On 21 December 2023, an amendment to Directive 2013/34/EU was published which changes the criteria for the categorisation of accounting entities. In particular, the monetary limits (i.e. assets and net turnover) for business and non-profit entities have been valorised by approximately 25%. As regards the average number of employees criterion, there is no change in this case. This change is to be applied by EU Member States within 12 months of the publication of the amendment.
It is likely that the current Accounting Act will be amended during 2024 to incorporate the increase in these limits. Thereafter, the categorisation of entities will be as follows (exchange rate as at 31.12.2023 - 24,725 CZK/EUR):
The category of CU | Total assets | Total turnover | Average number of employees |
Micro accounting unit | < 450 000 Eur / Approx. 11 000 000 CZK | < 900 000 Eur / Approx. 22 000 000 CZK | < 10 |
Small accounting unit | < 5 000 000 Eur / Approx. 123 000 000 CZK | < 10 000 000 Eur / Approx. 247 000 000 CZK | < 50 |
Medium-sized entity | < 25 000 000 Eur / Approx. 618 000 000 CZK | < 50 000 000 Eur / Approx. 1 236 000 000 CZK | < 250 |
Large accounting unit | > 25 000 000 Eur / Approx. 618 000 000 CZK | > 50 000 000 Eur / Approx. 1 236 000 000 CZK | > 250 |
The change in the categorisation of accounting units is directly related to the changes in the audit obligation of accounting units. At the moment, the Legislative Council of the Government is drafting a new law on accounting, which includes an increase in the limits for mandatory auditing, which would now apply only to medium and large accounting units, i.e. units whose values would exceed assets according to the new increased limits - approx. 123 000 000 CZK, net turnover - approx. 247 000 000 CZK and the average number of employees - 50.
According to the opinion of the Chamber of Auditors of the Czech Republic, which does not agree with the proposal to increase the limits for statutory audit, in this case about 10 000 accounting units would fall out of the statutory audit. This would mean, among other things, lower information for users of financial statements and higher costs for these users, which include the state. The Chamber of Auditors believes that if such a number of companies are excluded from the mandatory audit, it will not be possible to replace the audit by the tax authorities and thus there is a risk of a negative impact on tax collection in the Czech Republic.
