Extraordinary financial statements

What it means

Extraordinary financial statements are drawn up as of a day other than the last day of the accounting period, in the cases the Accounting Act lists. The books are closed for them exactly as they are for ordinary annual statements.

That is what separates them from interim statements, which are prepared during a period and leave the books open. Ordinary, extraordinary and interim are not levels of detail but three different reasons for preparing statements at all.

Extraordinary statements cut the accounting period short: it ends on the day the statements are drawn up to, and a new one begins the next day. The tax return follows the shortened period too, so extraordinary statements are not just an accounting formality; they also close the company’s tax period.

How it works in practice

The usual trigger is entry into liquidation or a declaration of bankruptcy: statements are prepared as of the day before, and another set as of the day the process ends. In a transformation the ceasing company prepares them as of the day before the decisive date.

They are filed in the register of financial statements within six months of the date they are drawn up to, and they go through approval like any annual set. Once liquidation starts, the liquidator answers for them, not the former director.

A sole trader keeping double-entry books who ends the business also prepares extraordinary statements. When that happens we go through the stock, receivables and payables that will remain open on the last day with the client in advance, because how they are settled affects the tax base in the final return.

What to watch out for

On entering liquidation nobody prepares the statements as of the preceding day, and liquidation accounting starts from nothing. Deletion from the commercial register will not move while filings are missing, so the company stays alive, keeps filing returns and keeps paying for bookkeeping.

Drawing up the statements to the wrong day is a mistake that carries forward. If, say, the date of the members’ decision is taken instead of the day the law ties the statements to, the periods overlap or leave a gap between them, and the return has to be corrected with an amended tax return.