Finnish company audit, financial statements, accounting, consulting in Finland

Requirements regarding accounting and audit of financial statements are stipulated by the Accounting Act No. 1620/2015, government decrees, general instructions of the Accounts Chamber of Finland under the Ministry of Economy and Employment, EU directives enacted into national law and regulations, and the International Financial Reporting Standards (IFRS).

Financial statements must be prepared in accordance with the Finnish accounting standards (FAS) or in accordance with the International Financial Reporting Standards (IFRS). IFRS are applied by companies whose securities are traded on a regulated market and in order to prepare consolidated financial statements of public-interest entities: listed companies, credit institutions, investment firms, insurance companies and pension funds. IFRS can also be applied by companies whose financial statements are audited by certified auditors.

Small companies can prepare condensed financial statements provided that they meet two of the three criteria during two straight years:

1. net turnover is less than 8 000 000 EUR;
2. total assets do not exceed 4 000 000 EUR;
3. average number of employees is not more than 50.

Small and medium-sized enterprises (SMEs) are allowed to apply IFRS provided that their financial statements are audited.

Companies that are not required to apply IFRS approved by the EU must comply with the requirements set by the Finnish generally accepted accounting principles (GAAP).

Financial statements must be prepared for each financial year and must contain:

• balance sheet showing financial position on the reporting date;
• profit and loss statement showing how profits and losses occurred;
• cash flow statement disclosing money received and its application if the reporting unit is a large enterprise or public-interest entity;
• notes to the balance sheet, profit and loss statement and cash flow statement.

Financial statements and management report must be in Finnish or Swedish (and in euros).

Companies must file financial statements with the Trade Register within 4 months after the end of the reporting period.

If a parent company controls a subsidiary or several subsidiaries, the parent enterprise and its subsidiaries form a group of companies.

A parent enterprise, if it is a limited liability company, limited partnership or general partnership or cooperative, must prepare consolidated financial statements.

Small groups are not required to prepare consolidated financial statements if none of the companies is a public-interest company.

Small enterprise means a reporting unit that does not exceed more than one of the three thresholds on the date of the end of the previous reporting period and the reporting period immediately preceding it:

1. total assets are 6 000 000 EUR;
2. net turnover is 12 000 000 EUR;
3. average headcount of employees during the reporting period is 50.

An entity is also exempt from the obligation to prepare consolidated financial statements if:

• an enterprise regulated by the legislation of a member state of the European Economic Area (EEA) owns at least 9/10 of the parent enterprise;
• all the other owners of the reporting entity have consented to not prepare consolidated financial statements;
• financial statements of the parent enterprise and its subsidiaries are part of consolidation of an entity that files consolidated financial statements and that is regulated by the legislation of a member state of the EEA;
• for enterprises that are not regulated by the legislation of a member state of the EEA, this provision can also apply in accordance with the following conditions: the said enterprise prepares consolidated financial statements and a management report in accordance with Directive (1); in the manner corresponding to consolidated financial statements and management accounts prepared in accordance with Directive (2); in accordance with the International Financial Reporting Standards (IFRS) (3).

A subsidiary is not required to be included in consolidated financial statements if:

• it does not jeopardize reliable and objective representation of the results of the group’s activity and its financial position;
• ownership of the subsidiary is short-term and only retained for the purpose of subsequent withdrawal;
• information necessary to prepare consolidated financial statements cannot be obtained without an unjustified delay or disproportionate expenses; or
• long-term restrictions substantially impede exercise of the parent enterprise’s rights to manage this enterprise.