The organisation and keeping of accounts of legal entities with limited and unlimited civil liability, as well as of branches and representative offices of foreign legal entities situated in the Republic of Lithuania, are stipulated in the Accounting Law.
Legal entities with unlimited civil liability are not obliged to draw up financial statements.
Branch offices of foreign companies shall keep the accounts in accordance with the requirements that the foreign company is following, and shall not draw up separate financial statements. This rule is not applicable when the foreign company follows requirements other than those applied in the European Union while drawing up its financial statements.
Legal entities with limited civil liability shall draw up financial statements in accordance with the procedure provided in the Law on Financial Statements of Entities.
Residents who engage in individual activities, as well as legal entities with unlimited civil liability that are not payers of value added tax and that did not have hired employees during the reporting and the preceding year, may choose simplified accounting, i.e. single entry accounting.
All other entities than the listed above apply double-entry accounting system.
Economic entities, the securities of which are traded in a regulated market, shall keep the accounts in accordance with the International Accounting Standards.
Legal entities with limited civil liability that are profit-seeking in nature, except economic entities, the securities of which are traded in a regulated market, shall follow the Business Accounting Standards or the International Accounting Standards in keeping their accounts.
Legal entities with unlimited civil liability shall follow the Business Accounting Standards in keeping the accounts in the event that they decide to draw up financial statements at their own discretion, or that the Law on Financial Statements of Entities requires them to do so.
The auditing of financial reports is performed in accordance with the Law on Audit.
All economic transactions and economic events must be substantiated by accounting documents.
Accounting documents are to be written at the time of the economic transaction or economic event, or after their occurrence.
Economic transactions and economic events that cannot be substantiated by accounting documents directly are to be substantiated by accounting documents of related economic transactions and economic events.
The procedure for inventory management is provided in the Regulations for Inventory Management.
Financial reports are to be electronically filed via the System of Online Services of the State Enterprise Centre of Registers (CEPS).
Data on economic transactions and economic events is registered in accounting registers. The form, content and number of accounting registers is determined by the economic entity itself in accordance with its needs.
At least once a year, accounting data used for drawing up financial statements must be substantiated by inventory management data.
Newly registered businesses are to draw up a balance for the beginning of economic activities, which must show the assets, equity capital and liabilities at the beginning of the activities of the business.
Annual financial statements are to be drawn up by businesses after the end of their financial years.
Interim financial statements are to be drawn up by businesses when they are needed, or at the periodicity provided in legal acts.
The set of financial statements is composed of these financial reports:
- a balance sheet;
- a profit-and-loss account;
- a statement of cash flow;
- a statement of changes in equity;
- an explanatory note.
Businesses that meet certain criteria may draw up a simplified balance sheet, simplified profit-and-loss account, and simplified explanatory note, and do not have to draw up a statement of cash flow.
Storage and submission of documents
Accounting documents, accounting registers, inventory management documents, and other documents must be kept for 10 years. A set of annual financial statements must be kept for 15 years.
Auditing, disclosure and publication
An audit of annual financial statements must be performed in:
- state and municipal enterprises;
- public interest companies;
- public limited liability companies;
- private limited liability companies in which state and/or municipality is a shareholder.
An audit of annual financial statements must also be performed in:
- private limited liability companies;
- cooperative societies (cooperatives);
- general and limited partnerships, in which all general partners are public limited liability companies or private limited liability companies.
An audit is compulsory for economic entities of this second category only if no less than two of their indicators are over the following limits on the last day of a financial year:
- the net revenue on sales over the reporting financial year - 12 million litas;
- the value of assets shown on the balance sheet - 6 million litas;
- the average annual number of listed employees over the reporting financial year - 50.
Approved annual financial statements and the annual report, along with the auditor's conclusion, are to be publicly announced in the instances, and in accordance with the procedure, provided by law.