When preparing the 2024 annual financial statements, Czech businesses must determine whether to compile them in full or abbreviated form. This decision depends on the category of the accounting entity and whether the entity is subject to a statutory audit.
🧾 1. Full vs. Abbreviated Financial Statements
Full-scope financial statements are mandatory for entities that are subject to statutory audit.
Entities that are not required to undergo an audit may prepare their financial statements in an abbreviated form, depending on their classification (micro, small, etc.).
Sometimes, a hybrid approach is used, where certain components of the financial statements are prepared in full while others are abbreviated — tailored to the specific requirements of the entity’s category.
💸 2. Cash Flow Statement & Statement of Changes in Equity
Cash Flow Statement
The structure and content are defined by the Czech Accounting Standard No. 023, which applies to entities following Decree No. 500/2002 Coll.
This report provides insight into the inflows and outflows of cash, supporting a clearer view of an entity’s liquidity.
Statement of Changes in Equity
Interestingly, the structure of this report is not legally regulated in Czech accounting legislation.
A useful guide for preparing this statement is provided in Interpretation No. 32 by the National Accounting Council. This guidance is recommendatory, not mandatory.
📊 3. Overview: Financial Statement Components by Entity Type
| Category | Balance Sheet | Profit & Loss | Notes to FS | Cash Flow | Changes in Equity |
|---|---|---|---|---|---|
| Large | Full | Full | § 39, 39b, 39c | Yes | Yes |
| Medium | Full | Full | § 39, 39b | Yes | Yes |
| Small (audit) | Full | Full | § 39, 39a | No | No |
| Small (Z1) | Abbreviated (Z1) | Full | § 39 | No | No |
| Micro (Z2) | Abbreviated (Z2) | Full | § 39 | No | No |
Z1 and Z2 refer to abbreviated balance sheets defined under Section 3a of Decree No. 500/2002 Coll.
📝 4. Annual Report
Although not part of the financial statements, entities required to have their financial statements audited must also prepare an annual report in accordance with Section 21 of the Accounting Act.
The annual report must include:
The full financial statements
The auditor’s report
A report on relationships between related parties (as per Section 82 of the Business Corporations Act)
Note: Entities undergoing insolvency proceedings or similar exceptions are not required to prepare an annual report.
🌱 5. Sustainability Report
Beginning in 2024, the obligation to prepare a sustainability report applies to large entities with over 500 employees.
These reports must cover environmental, social, and governance (ESG) information.
Subsidiaries of consolidated groups are not required to prepare their own reports; instead, they must provide data to the parent company, which consolidates and reports at the group level.
📌 Final Thoughts
The structure and content of your 2024 financial statements will depend not only on your entity’s size and classification but also on whether you’re subject to a mandatory audit or part of a consolidated group.
Do you need assistance determining your reporting obligations or compiling your annual financial statements?
📩 Get in touch — we’re here to help simplify Czech accounting requirements:
👉 www.expat-tax.cz