Preparation of annual financial statements and management reports

Updated last 26.03.2021

This section provides the following information:

  • Types of financial statements;
  • Requirements to the annual financial statements;
  • Key financial indicators in the financial statements;
  • Need to prepare consolidated financial statements;
  • Nature of the annual management report;
  • Need to prepare annual management report;
  • Reporting of companies not carrying out any activities.


What are the types of financial statements that companies have to prepare?

The financial statements are a structured presentation of the financial position and financial performance of a company. The purpose of the financial statements is to provide information on the financial position and performance of a company, which is necessary for a wide circle of users in order to make economic decisions. In accordance with the Accountancy Act the companies should prepare:

  • Annual financial statements as at 31 December of the reporting period;
  • Consolidated financial statements as at 31 December of the reporting period, when the parent is an entity falling within the requirements of Section Three in Part Two of the Commerce Act;
  • Interim financial statements covering period shorter than one reporting period, when this is required by law or by the company’s policy.


What are the main requirements that the annual financial statements have to meet depending on the type of the company?

  • The annual financial statements of all companies should include as a minimum a balance sheet, profit and loss account and notes to the financial statements (a summary of the significant accounting policies and other explanatory notes);
  • The annual financial statements of sole proprietors whose net sales revenue during the current period does not exceed BGN 200 000 and who are not subject to statutory independent financial audit, may only include a profit an loss account;
  • The annual financial statements of micro companies may only include a concise balance sheet by sections and concise profit and loss account, unless the company is an investment or financial holding company;
  • The annual financial statements of small enterprises may include concise balance sheet, concise statement of income by sections and groups and expenses and notes to the financial statements.

Additional information regarding the basis which your company should apply in preparing its financial statements is available in the clarification titled “Accounting policies“.


Which are the main financial indicators present in the annual financial statements?

Information regarding the following indicators is required in order to prepare the complete set of elements of the financial statements (balance sheet, profit and loss account, statement of  equity and cash flow statement and attachment), the enterprise should be classified as a medium-sized enterprise, a large enterprise and an enterprise of public interest within the meaning of § 1, item 22 of the Additional Provisions of the Accounting Act. For this purpose, information on the following indicators is required:

  • Assets (for example, buildings, inventories, receivables, etc.);
  • Liabilities (for example, bank loans, payables to suppliers, etc.);
  • Equity (for example, subscribed capital, reserves, accumulated profit / loss);
  • Income and expenses (for example, sales revenue, cost of goods / services, operating expenses, etc.);
  • Changes in equity (for example, capital increase, dividend distribution);
  • Cash flows (for example, proceeds from customers, payments to suppliers, repayment of loans, etc.).

Additional information regarding the accounting documents based on which the annual financial statements are prepared is available in the clarification “Drawing up of accounting documents, administration of accounting information / systems”.

When is the company required to prepare consolidated financial statements?

The company should prepare consolidated financial statements when:

  • It controls more than half of the shareholders’ (or partners’) voting rights in another company (subsidiary);
  • It has the right to appoint or dismiss more than half of the members of the management / supervisory body of another company;
  • It has the right to direct the financial and operating policies of another company by effect of an agreement.

Consolidated financial statements may not be drawn up by the parent of a small group (in accordance with the “small group” definition in art. 21, para 2 of the Accountancy Act), except in the cases when the group includes at least one public interest company.

For more information
For more information

Additional information regarding the requirements to the content, allowed principles and  preparation of annual financial statements is available in:

  • Art. 25 and art. 26 of the Accountancy Act;
  • Standard 1 of the National and International Accounting Standards.


Important to know
Important to know

All traders (in the meaning of the Commercial  Act) publish their annual financial statements in the Commercial Register by 30 September on the following year,. Please, have in mind that the deadline for filing the separate accounts with the NSI is 30 June, and the consolidated ones –  30 September. Additional information regarding the filing of annual financial statements with the NSI is available in the clarification „Filing of the required statistic information to the NSI“.

Sole proprietors who are not subject to independent financial audit or who did not carry out activity in the previous year are not obliged to publish their reports in the Commercial Register.


What is the annual management report?

Generally speaking the annual management report describes the development of the company’s business during the past period, analysis of main financial and non-financial indicators related to the company's activity and it states the business policies planned for the following year, the expected investments and personnel development, the expenses investment income and development of the company, as well as the future transactions that have significant importance in the company’s operations.


Which companies are required to prepare annual management reports and which - not?

  • Annual management reports should be prepared by all companies subject to independent financial audit, as well as investment and financial holding companies, regardless of their size;
  • Micro and small enterprises, not subject to independent financial audit, may choose not to prepare annual management reports;
  • Micro, small and medium-sized enterprises, which are required to prepare annual management reports, are allowed not include non-financial information therein (for example, clarifications of the company’s business policy, situation at the market, etc.);
  • Consolidated management reports should be prepared by all parent companies that meet the criteria for obligatory presentation of consolidated financial statements under art. 31 of the Accountancy Act.

The annual  and consolidated financial statements of the entities listed below are subject to statutory independent financial audit by registered auditors:

  • Small companies which as at 31 December of the current reporting period exceed at least two of the indicators listed below:

- Carrying amount of the assets – BGN 2 000 000;

- Net sales revenue – BGN 4 000 000;

- Average personnel headcount during the reporting period – 50   employees;

  • Medium-sized and big enterprises;
  • Public interest companies;
  • Medium-sized and big groups and groups that have at least one public interest company;

Companies which are required to be subject to statutory independent financial audit.


For more information
For more information

Additional information regarding the contents of the annual management report is available in art. 39 of the Accountancy Act.


What is the reporting procedure for companies that had no operations during the reporting period?

The companies, which have not carried out activity for the reporting period, shall declare this circumstance in the Commercial Register by June 30 of the following year once for the first reporting period, in which no activity has been carried out, by submitting a declaration according to a template.

The enterprises that have not carried out activity are not obliged to submit a report to the NSI. If they wish, they can declare this circumstance to the NSI once for the first reporting period in which they have not carried out activity, by submitting a Declaration for enterprises without activity by June 30 of the following year. The declaration can be downloaded from the Institute's website [1].

[1] As of 01.01.2022, the Centralized Administrative Information System “Single Entry Point” and the submission of annual financial statements under Art. 38 of the Accounting Act and the Annual Activity Reports under Art. 20, para. 5 of the Law on Statistics will take place simultaneously under conditions specified in a joint order of the Chairman of the NSI and the Executive Directors of the NRA and the Registry Agency.
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