ASSESSMENT OF THE COMPLIANCE OF THE NATIONAL LEGISLATION OF CORPORATE REPORTING SYSTEM WITH THE REQUIREMENTS OF THE EUROPEAN DIRECTIVES

Abstract

The establishment of a modern European standard corporate reporting system in Georgia, which represents the country's commitment under the "Association Agreement", is, in turn, an important stimulating factor for attracting additional investments, business development, creating new jobs and, ultimately, increasing social well-being. For the introduction of a modern corporate reporting system, one of the most important prerequisites is to bring the national legislation and regulatory norms into compliance with the relevant European regulations. Such is the Directive 2013/34/EU of the European Parliament and the Council - "On annual financial statements, consolidated financial statements and related reports of certain categories of enterprises" and Regulation N1606/2002 of the European Parliament and the Council of July 19, 2002 on the application of international accounting standards. This regulation establishes that in the member states of the Union, the consolidated statements of open joint-stock companies must be prepared in accordance with international accounting standards. In addition, member states have the right to allow or require the same obligation from closed joint-stock companies. Directive 2013/34/EU establishes that the requirements contained therein shall apply to the laws, regulations and administrative provisions of the Member States and shall apply to private and public companies which have share capital or whose owners are enterprises with share capital. The directive contains the definitions of the main concepts, the criteria for determining the size category of enterprises, as well as the list of organizations to be included in the category of Public-interest entity. The accounting standard to be used for each category of entity, the list of mandatorily prepared reports and the rules of their preparation and publication are established. The directive allows the member states to use simplified forms of reporting for small enterprises and provides specific approaches and instructions as to which articles/points should be combined to simplify the reporting forms. On June 8, 2016, the Parliament of Georgia approved the law on Accounting, Reporting and Auditing, however, if we look at the date of entry into force of the Association Agreement (July 01, 2016) and the date of adoption of the law, as well as the deadlines for the implementation of the main obligation defined by this law, we can conclude that Obligations under the association agreement are fulfilled within the relevant time frame. The law, as defining the categories of enterprises, as established the obligation of them to prepare and submit financial statements, as well as to publish them for public stakeholders, for enterprises of the first, second and third categories. And the enterprises of the fourth category have the obligation to submit to the Accounting, Reporting and Audit Supervision Service (SARAS) the statement prepared in accordance with the simplified standard intended for them. The rules of delivery of which to the interested person are established by the SARAS. It should be noted that the regulation of the law of Georgia, regarding the division of enterprises into categories, cannot include all economic subjects, and therefore, some of them remain outside the legal regulations, in particular, individual entrepreneurs who do not belong to the third, second or first category, are not included in the second category either. which does not comply with the requirements of the discussed directive.