Bulgarian company audit, financial statements, accounting, consulting in Bulgaria

Accounting of Bulgarian companies is regulated by the Accountancy Act («Закон за счетоводството»).

Bulgarian companies must make financial statements on the basis of the International Financial Reporting Standards (IFRS) or on the basis of the national Bulgarian accounting standards for small and medium-sized companies.

A company’s size is determined by the following criteria:

Micro company:

• book value of assets is not more than 700 000 BGN (Bulgarian levs);
• net turnover is not more than 1 400 000 BGN;
• average headcount of employees is not more than 10.

Small company:

• book value of assets is not more than 8 000 000 BGN;
• net turnover is not more than 16 000 000 BGN;
• average headcount of employees is not more than 50.

Medium-sized company:

• book value of assets is not more than 38 000 000 BGN;
• net turnover is not more than 76 000 000 BGN;
• average headcount of employees is not more than 250.

The company must not exceed at least two of the three criteria on 31 December of the reporting period.

Enterprises that prepare and present their annual financial statements on the basis of the national financial reporting standards for micro, small and medium-sized companies apply simplified form of financial reporting.

Annual financial statements include the following:

• balance sheet,
• profit and loss statement,
• cash flow statement,
• statement of changes in equity,
• notes to financial statements.

Annual financial statements of individual entrepreneurs whose net sales revenue does not exceed 100 000 BGN per year can consist of only a profit and loss statement.

Accounting records of legal entities shall be made in Bulgarian and with the use of Arabic numerals and in the Bulgarian currency, levs (BGN). In the case of transactions made in a foreign currency with foreign counterparties, accounting records can also be drawn up in the relevant foreign language and foreign currency. If a transaction is made in a foreign currency, its equivalent in levs shall be calculated by applying to the amount in the foreign currency the central exchange rate of the Bulgarian National Bank on the date of the transaction.

All financial statements and accounting records that are subject to tax inspections (invoices, bank statements, etc.) must be kept for 10 years. All salary related documents must be kept for 50 years, and all other documents must be kept for 3 years.

In accordance with the Accountancy Act of Bulgaria, companies must publish their annual financial statements in the Commercial Register by 30 June of the calendar year following the reporting period.

An enterprise (parent enterprise) shall make consolidated financial statements when:

1. it controls more than a half of the votes of shareholders or unit holders of another enterprise;
2. it has the right to appoint or dismiss more than a half of members of the board and/or supervisory body of another enterprise;
3. it has the right to manage the financial and operating policies of another enterprise;
4. it is a shareholder or unit holder that holds 20% or more of the votes in another enterprise and has appointed more than a half of members of the board and/or supervisory body in the controlled enterprise.

A parent enterprise shall not draw up consolidated financial statements when the sum of indicators (that are subject to consolidation) of the enterprises in the group that are subject to consolidation, according to their annual financial statements made on 31 December of the current year does not exceed two of the following criteria:

1. book value of assets on 31 December is 3 000 000 BGN;
2. net turnover is 6 000 000 BGN;
3. average number of employees during the year is 80.

The component parts of consolidated financial statements are:

• consolidated balance sheet;
• consolidated profit and loss statement;
• consolidated cash flow statement;
• consolidated statement of changes in equity;
• notes.