Financial reporting standard for the fourth category enterprise was approved

Under the order (June 26, 2018) of the head of the Service for Accounting, Reporting and Auditing Supervision Subdivision of the Ministry of Finance of Georgia,  “Financial Reporting Standard for the Fourth Category Entities” was approved. This Standard becomes operative for financial statements covering reporting periods beginning on or after 1 January 2018. As the result of the standard approval, the act N9 (April 5, 2005) of the Commission of Accounting Standards of the Parliament of Georgia regarding “the Simplified (temporary) Accounting Standard for Small-sized Entities” was declared invalid.

The relevant EU provisions and best practices were considered in Standard development. The Standard is oriented on simplification and aims to decrease administrative costs necessary for standard adoption by the fourth category entities.

Within the technical support project of the Good Governance Fund of British Government, SARAS formed the working group for standard development. The group is guided by the international expert. Within the project, analysis of GAAP adopted by Estonia, United Kingdom, Poland, Ireland and Singapore was carried out. Also, electronic research of up to 16’200 fourth category entities was conducted and accountants of more than 60 entities were interviewed. Research aimed to identify difficulty, nature and complexity of accounting transactions of entities.  Also, within the project, Consultative Group was formed. The group was composed of accountants, representatives of the Revenue Service, commercial banks, business associations, academic sector, professional organizations and private consulting companies. SARAS held working meetings with interested parties. SARAS also published the Standard’s exposure draft for a month on the official web page for comments.

On October 2018, the self-learning materials of the Standard will be available for fourth category entities. These materials also serve the same purpose - to maximally simplify standard adoption.