Law on Accounting (Zakon o Racunovodstvu)

8/10/2019 Law on Accounting (Zakon o Racunovodstvu)

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LAW ON ACCOUNTING

I GENERAL PROVISIONS

Article 1

1) Every entrepreneur incorporated in Republic of Croatia is obliged toconduct accounting records and prepare financial statementsaccording to accounting principles, so that they provide informationabout his operations and position of his assets. Bookkeeping mustbe such that provide insight into business events and position of thecompany in reasonable time. Business events should be recognizedhen they occur.

!) "n entrepreneur, according to this #a, is legal person that conducts

business ith purpose of earning profit.$) "n entrepreneur is also a physical person that conducts businessoperation ith purpose of earning profit, if some other regulationsprescribe his obligation to pay income ta%.

&) 'rovisions of this #a are valid for those organizational parts ofentrepreneur that conduct business activities abroad if there is noobligation for them for bookkeeping and financial reportingaccording to foreign regulations, as ell as organizational parts offoreign entrepreneurs conducting business activities in Republic ofCroatia.

() "ccounting for institutions, social organizations, groups of citizensand other nonprofitable legal entities is prescribed by *overnmentof Republic of Croatia on proposal of +inister of inance.

II DATA COLLECTING AND PROCESSING AND ACCOUNTING

DOCUMENTATION

Article 2

1) Recording data into accounting records is based on fair and faithfulaccounting documentation.

!) "ccounting document is ritten proof about business change, and itserves as the basis for recording data into accounting records andsupervision over business events.

$) "ccounting document from paragraph -1) of this article is obligatoryfor primary entrance of data records through electronic dataprocessing.

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Article 3

1) "ccounting document is prepared at place and in time henbusiness event occurs, e%cept those documents prepared inaccounting department.

!) Content of accounting document must be such that unuestionableand prudently represents business change and to provide all datanecessary for filling the accounts.

$) "ccounting document is prepared in one or several copies -originaland copy or several prints).

&) /elivery of accounting document prepared in one copy is alloedonly if data from that document have been saved and available foruse.

() 0riginal document can be prepared and ritten by electronicdevices, halfautomatic devices, typing machine or manually.

) *ood basis for data recording is accounting document receivedthrough telecommunication devices under the condition that sendersaves and keep the original in proper ay.

2) /ata received through electronic devices can be used as accountingbasis for filling the accounts. Responsible person, ho processeddata, is responsible for prudence and fairness of such data.

3) 'hotocopies of original documents can be used as basis for datarecording under the condition that they have notice about the placehere original document has been saved, the reason for usingphotocopy and signature of responsible person.

Article 4

1) "n entrepreneur is responsible for accounting documentationpreparation. #egal representative of an entrepreneur or personsthat authorities have been transfer to ith their signature ensureprudence and fairness of business change. Electronically prepareddocumentation may have facsimile or other recognizable mark ofthe persons ho prepared the documentation instead of signature.

Article 5

1) "ccounting documentation must be controlled beforerecording.!) Control is done by persons, authorised for controlling prudence of

each type of accounting document.$) Controlled accounting document must be such that neutral e%pert

person ho did not take part in business change can,unuestionable and ithout any suspicious, make conclusions andfind out about the nature of change.

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&) Control should fulfil reuests from "rticle & and ( of this #a.

Article 6

1) "ccounting documentation is stored in original on automaticprocessing devices, micrographic processing devices or othersuitable ay. "ccounting documentation is stored for folloingperiods4

'ayroll list or analytical payroll and salary evidences are stored

forever, if they ensure relevant data about employees5

/ocuments that served as basis for recording data are stored

for five years5

'ayment system documents are stored for three years in

authorised financial institutions

6elling blocks and control blocks, aside statements and similardocuments are stored for to years.

III ACCOUNTING RECORDS

Article 7

1) "ccounting records are based on doubleentry principles.!) "ccounting records are4 7ournal, general ledger and subsidiary ledger.

$) 8ournal is business record here accounting changes are recorded inchronological order. 9t is organized as simple accounting record or asseveral records specialized for changes on certain groups of balanceor out of balance entries.

&) *eneral ledger is systematic accounting evidence of changes onassets, liabilities, capital, e%penses, incomes and business result.*eneral ledger consists of to autonomous parts4

- Balance 6heet entries- out of Balance 6heet entries.

() 6ubsidiary ledgers are organized separately.

) 6ubsidiary ledgers on material assets are presented in uantities andamounts.

Article

1) +odel of accounting records depends on techniues of enteringbusiness changes.

!) 9f the data are processed manually and halfautomated, accountingrecords are in form of free lists or bound.

$) 9f electronic computer keeps the accounting records, data arerecorded on available devices.

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&) Recording data into accounting records is organized and done toassure4

Controlling reuests for recorded data

"ccuracy of records and data

:eeping the data

'ossibility of using data

'ossibility of getting insight into items and balance of general

ledger accounts

'ossibility of insight into chronology of recorded business

changes.

Article !

1) "ccounts in general ledger are positioned according to beforeprepared chart of accounts. /etails of accounts in chart of accountsevery entrepreneur does according to his needs, taking care that hemust assure positions in Balance 6heet and 9ncome 6tatementprescribed in this #a.

Article 1"

1# "ccounting records are prepared for business year, hich is eual tocalendar year$

!) 0pening accounts is done at each business year according to balancesheet at the end of the previous period. E%penses and incomeaccounts are opened according to documentation about businesschange.

$) 6ubsidiary ledgers are opened by carrying over the balancesaccording to balances of same records for previous year, i.e. on thebasis of inventory records on asset and liabilities for neentrepreneurs.

Article 11

1) "t the end of business year all accounting records must be closed andstored.

!) 9f the accounting data have been processed ith electroniccomputers, 7ournal and general ledger should be printed according toclosing entries and then bound.

$) "ccounting records are stored for period4

*eneral ledger and 7ournal at least 1; years

6ubsidiary ledgers at least ( years.

&) 'eriod for storing the records starts ith last day of business year.

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IV INVENTOR% O& ASSETS AND LIA'ILITIES

Article 12

1) "t the beginning of business operation every entrepreneur must makeinventory of his assets and liabilities and set their individual values.6uch list must be made at the end of each business year.

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1;) 6mall entrepreneurs from "rticle 1 of this #a are not obliged toprepare 6tatement of Changes in inancial 'osition.

11) #egally authorised representative of entrepreneur must sign financialstatements.

VI ACCOUNTING STANDARDS

Article 15

1) 9nternational "ccounting 6tandards, published in =ational *azette, areapplied in Republic of Croatia.

!) Croatian Committee for "ccounting and "ccounting 6tandards isauthorised to supervise, ad7ust and interpret application of9nternational "ccounting 6tandards.

$) Croatian Committee for "ccounting and "ccounting 6tandards ise%pert body and consists of fifteen members, named by the*overnment of Republic of Croatia, on the proposal of +inister ofinance, for period of three years. "fter this period, association on thebasis of +inister of inance>s authority, appoints members.

&) Croatian Committee for "ccounting and "ccounting 6tandards setsRegulation on ork, decisionmaking and other details, confirmed bythe *overnment of Republic of Croatia.

VII CLASSI&ICATION O& ENTREPRENEURS

Article 16

1) Entrepreneurs that are obliged to conduct accounting records andprepare financial statements according to this #a are classified intogroups as small, medium large and large entrepreneurs.

!) t be met4a.


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&) #arge entrepreneurs are those entrepreneurs ho fulfil at least to ofthree criteria from paragraph $ of this "rticle.

() Banks, financial organizations, insurance and reinsurance companiesare considered as large entrepreneurs according to this #a.

) "verage number of employees is calculated as one uarter of sum of

employees in period from $1st+arch to $;th8une, and from $;th6eptember to $;th/ecember, including employees orking abroad.

VIII CONTENT O& &INANCIAL STATEMENTS

Article 17

1) Entrepreneurs, e%cept banks, financial organizations, insurance andreinsurance companies, prepare Balance 6heet ith folloing item at

least4

ASSETS

". RECEIVA'LES &OR S(ARE(OLDERS E)UIT%* NON+PAID-or Called up share capital, not paid)

i$ LONG TERM

ASSETS

9 9=


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&. investments in other securities(. given loans, deposits. compulsory longterm investments2. treasury shares3. other longterm investments

9A RECE9A"B#E61. receivables from subsidiaries!. receivables from sales on credit$. other longterm receivables

'$ CURRENT ASSETS ,S(OR+TERM ASSETS#

9 9=AE=


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LIA'ILITIES

A$ CAPITAL AND RESERVES

9 C"##E/ ' C"'9


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E ACCRUALS AND DE&ERRED INCOME

& TOTAL LIA'ILITES

G O&& 'ALANCE S(EET ITEMS

!) Balance 6heet positions from paragraph 1 of this "rticle are obligatoryfor large and medium large entrepreneurs.

$) 6mall entrepreneurs prepare abbreviated Balance 6heet in such aythat fulfil those positions marked ith letters and roman numbers.

Article 1

1) 9ncome 6tatement for entrepreneurs from "rticle 12 consists of

folloing items minimally4

I.c/0e Stte0e.t

1. 6ales revenue!. revenue from using on products, good and services$. other operational revenues&. changes in inventories for production and goods(. operating charges

i. cost of ra materials

ii. costs of goods soldiii. other e%ternal e%penses -costs of services)

. E%penses for employeesi. 6alaries and agesii.


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b) interests, foreign currency e%change gainsFlosses andsimilar costs from transactions ith nonrelated companies

1(. profit or loss from operations, before ta%ation1. income ta% or loss from operations12. profit or loss from operations, after ta%ation

13. e%traordinary income1?. e%traordinary e%penses!;. profit or loss from e%traordinary activities!1. other ta%es not reported in above transactions!!. profit or loss for financial year.

!) 9ncome 6tatement from paragraph 1 of this "rticle are obligatory forlarge and medium large entrepreneurs.

$) 6mall entrepreneurs prepare abbreviated 9ncome 6tatement ithfolloing items4

i. revenues from operations -regular activities)ii. e%penses for operationsiii. revenues from other activitiesiv. e%penses for other activitiesv. e%traordinary revenues

vi. e%traordinary e%pensesvii. income ta% or lossviii. profit or loss for financial year.

Article 1!

1) Banks and financial organizations prepare Balance 6heet ithminimally folloing items4

ASSETS

1. money in cash and on accounts!.


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b) other investments3. shares in subsidiaries

a) shares in credit institutionsb) shares in other related companies

?. intangible assets

a) costs of formationb) goodillc) other intangible investments

1;. tangible assetsa) land and buildingsb) euipment and machineryc) furniture, transportations and similard) residential buildings and apartmentse) other tangible assets

11. called up share capital, not paid

1!. other assets1$. prepayments and accrued income1&. total assets1(. off balance sheet items

LIA'ILITIES

1. payables to credit institutionsa) on demandb) ith confirmed due dates

!. payables to clientsa) savings depositsb) other liabilities

$. certified payablesa) notes, bonds and similarb) other securities

&. other payables(. accruals and deferred income. provisions -reserves) for risks and charges

a) provisions for retirements and similar costs

b) provisions for ta%es and contributionsc) other provisions2. second line liabilities3. shareholders euity

a) paid capitalb) called up capital

?. share premiums -capital gains)1;. reserves11. revaluation reserves1!. profit brought forard or loss1$. profit or loss for the year1&. total liabilities

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1(. off balance sheet itemsa) une%pected liabilities -contingencies)

accepts and approvals guaranties and collateral

b) liabilities

from transactional sale repurchase agreements.

Article 2"

1) 9ncome 6tatement for banks and financial organizations consists offolloing items4

1. interest income and similar revenues

!. income e%penses and similar e%penses$. revenue from securities

a) revenue from shares and other securities ith variable incomeb) revenue from participating interestsc) revenue from shares in subsidiaries

&. fee income(. fee e%penses. net profit or loss from financial operations2. other revenues3. general administrative e%penses

a) e%penses for employees- salaries and ages- ta%es, social insurance and similarb) other administrative e%penses

?. depreciation1;. other e%penses11. revaluation of loans and advances and provisions for

contingencies and other obligations1!. repeatable revaluation of loans and advances and provisions

for contingencies and other obligations

1$. revaluation for transferable securities as long term financialassets, participating interests and shares in related companies1&. repeatable revaluation for transferable securities as long term

financial assets, participating interests and shares in relatedcompanies

1(. profit or loss from ordinary activities1. income ta% or loss from ordinary activities12. profit or loss after ta%ation13. e%traordinary revenues1?. e%traordinary e%penses!;. profit or loss from e%traordinary activities!1. ta% on e%traordinary profit or loss

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!!. e%traordinary profit or loss after ta%ation!$. other ta%es not reported above!&. profit or loss for current year

Article 21

1) 9nsurance and reinsurance companies prepare Balance 6heet ithfolloing items, minimally4

ASSETS

A$ CALLED UP CAPITAL* NOT PAID

'$ INTANGI'LE ASSETS

1. costs of formation!. goodill$. other intangible e%penditures

C INVESTMENTS

9 #"=/ "=/ B9#/9=*6

99 9=AE6


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9 RECE9A"B#E6 R0+ 0D= 9=6R"=CE "C


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C TEC(NICAL RESERVATIONS

1. transferable premiumsa. gross amount

b. portion for insurance transferred into reinsurance!. mathematical life insurance provisions

a. gross amountb. portion for insurance transferred into reinsurance

$. reservation for claimsa. gross amountb. portion of reinsurance

&. reservation for premium recovery dependent and independent onresulta. gross amount

b. portion of reinsurance(. legally prescribed reservation for uncertainty of damage. other insurancetechnical reservations

a) gross amountb) portion of reinsurance

D NON+INSURANCE TEC(NICAL RESERVATIONS

1. reservations for pensions and other!. reservations for ta%ation$. other reservations

E (OLD DEPOSITS &ROM OPERATIONS TRANS&ERRED INTO

REINSURANCE

& OT(ER O'LIGATIONS

a) to subsidiariesb) to companies ith participating interests

1. loans!. liabilities to credit institutions$. liabilities from independently concluded insurance

&. liabilities from reinsurance(. other creditors, including ta% and social insurance

G ACCRUALS AND DE&ERRED INCOME

( TOTAL LIA'ILITIES

9 0 B"#"=CE 6EE< 9


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Article 22

1) 9ncome 6tatement for insurance and reinsurance companies consistsof folloing items minimally4

1.


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1;.changes in reservation and reserves for uncertainty ofdamage

i. changes in compulsory or statutory prescribedprovisions

ii. changes in other provisions and reserves

11.subtotal -second technical result) -999 1)

99 9=6R"B#E


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!. other costs for investment management,including interests

$. ad7ustments&. losses hen selling @ capital investment

realisation

11. unrealised losses on investments1!. other insurabletechnical e%penditures1$. income from investment transferred to nontechnical account -999.()

-)1&. subtotal4 technical result -999.!)

999 =0=


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ANNUAL REPORT

Article 27

1) #arge entrepreneurs from "rticle 1 of this #a prepare annual reporthich, besides financial reports, must provide folloing information4

1. about all relevant business events during the year!. reliable and predictable revie of business operation$. activities in area of research and development&. information about acuisition of treasury shares.

!) #egal representative of the entrepreneur presents annual report.

I AUDIT O& &INANCIAL STATEMENST

Article 2

1. 0nce a year financial reports of all large entrepreneurs and mediumlarge entrepreneurs, if they are organized as 7oint stock companies,must be audited.

!. 6mall entrepreneurs organized as 7oint stock companies are obligedfor shortened audit every third year. 6hort audit is revie intooperations.

$. 0ther medium large and small entrepreneurs are obliged to auditfinancial reports according to on regulation or 6tatute.

II &INANCIAL STATEMENTS DISCLOSURE

Article 2!

1) "ll large and medium large entrepreneurs organized as 7oint stockcompanies are obliged to publicly disclose financial statements.

!) inancial statements are disclosed according to content of Balance6heet and 9ncome 6tatement prescribed for small entrepreneurs.$) "uditor>s opinion is published together ith financial statements.

III &INANCIAL STATEMENTS AND ANNUAL REPORTS

PRESENTATION

Article 3"

1) #egal representatives of entrepreneurs are obliged to present financialstatements and annual report to their oners in folloing periods4

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a. 9n period of si% months after business year @ largeentrepreneurs

b. 9n period of four months after business year @ medium andsmall entrepreneurs

c. 9n period of nine months after business year @ a group that

prepares consolidated financial statements.!) #egal representatives of entrepreneurs are obliged to deliver financial

statements to court register immediately after presentation to oners,but not later than nine months after business year.

$) inancial statements are delivered in abbreviated form, as prescribedfor small entrepreneurs.

IV LANGUAGE AND CURRENC%

Article 31

1) "ccounting records and financial statements are prepared in Croatianlanguage and presented in Croatian currency.

V PENAL PROVISIONS ,MEASURES#

Article 32

1) #egal representative of entrepreneur in hose financial statementsposition of assets, euity and liabilities ere presented unfaithfullyith intention to mislead and get some personal gain or producedamage to somebody ould be punished ith 1; million Croatiandinars or prison lasting up to three years.

Article 33

1) #egal representative of entrepreneur in hose financial statements

business events ere based on unreliable documentation -contrary"rticle $) ould be punished in amount of (;H of the amountspresented in that unreliable documentation.

Article 34

1) #egal representative of entrepreneur ho does not make inventory ofassets and liabilities and does not present true amounts in accounting

According to Article 5 of the Decree on getting out of force the Decree on introduction Croatian dinar as legal

currenc on territor of !e"u#lic of Croatia$ and on %ethod and ti%e of calculation a%ounts in dinar into &una

and li"a '(ational )a**ette 37+94,$ a%ounts of "unish%ents "resented in Croatian dinar in all regulations$ so asell in .a on Accounting$ are considered to #e "resented in &unas$ #ut figures in Croatian dinars are di/ided #

1000

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records -"rticle 1! and 1$) ould be punished in amount of !;H ofvalue of those assets and liabilities that have not been inventoried andad7usted in records.

Article 35

1) #egal representative of entrepreneur ould be punished ith amountsfrom (;;.;;; to 1; million Croatian dinars if4

a. /oes not conduct accounting records -"rticle 2)b. /oes not store accounting records -"rticle 11)c. /oes not prepare basic financial statements -"rticle 1& to !()d. /oes not follo principles and methodologies of measurement

-"rticle !)e. /oes not prepare annual report -"rticle !2).

Article 36

1) #egal representative of entrepreneur ho does not disclose -publish)or present financial statement -"rticle !? and $;) ould be punishedith amounts from (;;.;;; to 1; million Croatian dinars.

VI TRANSITIONAL PROVISIONS

Article 37

1) Entrepreneurs from "rticle 1 of this #a may prepare starting-opening) Balance 6heet at ;1stof 8anuary 1??$, according toprovisions from "rticle 1; paragraph ! and "rticle 1! of this #a thatis obligatory for nely established entrepreneurs.

Article 3

Coming into force this #a, #a on "ccounting -=ational *azette ($F?1and $$F?!) is getting out of force, e%cept for institutions, social

organisations, groups of citizens and other nonprofitable legal entities, forhom that #a ould be in force until legislation from "rticle 1 paragraph( of this #a ould be approved.

Article 3!

Law on Accounting (Zakon o Racunovodstvu)

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