You have no clue what this title means?   Don’t worry, we do and we are ready to help you to fight with this issue. Let's have a look at what the internal Accounting Directive actually means and which Accounting Directives are required according to the Act on Accounting and Accounting Procedures for you as entrepreneurs.

Although the Accounting Act sets the principles for proper bookkeeping, it does not specify the method of bookkeeping. Even though, you as entrepreneurs are obliged to comply with these principles when you are keeping your accounts, you determine the solutions to specific issues on your own. However, the aforementioned accounting directives are a necessary addition to the accounting legislation and also a binding standard which you must follow in your accounting.

In practice we regularly encounter the fact that entrepreneurs often forget this obligation or fulfilled it just partially.

In particular, the Accounting Directive should function as an internal regulation. At the same time, it should be based on the entrepreneur needs and determine a uniform procedure chosen by the entity in cases you have a choice according to the law. Furthermore, the accounting directive creates an organizational layout and defines liabilities and responsibilities of persons. On this basis, the accounting directive can eliminate inefficient procedures, reduce human error and at the same time serve as a means of control.

Following the individual provisions of the aforementioned Accounting Act, we recommend those of you who perform their accounting in the double-entry accounting system to prepare at least some internal Accounting Directives such as the Directive on bookkeeping, the Directive on the recording of tangible and intangible assets, the Directive on the creation and recording of reserves etc.

An entrepreneur mentions in his Directives just the information she uses on a daily basis. Of course, you should not forget to update these directives as a results not only from changes in the company's activities, but also from changes in the legislation.

If you have a little more clarity about the term internal directive and the issues related to it, but still need help with their preparation, update or just control, do not hesitate to contact our VGD team. We are ready to share our long-term experiences with you.