Annual Report Reminder

During the annual reporting period, many entrepreneurs struggle to find an accountant at the last minute to prepare a correct report and submit it to the commercial register. These same entrepreneurs may not believe it at that moment, but it can all go much more smoothly. To prevent the annual report from being a headache for the accountant and a surprise for the board, its preparation should begin already during the current financial year.

An entrepreneur who has decided to use the services of an accountant only once a year must remember that the monthly collection and archiving of documents is his or her own responsibility.

It is wise for an accountant to conduct a monthly balances check to make sure that all transactions are correctly reflected in the financial statements and that nothing has been forgotten. In this way, it is possible to quickly discover potential errors in the reports. If you review transactions only once a year, the content of transactions at the beginning of the year will probably have been forgotten long ago, and thus errors are more likely to end up in the report. One should definitely not forget to analyze foreign currency accounts or other more passive balances (e.g. accounting for financial investments and loan interest) in the current financial year, with the aim of ensuring that such balances do not unexpectedly spoil the final result of the financial year, which was initially very positive.

It is also important for an accountant to determine before the end of the financial year whether the company has a financial reporting review or audit obligation. This can be easily checked using the audit calculator on the website of the Estonian Auditors’ Association. Finding a suitable auditor takes time, and during a first-time review or audit, both the auditor and the accountant spend more time planning and carrying out all the activities. Therefore, it is worth starting to look for an auditor already before the end of the financial year.

Before starting to prepare the annual report, it is worth making sure what type of annual report must be submitted to the Business Register. This also determines the scope of the accountant's work when preparing the annual report. The Accounting Act divides companies into 4 groups: micro-enterprises, small enterprises, medium-sized enterprises and large enterprises. A micro-enterprise has the option of submitting only an abbreviated annual report, which consists of a balance sheet and income statement and usually three annexes (accounting principles, related parties and labour costs), a small enterprise and a medium-sized enterprise must also disclose the most important balance sheet balances in the annexes and prepare an activity report. However, a large enterprise must prepare a full-length annual report, including a cash flow statement and a statement of changes in equity. Starting from the 2024 financial year, large public interest entities with more than 500 employees must also submit a sustainability report. The obligation to submit a sustainability report will expand to a larger number of companies each year in accordance with the Corporate Sustainability Reporting Directive (CSRD), and for the financial year ending in 2026, a sustainability report will also be required for small companies listed on the stock exchange and all credit institutions.

If the accountant has carefully planned the activities in advance, the annual balancing of accounts and annual report preparation process will be pleasant and quick.

The company's annual report is a document available to everyone free of charge. A timely and correctly prepared annual report creates a reliable image for the company!