Czech Annual Report: Requirements and Content

An annual report in the Czech Republic is an important document that contains information about the company’s finances and activities for the past year. It is necessary so that all interested parties (shareholders, employees, and the public) can find out how the company is doing.

An annual report includes:

Financial results:

how much the company earned or lost, what assets and debts it has.

Non-financial information:

what the company does, what plans it has for the future, and what goals it has set for itself.

An annual report is not just a formality. It is an opportunity for a company to talk about its achievements, plans, and development strategy. A well-written annual report can enhance the company’s reputation and attract new investors.

In the Czech Republic, as well as in some other countries, companies are required to publish annual reports. This is done to ensure business transparency and protect the interests of all stakeholders.

Legal regulation in the Czech Republic

Several legal regulations in the Czech Republic impose the obligation to prepare and publish an annual report. The key law is Act No. 563/1991 on Accounting, which provides for the obligation to prepare an annual report for accounting entities. Another important legal regulation is Act No. 90/2012 on Commercial Corporations, which defines other commercial companies’ obligations.

According to the Accounting Act (Section 21), the annual report must contain information that will allow users of the financial statements to obtain an accurate and complete overview of the financial position and performance of the accounting entity. Simultaneously, the annual report’s information must align with that of the financial statements.

This information includes, for example:

• Accounting information: financial results and asset status
• Material events that have affected or affect the accounting entity
• Plans for economic and social development
• Assessment of past performance and forecasts for the future
• The annual report is subject to audit.

Annual Report Content

The annual report is a crucial document that reflects a company’s financial health and performance over the year. It serves as the organization’s “calling card” and can include both mandatory information and additional details that go beyond legal requirements.

Annual reports that have undergone an audit are particularly valued. This confirms the accuracy of the data and increases trust in the company. An audit is mandatory for certain categories of organizations, but even those not required to undergo an audit may prepare an annual report, for example, at the request of banks or partners.

Laws regulate the content of the annual report. It must include financial information and may also include non-financial information, such as a description of the company’s activities, its strategy, and its plans. However, small businesses and sole proprietors may not include non-financial information in their annual reports.

The main parts of the annual report are:

• Financial section: contains the financial statements, auditor’s report, and a review of financial results for the past period.
• Information that occurred after the end of the reporting period: this should be information that is material.
• Activity report: a description of the key projects and activities implemented during the year.
• Prospects: a brief description of plans and goals for further development.
• Social responsibility: information on the company’s activities in the field of social responsibility and sustainable development, including the environment and labor relations.
• Information required by specific legislation: for example, the Commercial Corporations Act.

The Purpose of the Annual Report

The annual report plays a key role in communicating accounting information to users, especially management, investors, employees, and the general public. The annual report not only provides an overview of the company’s financial position, but also its strategic direction, innovation, and social responsibility.

For investors and analysts, the annual report is a valuable source of information to help make strategic decisions. For employees, it is a source of information about the company’s direction and plans, which can affect their performance.

Approval of the annual report

The annual report, like the financial statements, must be approved by the statutory body (usually the executive body). The deadline is set within six months after the end of the reporting period.

Publication of the annual report

Audited entities must publish the annual report within 30 days after the audit and approval by management, but not later than the end of the following reporting period. Unaudited data cannot be published.

Unaudited entities publish their reports no later than the end of the following reporting period. Some of them are required to submit the report to the Czech National Bank, which then publishes it in the document collection.

The document collection typically publishes the financial statements and the annual report electronically through a special service.

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