REPUBLIC OF LITHUANIA

REPUBLIC OF LITHUANIA REPUBLIC OF LITHUANIA LAW ON THE PRINCIPLES OF ACCOUNTING Chapter 1 General Provisions Article

1. Sphere for the Application of the Law on the Principles of Accounting This Law shall establish the procedure of financial accounting binding upon individual (private) enterprises, general and limited partnerships, stock companies, limited liability companies and agricultural partnerships, state enterprises, state stock enterprises (hereinafter referred to as enterprises) as well as to all types of enterprises, organizational units, and enterprises and organisations financed from the budget. Other institutions and organisations involved in noncommercial (non-profit) activities shall determine the procedure of rendering accounting independently, in compliance with this Law. Article
2. Objectives of the Law The Law on the Principles of Accounting shall regulate the general accounting principles of property and ownership, as well as of the results of economic activity and performance of economic subjects (the entities' going concern, the consistency of accounting, and the accrual of revenues and expenses) as indicated in Article 1 thereof. Accounting shall be duly organised as to provide tax assessment agencies, state statistics, owners, creditors, and commercial partners with timely and exact information, and to ensure an informational basis for business and commercial transactions. Article
3. General Management for Accounting In pursuance of the laws of the Republic of Lithuania, International Accounting Standards and the directives of the European Economic Community general methodical management for accounting shall be carried out by the Government of the Republic of Lithuania. Article
4. System of Accounting The system of accounting shall be determined by the form of ownership, the type of enterprise, the size of enterprise, and the nature of its activities. Enterprises shall independently choose the system of management accounting. All enterprises and organisations shall conduct accounting in a double entry system, with the exception of those enterprises which are allowed to conduct simplified accounting. All business and financial transactions shall be confirmed by documents. Business transactions which cannot be confirmed by documents shall be confirmed by documents for other transactions related to the said transactions. Accounting shall be conducted in the State language (Lithuanian). In joint ventures and foreign capital companies functioning in the Republic of Lithuania, accounting shall be conducted in the Lithuanian language and, if necessary, in a foreign language as well. Article
5. Chart of Accounts The specimen chart of accounts shall be approved in accordance with the procedure established by the Government of the Republic of Lithuania. Enterprises shall draw up individual charts which shall be approved by the head of an enterprise. Article
6. Monetary Unit Accounting shall apply the basic monetary unit of the Republic of Lithuania. In case of transactions in foreign exchange, accounting figures shall be recalculated in accordance with the established exchange rate. Chapter 2 Accounting Services Article
7. Management of Accounting Accounting may be managed: 1) upon the foundation of an independent accounting agency; and 2) using the services of accounting, auditing and consulting enterprises according to agreements. State enterprises, state stock enterprises, stock companies and limited liability companies shall be obliged to establish either an independent accounting department or an accountant post. The functions of independent accounting services, accounting, auditing and other consulting agencies shall be regulated by their statutes. Article
8. Status of Chief Financial Manager (Accountant) In an enterprise, accounting shall be managed by the chief financial manager (accountant). The chief financial manager shall be appointed and dismissed by the head (board) of the enterprise or by its owner(s). The chief financial manager (accountant) maintaining accounting in pursuance of the laws and executive acts of the Republic of Lithuania as well as with this Law, must ensure the accuracy of accounting entries and the timely preparation of statements. The chief financier's instructions concerning accounting shall be binding upon all employees of the enterprise. Chapter 3 Documents and Registers of Accounting Article
9. Registration of Economic Transactions Records of business transactions made in registers of accounting shall be confirmed by documents. They shall be recorded clearly and legibly, either by hand or by technical means. Enterprises may use standard, special, or free-form primary documents, which have juridical validity. Article
10. Juridical Validity of Documents The following requisites shall provide a document with juridical validity: the name of the enterprise; the name of the document; the date of its formation; the contents of the economic transaction; the indices of the estimation of economic activity; and the posts, surnames, names, and signatures of individuals who conducted the economic transaction and who are responsible for its execution and registration in compliance with the established requirements. Documents which do not contain the aforementioned requisites shall not have juridical validity. Article
11. Signing of Documents and Responsibility The head of an enterprise shall approve the list and certify specimens of the signatures of individuals authorised to sign source documents. Documents shall be signed personally. The individuals who draw up and sign the documents shall be responsible for their timely and accurate preparation, the exactness of the information included therein, and their legitimacy. Article
12. Accounting Registers Data concerning the accounting period shall be recorded in accounting registers. Accounting registers may be rendered in a standard or free form. They shall be compiled in a chronological, systematic, systematic-chronological or other established manner. Chapter 4 Financial Statements Article
13. Contents and Submission Annual financial statements of enterprises, with the exception of enterprises which are allowed to submit simplified reports, shall include a balance sheet, income statement, statement of the changes in financial position of the enterprise, as well as notes about the statements. The forms of financial statements as well as the procedure for their submission and availability to the public shall be established by the Government of the Republic of Lithuania. It shall be prohibited to demand the submission of non-established financial statements. Article
14. Major Requirements Prior to the drawing up of an annual statement, accounting must cover all business transactions made within the accounting period. Accounting data must be confirmed by stock-taking data related to long-term assets, inventory values, accounts, as well as to financial and other resources. Article
15. Approval of Financial Reports Prior to submission to administration bodies, financial statements shall be considered and approved in accordance with the procedure set forth in the by-laws of enterprises. Prior to submission for approval the financial statement, it may be submitted for auditing. The head or owner of an enterprise shall be responsible for the submission of an incorrect financial report, even if it has been checked and approved by an auditor. Enterprises which have the rights of a legal person shall prepare their financial reports on the basis of the data as of December 31, whereas the balance sheet shall be prepared on the basis of the data from the foundation and liquidation date of an enterprise. Chapter 5 Evaluation of Property and Inventory Article
16. Valuation of Property In the accounting books of an enterprise, long-term assets shall be evaluated and recorded at the purchase price whereas in the balance sheet they shall be recorded at the value of net fixed assets (the purchase price and depreciation shall be recorded separately). In the accounting, inventories shall be evaluated at the price of acquisition, and in financial statements - at actual costs. While calculating the actual cost, earlier acquired inventory shall be written off. Article
17. Stock-Taking The stock-taking procedure shall be established by the Government of the Republic of Lithuania. Article
18. Accounting and Evaluation of Expenses and Revenues In accounting revenue shall be recognised at the time they were earned, whereas expenses shall be computed at the time they have accumulated, with no consideration to the date of payments. The procedure for the accounting of revenues and expenses shall be established by the Government of the Republic of Lithuania. Chapter 6 Keeping of Documents, Accounting Registers and Financial Statements Article
19. Rectification of Errors Errors in documents shall be rectified by crossing out the incorrect text or number in a legible manner and by inserting the appropriate number or text. The individuals who make corrections therein shall put their signatures and the date next to the corrected number or text. It shall be prohibited to make corrections in monetary documents. Upon approval of the financial statement, its data shall not be subject to rectification. Errors and inaccuracies noted after the approval of a financial statement shall be rectified by drawing up a subsequent financial statement. Article
20. Procedure for Storage Prior to the approval of an annual financial statement, documents and accounting registers shall be kept in accordance with the procedure established by the heads of enterprises. Such documents shall be submitted to the archive and kept there in accordance with the Regulations of the State Archive. Annual financial statements shall be kept for an unlimited period. Article
21. Registration of Lost or Withdrawn Documents In case of loss (damage) of documents, accounting registers, or financial statements, the employee in charge of their keeping shall write an explanatory note and submit it to the head (owner) of the enterprise. The head (owner) of the enterprise shall adopt an appropriate decision. The bodies of law enforcement, finance and control may withdraw documents only in the presence of the head (owner) or accountant of an enterprise. The officials who withdraw the documents shall draw up a report and leave copies of the documents which were withdrawn. In the event that it is impossible to leave copies, all the requisites of a taken document shall be included in the report. Article
22. Continuity of Accounting If an enterprise is liquidated, when its property, rights, obligations and responsibilities are transferred to another enterprise, the latter enterprise shall take over the kept documents, accounting registers and financial statements. In the event that there is no legal successor, the body which has adopted the decision to liquidate the enterprise shall establish the procedure for the further keeping of documents, accounting registers and financial statements. Chapter 7 Commercial Secrecy and Responsibility Article
23. Commercial Secrecy Accounting data of an enterprise presenting a commercial secret shall not be open to the public. Employees of an enterprise and other individuals (auditors, inspectors, experts and tax inspectors), as well as law enforcement officials who have learned the commercial secret in the line of duty, must keep it in secret. Data included in financial statements may not constitute a commercial secret. Article
24. Responsibility for the Organisation of Accounting The head (owner) of an enterprise shall be responsible for the organisation of accounting, timely submission of statements, and preservation of documents. Officials of an enterprise who have violated the provisions of this Law or other regulations for accounting shall be liable under the laws of the Republic of Lithuania. VYTAUTAS LANDSBERGIS President Supreme Council Republic of Lithuania Vilnius 18 July 1992 No I-2654