Updating regulations in a changing legal environment

All Companies’ activities are controlled by regulations which were created by the Company’s management based on its business, operations and the continuously changing legal environment. It worth considering the changes entered into effect in the year 2022, as the fundamental document, the accounting policy must be updated to reflect these legal changes.

One of the most important document from the financial records is the accounting policy which summarizes what decisions management made on those points where the Act on Accounting gave chances to do so. These are inter alia the definition of significant and insignificant, or the exceptional items in size and occurrence in the financial statements, or whether the Company applies fair valuation in its books and if yes, with what conditions, etc.

There are additional regulations that are strongly connected to the accounting policy and should be prepared in the same time (these are the inventory taking, money handling, valuation and production costing regulation). Beyond these there can be various other regulations at the Company, depending on its operation, which govern a smaller area of the business (e.g.: benefits in kind, anti-money-laundering, or GDPR regulation, etc.)

Accounting policy must be prepared when the Company is established, and it should be updated each time when:

• there is a change in the legal environment, the Company has maximum 90 days for this update
• there is a significant change in the business which requires an update

Highlighting the first point from the above list, the Act on Accounting introduced significant changes on 1 January 2022 which requires the update of the accounting policies. As the deadline for this is already passed, those Companies who didn’t perform this update could face high risk during an inspection and should be prepared for increased interest on this topic from the authorities. To avoid this our experts are ready to help you to prepare or update the accounting policy and all the mandatory and voluntary regulations.

5 July, 2022

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he experts of VGD Hungary will be pleased to assist you.

This newsletter provides general information and does not constitute professional advice