Financial reporting and auditing

The Hungarian accounting system has been brought in line with the EU Accounting Directives and the International Accounting Standards.

Reporting

All companies registered in Hungary, public and other organisations are obliged to report on their activities, assets, financial position and earnings. According to the Act C/2000 on Accounting, there are four methods of reporting:

Annual financial statements, which consists of a balance sheet, an income statement, notes to the financial statement and an annual report.
Summary annual financial statements, where the annual report is not required, is only permissible to companies fulfilling at least two of the three criteria listed below in two consecutive years:

Worth of total assets is less than HUF 150 million (approx. EUR 600 000)
Annual net sales revenues do not exceed HUF 300 million (approx. EUR 1 200 000)
The average workforce is not more than 50 employees.

Stock companies, companies that are consolidated and the branch establishments of foreign companies are not permitted to prepare a summary annual financial statement, even if they meet two of the criteria listed above.
Consolidated annual financial statements, which must be prepared by a company acting as parent company or by a company which's equity interest in a jointly managed company gives it certain rights regarding that company.
Summary financial statements (summary balance sheet and summary income statement).

The financial statements must be prepared in Hungarian, and figures must be in HUF 1 000. The annual financial statements must be lodged at the Commerical Registry Court, but a copy must also be sent to company registration and information office of the Ministry of Justice.

Obligation of Audit

All companies are required to undergo audits if their net sales proceeds exceed an average HUF 50 million (approx. EUR 200 000) in two consecutive years.

Audit is also mandatory

if it is specified by legal provisions (e.g. stock corporation, one-man company);
for savings banks;
for companies which are consolidated;
for branch establishments of foreign companies.

Relevant legal statutes:
Act C/2000 on Accounting

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Source: ITDH Hungary
Last updated 7th JFebruary 2006