Starting January 1, 2026, important amendments to the Accounting Act will come into effect, impacting which accounting entities will be subject to mandatory audit and what criteria will apply to their categorization.
Below is an overview of the key changes and their implications that all entrepreneurs and accountants should keep in mind.
Inflation and New Thresholds for Categorization
One of the main changes concerns the adjustment of threshold values (limits) for classifying entities as micro, small, medium, or large, based on total assets, turnover, or number of employees.
The new thresholds reflect inflation and economic developments in the Czech Republic.
Since categorization determines the scope of financial statement preparation, consolidation, and disclosure, it is essential for entities to assess in time whether their category might change.
An interesting detail is the transitional period for 2025 assessments:
- As of December 31, 2023, entities are assessed according to the current thresholds,
- As of December 31, 2024, according to the new (increased) thresholds.
This means that entities close to the limit may move into a new category sooner than expected.
Change in the Scope of Mandatory Audit
A major change is that from 2026, some small accounting entities will no longer be required to have their financial statements audited. Until now, certain small entities exceeding specific thresholds were still subject to audit.
The amendment clarifies that the audit obligation will no longer apply to all small entities, thereby reducing the number of companies affected by this requirement.
However, for accounting periods beginning before January 1, 2026, the current legal rules remain in force. This means that small entities with financial periods ending in 2025 may still have to undergo an audit under the existing regulations.
Implications for Businesses and Accountants
Entities near the category thresholds should recalculate based on the new limits to determine if reclassification applies.
Companies previously subject to mandatory audits may, in some cases, no longer be required to undergo one from 2026 – potentially reducing costs.
Nevertheless, a voluntary audit may remain a valuable tool of credibility towards investors, banks, and business partners.
Recommended Actions
- Run a simulation using the new thresholds to assess potential changes in categorization.
- Check your accounting period – if it starts before January 1, 2026, the current audit rules apply.
- Consider a voluntary audit – even if not required, it can enhance transparency and trust with third parties.
