Accounting and bookkeeping in Latvia are regulated by the Law on Accounting, which states that accounts must reflect all of a company’s economic transactions and all changes in the state of the company’s property, so that a third person qualified in the area of accounting may obtain a true and clear representation of the financial position of the company.
Accounting registers must be maintained in the Latvian language and kept together with source documents in the territory of Latvia. If a foreign legal or natural person participates in the economic transactions, another language may be used. Companies must maintain accounting registers using a double entry accounting system. All source documents, accounting registers, and other documents related to the company’s accounts must be kept in the company’s archive for a period between 5 and 75 years, depending on the type of the respective documents.
The accounting year usually coincides with the calendar year. The first accounting year for newly established companies may not exceed 18 months. Companies may change their accounting year if appropriate explanations are provided. Where the financial year is different from the calendar year, this should be stated in companies’ Articles of Association.
ANNUAL FINANCIAL REPORTING
Companies, cooperatives, individual merchants, and farms registered in Latvia must prepare annual financial reports in accordance with the Annual Accounts Law if revenue in the previous financial year exceeded EUR 300 000. Annual financial reports consist of a financial report and a report by the company’s management. Companies can choose not to prepare cash flow statements, not to prepare statements of changes in equity, and not to calculate and report deferred tax assets and obligations, and they may prepare shortened annexes, if the company does not exceed two of the following conditions:
Reports by company management must provide information about the development of the company, financial results, and the main risks and uncertain conditions faced by the company.
The annual financial reports prepared by companies must be audited by a sworn auditor in accordance with the Law on Sworn Auditors if the company exceeds two of the above mentioned criteria, or in case a company issues transferable securities that are admitted to trading in the regulated market of a member state.
Companies must submit their annual financial report together with the sworn auditor’s report (if such exists) to the SRS no later than one month after approval of the annual financial report, and no later than four months after the end of the accounting year.
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