule 585, but the economy and the business environment will remain substantially unaffected. The new rules will basically take over the provisions of Rule 585 and will be aligned with the provisions and terminology of the new Accounting Act.
The time frame for passing the new rules
The proposed rules were announced at the meeting of state secretaries on 19 August and will be submitted to the State Chancellery on 21 October.
Although the new rules are expected to come into force along with the new Accounting Act on 1 January 2022, Rule 585 will continue to apply to the extent it is consistent with the new Accounting Act until the date the new rules take effect or 1 July 2022, whichever is earlier, in line with the transition provisions of the Accounting Act.
Areas governed by the new rules
- Bookkeeping requirements (section 8 of the Accounting Act)
- Procedures for adjusting entries made in accounting records and in supporting documents (section 8 of the Accounting Act)
- Procedures for preparing supporting documents, and requirements for supporting documents prepared for goods, other tangible assets and services, and relating to the use of advances paid in cash or by bank transfer or to the reimbursement of staff expenses (section 11 of the Accounting Act)
- Company details and other information that must appear on documents relating to supplies of goods, and procedures for preparing, signing and registering those documents (section 12 of the Accounting Act)
- Requirements for the use of accounting software and accounting information systems software (section 6 of the Accounting Act)
When it comes to storing documents in a cloud, the proposed rules require a minimum of 96.7% availability of accounting software and accounting data each month.
What provisions of the old rules are omitted from the new rules?
Rule 585 provisions for the following areas are omitted from the draft:
- The accounting cycle
- Single-entry or double-entry bookkeeping and the use of chart of accounts
- Restatement of receivables, payables and foreign currency balances at the end of each financial year
- Single-entry bookkeeping procedures to be adopted by associations, foundations, trade unions, and religious organisations
Provisions for these areas are included in the new Accounting Act to the extent necessary.
Since sections 31, 32 and 33 of the new Accounting Act include provisions for the CEO’s rights and obligations, Rule 585 provisions for the following areas are omitted from the draft:
- The CEO’s right to choose (a) the form and content of supporting documents and accounting records, (b) procedures for preparing them, and (c) accounting software or accounting information systems software
- The CEO’s obligation to prescribe requirements for the security of accounting information systems and for data protection in the company and to monitor compliance with those requirements
- The CEO’s obligation to draw up and issue accounting policies
- The CEO’s obligation to develop and maintain the company’s system of accounting controls, as well as exemptions from this obligation
Information about the proposed rules has been posted on the Finance Ministry’s website, and members of the public can still take part in improving the draft by submitting written opinions on it, even though it has already been announced at the meeting of state secretaries.
Once the proposed rules are adopted, Finance Ministry representatives will provide comments at various public events as well as in the press and media.
