Taxes
Annual financial statements and the KCFR
What financial statements are, who files them with the Kosovo Council for Financial Reporting, entity categories and when an audit is required.
Andi B. · · 3 min read
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Financial statements are a business's health record. Banks read them when you apply for a loan, committees when you bid for a tender or grant, partners when they decide whether to work with you and ATK when it checks your tax returns. The law requires most companies to prepare and file them every year.
What financial statements are
A full set includes:
- The balance sheet (statement of financial position): assets, liabilities and equity at 31 December.
- The income statement: revenue, expenses and the year's profit or loss.
- The cash flow statement: where money came from and where it went.
- The statement of changes in equity: how the owners' capital changed.
- Notes: accounting policies and details.
Smaller entities can prepare simplified statements.
Entity categories
The Law on Accounting, Financial Reporting and Auditing divides entities into categories by turnover, assets and number of employees:
| Category | Usual requirements |
|---|---|
| Micro | Simplified statements |
| Small | Statements under SME standards |
| Medium | Full statements |
| Large | Statements under IFRS and an independent audit |
The exact thresholds for each category are set by law. Your accountant will know which category you fall into.
Who files and where
Annual financial statements are filed with the Kosovo Council for Financial Reporting (KCFR, locally KKRF), online. The deadline is usually 30 April of the following year, a month after the annual tax return to ATK.
Individual Businesses on the simplified tax usually don't have the same obligations as companies, but must keep records of income and expenses.
Audit
Large entities, and some other categories set by law, must have their statements audited by a licensed auditor or audit firm. An audit costs money, but for companies seeking large loans, investors or big tenders, an audit report is often essential even when the law doesn't require it.
How good statements help
- Loans: the bank assesses your ability to repay from your statements. See Business loans.
- Tenders: many dossiers require minimum turnover for the last 2 to 3 years. See Public tenders.
- Grants: donors want financial stability. See Business grants.
- Selling the business or shares: the buyer values the business from its statements. See Selling shares in an LLC.
Common mistakes
- Statements that don't match tax returns. ATK and banks compare them.
- Uncounted year-end inventory, which distorts profit.
- Assets not depreciated, or sold assets still on the balance sheet.
- Partner loans without a contract, which show up as capital or income. See LLC share capital.
- Filing late, which brings a fine.
The year-end calendar
- December: count inventory, reconcile bank accounts and debts.
- January to March: close the books and file the annual return with ATK by 31 March.
- By 30 April: financial statements to the KCFR.
A good accountant makes this routine. To find accounting and audit firms in your municipality, search on Kerko.
Frequently asked questions
Who files financial statements with the KCFR?
Companies and other entities required to under the Law on Accounting, Financial Reporting and Auditing. Requirements depend on the entity's category (micro, small, medium or large).
When are financial statements due?
Annual financial statements are usually filed with the KCFR by 30 April of the following year. Check the KCFR's notice for the current deadline.
Does every LLC need an audit?
No. An independent audit is required for large entities and some other categories set by law. Most small businesses have no audit obligation.
What's the difference between a balance sheet and an income statement?
The balance sheet shows what a business owns and owes on a given date. The income statement shows how much it earned or lost during the year.
This article is for information only and is not accounting advice. Categories, deadlines and reporting requirements are set by the Law on Accounting, Financial Reporting and Auditing and by KCFR rules.
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