Updated last 26.03.2021
What is the accounting policy of the company?
The accounting policies are the set of principles, inputs, concepts, rules, bases and procedures that the company adopts in preparing its annual financial statements. The accounting policies are set by the general manager of the company before the respective reporting period and is required to be disclosed in the annual financial statements.
Additional information regarding the requirements to the annual financial statements of the company is available here.
What should the company’s accounting policies be based on?
Companies in Bulgaria, regardless of their size, may base their accounting policies both on the National Accounting Standards (NAS) and on the International Accounting Standards (IAS).
The only exception deals with companies , pointed out in the Art. 34, para 2 of the Accountancy Act, namely; credit and financial institutions, payment service providers, insurers and reinsurers, as well as insurance holdings and mixed financial holding companies, a head of a group; pension insurance companies and the supplementary pension insurance funds and payment funds managed by them; investment intermediaries; management companies and collective investment schemes; persons managing alternative investment funds and collective investment undertakings; national investment funds; undertakings whose transferable securities are admitted to trading on a regulated market in a Member State of the European Union; market operators; central securities depositories; who are required to prepare their financial statements on the basis of International Accounting Standards (IAS).
|Important to know |
Companies which are currently basing their accounting policies on either of the two sets of standards (NAS or IAS) may change their basis of accounting once and may transition to the other set of standards, unless this is required by law. Listed above companies in the Art. 34, para 2 of the Accountancy Act, are an exception and they are required mandatory to comply with IAS.
What should be disclosed in the financial statements in addition to the selected accounting policies?
- In the notes to the financial statements, disclosure of the measurement basis (the method chosen for the recognition of the amount of the non-current tangible and intangible assets in the financial statements): for example, whether they are carried at the historical amount they were acquired or at revalued amounts;
- In the notes to the financial statements, a documented clarification regarding the cases whether priority is given to one accounting principle before another when the chosen accounting policy is applied;• Disclosure of a change in accounting policy and the reasons that led to the change;
- In the notes to the financial statements, disclosure of deviation from the accounting principles and the adopted accounting policies which is allowed only in exceptional cases.
|For more information |
Additional information regarding the drawing up of the accounting policies and the related legislative framework is available in the Accountancy Act and the applicable accountancy standards (NAS and IAS).