In the Hungarian economy, the preparation of the annual financial statements has become a routine task and a fundamental obligation for companies that must be fulfilled every year. However, failure to meet this obligation can lead to serious legal consequences, which may pose a significant risk to the companies involved.
Preparation and Approval of the Annual Financial Statements
For companies applying double-entry bookkeeping, the preparation of an annual financial statement is mandatory, which is created as of the last day of the fiscal year, the balance sheet date. The purpose of the annual financial statement is to provide an accurate and reliable picture of the company’s assets, financial position, and performance, as well as their changes. The statement must include the company’s assets, equity, provisions, and liabilities, and it must also account for accruals and deferrals.
The annual financial statement consists of the following elements:
– Balance Sheet: A detailed representation of the company’s assets and sources.
– Profit and Loss Statement: A summary of income and expenses, as well as the tax result.
– Notes: Explanatory remarks and additional data that support the understanding of the company’s actual financial condition.
The annual financial statement must be approved by a resolution of the company, with the format of the statement set out in the appendices of the Hungarian Accounting Act of 2000.
Simplified Annual Financial Statement
Companies that apply double-entry bookkeeping may prepare a simplified annual financial statement if, in two consecutive fiscal years, at least two of the following three key figures do not exceed the specified threshold:
– Total assets: 1.2 billion HUF,
– Annual net revenue: 2.4 billion HUF,
– Average number of employees: 50 persons.
The simplified annual financial statement does not include a management report and consists of the usual elements (balance sheet, profit and loss statement, and notes). It is important to note that certain companies, such as publicly traded corporations and their parent companies, cannot make use of the option for a simplified annual financial statement.
Publication and Legal Consequences
Companies that apply double-entry bookkeeping must publish their annual financial statements via the OBR (Online Accounting Platform) managed by the Ministry of Justice. The obligation to publish is based on the requirements of the Accounting Act. Since the spring of 2018, the annual financial statement can only be published if the company has a valid company ID in the corporate network.
Failure to publish the annual financial statement on time may result in a fine from the tax authority (NAV). Additionally, the system is automatically connected to the company registry. In the event of failure, the company registry may order the forced deletion of the company based on a legal review, which can have serious legal and financial consequences.
In practice, accountants and their clients often handle the publication through a central customer portal to ensure legal compliance and accurate data recording.
Summary
For companies, the preparation of the annual financial statement and its publication is not only a legal obligation but also an indispensable part of ensuring the transparency of the company’s financial condition. Failures can have significant financial and legal consequences, so every company must adhere to the legal deadlines and requirements.
Dr. Katona Géza, LL.M. ügyvéd (Rechtsanwalt / attorney at law)
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Katona és Társai Ügyvédi Társulás
(Katona & Partner Rechtsanwaltssozietät / Attorneys’ Association)
H-106 Budapest, Tündérfürt utca 4.
Tel.: +36 1 225 25 30
Mobil: + 36 70 344 0388
Fax: +36 1 700 27 57