All activity carried out by companies registered in Georgia is subject to state control. In order to prevent money laundering, the financing of terrorist organizations, and the illegal circulation of funds, regulatory authorities check enterprise accounting records and tax returns. Financial reporting in Georgia is prepared in accordance with national and international standards.
Companies, which must file reports
According to Georgian legislation, companies are divided into 4 groups. An organization’s belonging to a particular class depends on 3 criteria:
- total assets
- total annual income
- the average number of employees
To classify an enterprise as one or another group, a company must meet at least 2 of the three indicators.
The first group includes firms with:
- total assets of over 50 million GEL
- an annual income of over 100 million GEL
- more than 250 employees
The second group includes companies with:
- total assets of less than 50 million but more than 10 million GEL
- an income between 20 and 100 million GEL
- between 50 and 250 employees
Group 3 includes firms with:
- assets of less than 10 million GEL
- an annual income of less than 20 GEL
- less than 50 employees
The fourth and final category includes enterprises with:
- total assets of less than 1 million GEL
- an annual income of up to 2 million GEL
- up to 10 employees
Enterprises belonging to the first two groups must carry out an annual audit of the reliability of the information specified in the reports.
A third party must perform audit, which is not affiliated with the auditee. Based on the results of verification activities, the company is issued a conclusion confirming the veracity of the report.
In addition to enterprises belonging to categories 1 and 2, companies, which are subjects of public interest must carry audit as well.
- firms, which trade securities on the stock exchange;
- financial institutions and MFOs;
- insurance companies;
- investment funds;
- other companies in accordance with applicable law.
Enterprises from the third and fourth categories are not subject to audit, though they may initiate one on their own initiative. The company head and accountant bear full responsibility for the preparation and disclosure of information on the financial and economic activities of the company in the statements.
The Frequency of Financial Reporting in Georgia
In accordance with Georgian legislation, companies must prepare and submit reports to the regulatory authorities annually, by October 1 of the year following the reporting period.
The financial statements include the following forms:
- report about income and material losses;
- explanations on the movement of funds in the accounts of the organization;
- annual results of the economic activity of the company;
- current financial position;
- explanatory note.
In addition to the regulated forms, the reporting reflects information about the branches of the enterprise, development plans, securities transactions, assessment of credit and market risks, financial risk management, etc.
In addition to annual financial statements, companies must report to the tax authority on a monthly basis by filing a declaration.
Company must prepare reporting based on external and internal accounting documents. Enterprise must store all primary documentation and reporting for 6 years following the economic activity. The supervisory authorities are entitled to verify the safety of the documentation.
Publication of Reporting
Company must place report in the public domain. This means that any Georgian citizen can examine the results of the firm’s activities. The reporting is public and transparent. An auditor’s report is also subject to publication if it is binding on the enterprise.
Company must fill out reporting forms on the saras.gov.ge portal. Process is online. Forms must be in Georgian language. After the publication of the reports, it becomes available to a wide range of users on the REPORTAL.ge website.
Interested parties can access the reports of companies belonging to the first, second, and third categories. Reports for enterprises from the fourth category are provided to the user on the basis of a written request with justification of the reasons why the user is interested in the reporting.
What Happens Should you Fail to Submit a Report
Should a company fail to submit a report in a timely manner or to conduct an audit of the report, the supervisory authority will issue a written warning and fine the company. The amount of the fine depends on the category of the legal entity:
- 1st category – GEL 10,000;
- 2nd category – GEL 5,000;
- 3rd category – GEL 1,000;
- 4th category – GEL 500.
Should the company fail to correct the violation within a month from the date of receipt of the warning, penalties shall be doubled.
The head of the enterprise can prepare reports independently or hire an employee to perform this function. The specialist responsible for drawing up the reporting must know the Georgian language and be familiar with accounting and tax legislation as well as IFRS norms.
To avoid receiving a fine and attracting unwanted attention from government agencies, you can order the preparation of financial statements from us. Our specialists will prepare your accounting reports in accordance with the Law of Georgia “On Accounting, Reporting and Auditing”, as well as in accordance with International Financial Reporting Standards.