Slovak accounting procedures

What it means

Accounting procedures are decrees of the Slovak Ministry of Finance that set out in detail how bookkeeping is done in practice. One decree applies to businesses using double-entry bookkeeping, others to non-profits, budgetary organisations or banks. By law they are binding on all the accounting entities concerned.

While the Accounting Act sets the basic duties, such as keeping books, taking inventory and preparing financial statements, the procedures go into detail. They define the content of individual accounts, valuation methods and the treatment of typical transactions, with the framework chart of accounts attached.

Together, the Slovak rules make up what is commonly called Slovak GAAP, as opposed to the international IFRS standards used mainly by listed and large companies. The procedures are amended regularly, usually with effect from the start of a new accounting period.

How it works in practice

When setting up a client’s bookkeeping, we build the chart of accounts from the procedures. The framework chart sets the general ledger accounts, and the company adds sub-accounts to suit its needs, for instance by cost centre or project.

Where the procedures allow a choice, such as how to account for inventory or value disposals, the company records its decision in its accounting policy. It must then apply that method consistently and change it only for a justified reason.

When the procedures are amended, we track what changes for our clients and update the accounting software and internal guidelines before the year begins. Typically this means new accounts, changes to what financial statement lines contain or a new treatment for certain transactions.

What to watch out for

The procedures are not a recommendation but a binding regulation. If a company accounts differently, its books are not kept correctly, which can lead to a fine from the tax office and a qualified audit opinion.

In unclear situations, principles such as substance over form and prudence also need to be applied. The procedures do not cover every transaction, and blindly hunting for “the right account” without understanding the substance of the deal leads to errors.