List of Legislations > ACCOUNTANCY LAW

ACCOUNTANCY LAW

In force from 01.01.2002

Prom. SG. 98/16 Nov 2001, amend SG. 91/25 Sep 2002

Chapter one. GENERAL

Art. 1.(1) This law settles:

•  the requirements for the comprehensiveness and reliability of the accountancy systems (book-keeping) in the
enterprises;

•  the contents, the drawing up and the publicity of the annual financial reports of the enterprises;

•  the requirements for the persons drawing up the annual financial report.

(2) Enterprises are: the entrepreneurs in the context of the Commercial Law; the corporate bodies who are not entrepreneurs, the budget enterprises, unregistered partnerships and the foreigners carrying out economic activity on the territory of the country from a place of economic activity.

Art. 2. The enterprises shall carry out the accountancy registration of the economic operations in chronological order corresponding to their fulfilment.

Art. 3. (1) (Amend., SG 91/02) The primary accountancy documents of the enterprises shall be drawn up in Bulgarian language with Arabic figures and in levs. They can also be drawn up in the respective foreign language in foreign currency for the transactions contracted in foreign currency with foreign contractors.

(2) The accountancy documents received in the enterprises in a foreign language shall be accompanied by a translation into Bulgarian of the contents of the operations indicated in them.

Art. 4. (1) The accountancy shall be carried out and the financial reports shall be drawn up in compliance with the requirements of this law and observing the following basic accountancy principles:

•  current assessment - the revenue and expenses originating from transactions and events shall be assessed by the
moment of their occurrence, regardless of the moment of receiving or payment of the monetary resources or their
equivalents, and shall be included in the financial reports for the period they refer to;

•  functioning enterprise - it is adopted that the enterprise is functioning and will remain so in a foreseeable future;
the enterprise has neither an intention or a necessity of liquidating or substantially reduce the volume of its activity -
otherwise, in drawing up the financial reports it must apply a liquidation or other similar accountancy basis.

(2) The accountancy shall be carried out by observing the following principles:

•  prudence - assessment and accounting of supposed risks and expected eventual losses in the accountancy treatment
of the economic operations for the purpose of obtaining actual financial result;

•  comparability of the revenue and expenses - the expenses related to a definite transaction or activity to be
registered in the financial report for the period during which the enterprise benefits from them, and to register the
revenue for the period during which the expenses for their obtaining have been accounted;

•  priority of the contents over the form - the transactions and the events shall be registered by the accountancy
according to their economic contents, nature and financial reality and not formally, according to their legal form;

•  keeping, where possible, the accountancy policy of the preceding period of account - achieving comparability of
the accountancy data and indices during the different periods of account.

(3) The enterprises shall carry out the accountancy on the grounds of the documentary substantiation of the economic
operations and facts, observing the requirements for drawing up the documents according to the acting legislation.

Art. 5. (1) The current accountancy reporting shall be organised by the order determined by this law and an individual chart of accounts approved by the management of the enterprise.

(2) The budget enterprises shall apply a chart of accounts and accountancy standards approved by the Minister of Finance, which shall be promulgated in the State Gazette.

Chapter two.

ACCOUNTANCY DOCUMENTS AND FORM OF ACCOUNTANCY

Art. 6. (1) The accountancy document is a paper or technical carrier of accountancy information, classified as primary, secondary and register:

•  the primary document is a carrier of information for economic operation registered for a first time;

•  the secondary document is a carrier of a transformed (summarised or differentiated) information obtained from the
primary accountancy documents;

•  the register is a carrier of chronologically systematised information for economic operations from primary and/or
secondary accountancy documents.

(2) The accountancy document can be an electronic document when the requirements of this law and of the Law for the Electronic Document and Electronic Signature have been met.

Art. 7. (1) The primary accountancy document addressed to other enterprises or individuals shall contain:

•  name and number of the document, date of issuance and place;

•  name and address of the enterprises - issuer and recipient of the document;

•  number in the national tax register and BULSTAT of the issuer of the document, and for the recipients -
individuals - the unified citizen's code of the person;

•  grounds, subject, natural (if necessary) and cost expression of the economic operation;

•  issuer and recipient - name and family;

•  signatures of the persons responsible for the fulfilment of the economic operation.

(2) The primary accountancy document which regards only the activity of the enterprise shall contain:

•  name and number of the document, place and date of its issuance;

•  name and address of the enterprise;

•  full name of the issuer of the document;

•  grounds, subject, natural (if necessary) and cost expression of the economic operation;

•  signatures of the persons responsible for the fulfilment of the economic operation.

(3) For the accounting of definite economic operations, assets and liabilities of the budget enterprises, the Minister of
Finance shall approve conditions and order of documenting, a form and essential elements of the accountancy
documents which shall be obligatory to apply.

Art. 8. (Amend., SG 91/02) In drawing up the primary accountancy documents through technical means the signatures under art. 7 can be replaced by identification codes or by electronic signatures in the context of the Law for the Electronic Document and Electronic Signature.

Art. 9. (1) In creating and maintaining the accountancy system the enterprises shall provide:

•  comprehensive chronological registration of the accountancy operations;

•  systematic accountancy registers for summarising the accountancy information which shall be opened at the
beginning of the period of account and shall be concluded at its end;

•  synthetic and analytical accountancy registers, as well as an equality and a link between them;

•  intermediate and annual conclusion of the accountancy registers, creation of a turnover sheet;

•  amendments in the accountancy entries through creation of adjusting accountancy items;

•  application of an individual chart of accounts.

(2) When the accountancy uses an accountancy software it must be in Bulgarian language, worked out in compliance with the requirements of this law.

Art. 10. Corrections and supplements in the primary accountancy documents shall not be permitted. Incorrectly drawn up primary accountancy documents shall be nullified and new ones shall be drawn up.

Art. 11. The persons who have drawn up and signed the accountancy documents and the technical information carriers shall be responsible for the correctness of the information in them.

Art. 12. The form of accountancy shall be approved by the manager of the enterprise. It must provide a synchronised the chronological and systematic (analytical and synthetic) accounting.

Chapter three.

ASSETS, OWN CAPITAL, LIABILITIES, REVENUE AND EXPENSES

Art. 13. (1) The assets, the own capital, the liabilities, the revenue and expenses shall be assessed and registered at the time of their acquisition or occurrence at their historic price or other price, in compliance with the applicable accountancy standards.

•  Historic price is the price of acquisition, cost price or fair price.

•  Subsequent assessments of the assets and liabilities shall be made in compliance with the applicable accountancy
standards.

Art. 14. (1) The assets are long-term (lasting) when the expected economic profit from them is obtained during more than a twelve-month period, and short-term (transient) when the expected economic profit from them is obtained once or within the period of twelve months.

•  The long-term assets are: material, immaterial, financial and goodwill.

•  The short-term assets are: material reserves, short-term takings, financial and monetary resources.

Art. 15. (1) The enterprises shall calculate depreciation of the depreciable long-term assets in compliance with the applicable accountancy standards.

•  The depreciation shall be calculated from the month following the month of acquisition of the long-term asset or
its introduction.

•  The depreciation in the budget enterprises shall be calculated by a decision of the Council of Ministers.

Art. 16. The material reserves, when being used, shall be assessed in compliance with the applicable accountancy standards.

Art. 17. (1) The expenses shall be accounted as expenses related to the activity in economic elements (materials, external services, depreciation, remuneration, insurance, etc.), financial expenses, extraordinary expenses and expenses for profit tax. The enterprises can also apply another classification of the expenses when it is stipulated by an applicable accountancy standard.

(2) Accounted as expenses shall be the calculated provisions when it is stipulated by a normative act.

•  Financial expenses are: the expenses for interest, the negative differences from operations with financial
investments and instruments; the negative differences from the change of currency exchange rates; the other
expenses related to financial operations.

•  Extraordinary expenses are the expenses which occur accidentally or which are caused by events outside the
usual activity and which are not expected to occur again in the near future.

•  The expenses made by the enterprise during the current period of account, related to receiving revenue or profit
during a subsequent period of account, shall be accounted as expenses for future periods.

Art. 18. (1) The revenue shall be accounted as revenue from the activity (from sales of production, commodities, services, financing and revenue from other sales),financial revenue and extraordinary revenue. The enterprises can also apply other classification of the revenue when this is stipulated by an applicable accountancy standard.

•  The financial revenue is: the revenue from interest and from share holding; the positive differences from
operations with financial investments and instruments; the positive differences from the change of foreign exchange
rates; other revenue from financial operations.

•  Extraordinary revenue is the revenue which has occurred accidentally or they are a result of events outside the
usual activity and their occurrence is not expected in the near future.

•  The revenue received by the enterprise during the period of account for long-term and short-term financing,
related to the expenses in subsequent periods of account shall be accounted as financing.

Art. 19. The liabilities shall be short-term - with a period of acquittal up to 12 months after the date of the balance, and long-term - all the rest.

Art. 20. (1) The own capital shall include the basic capital, the reserves and the financial result, the unallocated profit

and the uncovered loss of past years.

(2) Accounted as basic shall be the capital determined at the constituting of the enterprise and registered in court.

•  Accounted as reserves shall be the own resources formed according to the acting legislation , as well as by a
decision of the bodies of management of the enterprise.

•  Financial result is the profit or the loss of the preceding year.

Chapter four.

STOCK TAKING

Art. 21. The assets and liabilities shall be subject to inventory within the following terms:

•  the long-term material and immaterial assets - at least once in two years;

•  the material reserves - at least once a year;

•  (New, SG 91/02) the books in the libraries - at least once in five years;

•  (Prev. item 3 - SG 91/02) the remaining assets and liabilities - before the drawing up of the annual financial report.

Art. 22. (1) The stock taking shall be carried out by a commission by an order determined by the bodies of management of the enterprise for the purposes of the reliable presentation of the assets and liabilities in the annual financial report.

(2) Stock taking shall also be carried out upon request of the bodies of the judiciary authority and of other bodies when it is stipulated by a law.

Chapter five.

ANNUAL FINANCIAL REPORTS

Section I.

Contents of the annual financial reports

Art. 23. (1) The enterprises shall draw up annual financial report by December 31 in thousands of levs.

•  The financial report must correctly and fairly present the proprietary and financial status of the enterprise, the
accounted financial result, the changes in the cash flows and in the own capital.

•  The enterprises shall draw up and present their annual financial reports on the basis of the international
accountancy standards adopted by the Board of international accountancy standards approved by the Council of
Ministers.

•  The budget enterprises shall draw up and present their annual financial reports on the basis of accountancy
standards for the public sector approved by the Minster of Finance and promulgated in the State Gazette. They shall
be worked out on the basis of International Accountancy Standards for the public sector adopted by the International Federation of the Accountants.

•  Where necessary the Council of Ministers shall approve national accountancy standards for accountable subjects
for which there are no regulations in the International Accountancy Standards.

Art. 24. The management of the enterprise shall be responsible for the drawing up of its accountancy reports which must provide true and fair presentation of the financial status, the results from the activity, the cash flows and the changes in the own capital of the enterprise.

Art. 25. The information presented in the annual financial report must meet the following requirements:

•  comprehensiveness - to be useful for the consumers in taking economic decisions;

•  relevance - to enable the consumers to assess past, present or future events and to confirm or correct their precious
assessments in taking economic decisions;

•  reliability - not to contain substantial mistakes or partiality;

•  comparability - to enable comparison of the information for the enterprise from different years, as well as with
information from other enterprises, in order to assess the efficiency, the financial status and the changes in it;

•  independence of the individual periods of account and value relation between initial and final balance - every
period of account shall be treated in itself for the purposes of accounting regardless of its objective relation to the
preceding and subsequent period of account, whereas the data of the financial report at the beginning of the current
period of account must coincide with the data at the end of the preceding period of account.

Art. 26. (1) The components of the annual financial report are: accountancy balance, account of the revenue and expenses, accountancy report for the cash flows, accountancy report for the own capital and appendix.

(2) The adopted by the enterprise structure and form of presentation of the components of the annual financial report shall be unchanged during the different periods of account.

Art. 27. (1) The accountancy balance shall also include off-balance part and it shall be drawn up by double or single entry determined by accountancy standards.

(2) The balance part shall contain a systematised accountancy information in sections and groups:

1. assets - in the following sections:

•  long-term assets grouped as material, immaterial, financial, goodwill, expenses for future periods;

•  short-term assets grouped as material reserves, short-term takings, short-term financial assets, monetary resources
and expenses for future periods;

2. own capital - as a section with the following groups:

•  fixed capital, including unpaid capital;

•  emission premium;

•  reserve of subsequent assessments of the assets and liabilities;

•  expedient reserves;

•  financial result;

3. liabilities - in the following sections:

•  long-term liabilities grouped as long-term liabilities, revenue of future periods and financing;

•  short-term liabilities grouped as short-term liabilities, revenue of future periods and financing.

•  The assets and liabilities shall be arranged in the groups of each section of the accountancy balance in degrees of
substantiality.

•  Compensations between assets and liabilities shall not be admitted.

•  The off-balance part shall contain conditional assets and conditional liabilities acknowledged and assessed
according to accountancy standards.

•  The small-size enterprises defined by a law can draw up accountancy balance only in sections and groups.

Art. 28. (1) The account of the revenue and expenses shall be drawn up by double-entry or single-entry form determined in compliance with accountancy standards.

(2) The account of the revenue and expenses shall contain a systematised accountancy information for:

1. revenue - in the following sections:

•  revenue from the usual activity grouped as net revenue from sales, revenue from financing, financial revenue;

•  loss from usual activity;

•  extraordinary revenue;

•  accountancy loss;

•  loss;

2. expenses - in the following sections:

•  expenses for usual activity, grouped as expenses in economic elements, adjusting nature sums and financial
expenses;

•  profit from the usual activity;

•  expenses made;

•  accountancy profit;

•  tax expenses;

•  profit.

(3) The account for the revenue and expenses can also be drawn up by a classification of the revenue and expenses
systematised by a functional indication as follows:

•  net revenue from sales;

•  prime cost of the sales;

•  gross profit (loss);

•  other revenue;

•  expenses related to sales;

•  administrative expenses;

•  financial revenue/expenses;

h) profit/loss from the usual activity; i) extraordinary revenue/expenses; j) accountancy profit/loss; k) tax related expenses;

(1) profit/loss.

•  Compensation between the revenue and expenses shall not be admitted.

•  The small-size enterprises defined by a law can draw up an account for the revenue and expenses only in sections
or by functional indication.

Art. 29. The account for the cash flows shall include the cash flows of receivables and from payments for the basic activity, the investment activity and the financial activity, and it shall be drawn up in compliance with an accountancy standard.

Art. 30. The account for the own capital shall include the changes (increase and reduction) of the own capital as a result of the performed activity, the reassessments, the operations with the owners and others, and it shall be drawn up in compliance with an accountancy standard.

Art. 31. The appendix shall contain information for both the applied accountancy policy and for the status and the changes of the assets and liabilities and of the revenue and expenses, the cash flows, as well as other announcements regarding the requirements of the applicable accountancy standards.

Art. 32. (1) The contents and the form of the accountancy balance, of the account for the revenue and expenses, of the account for the cash flows and of the account for the own capital of the enterprises carrying out specialised activities (banks, insurers, investment and insurance enterprises), of the budget enterprises, of the non-profit enterprises and of the enterprises in liquidation shall be determined by accountancy standards.

•  For the enterprises controlled by the state or by municipalities or which are supported by them by subsidies,
preferential loans, state guarantees and other forms of state support the Minister of Finance can require presentation
of additional reports and information in a form, contents, deadlines and order of drawing up and presentation
determined by him.

•  The financial report of the enterprises whose annual turnover (sum of the sales) does not exceed 50 thousand levs
shall consist of only an account for the revenue and expenses.

•  The enterprises under para 3 can apply double-entry or single-entry accountancy.

Art. 33. (1) Enterprises whose annual financial reports are subject to obligatory independent financial audit shall also draw up a report for the management which shall include:

•  a reliable statement for the development of the activity and for the status of the enterprise;

•  the important events which have occurred after the annual accountancy conclusion;

•  the expected development of the enterprise;

•  the activity in the sphere of the scientific studies and research;

•  the movement of the stocks in compliance with the acting legislation;

•  other information by a decision of the enterprise.

•  The enterprises which draw up consolidated financial reports shall also draw up consolidated report for the
management with contents determined by an applicable accountancy standard.

•  The reported data for the assets, liabilities, revenue, expenses and operations of all budget enterprises shall be
consolidated in the Ministry of Finance on the grounds of presented turnover statements and other information by the
budget enterprises, under conditions and by an order determined by the Minister of Finance.

Section II.

Compilers of annual financial reports

Art. 34. (1) The annual financial report shall be compiled by an individual who has:

•  legal employment or official relation with the enterprise as a chief accountant or with other economic position;

•  contractual relations with the enterprise.

•  The annual financial report can also be drawn up by a specialised accountancy enterprise or by a specialised
auditing enterprise registered by the order of the Commercial Law and the Law for the independent financial audit.

•  The annual financial report shall be signed:

•  by the head of the enterprise, and

•  by the individual under para 1 who has drawn it up or who is responsible for its drawing up, or by the individual
who manages or represents the specialised accountancy or auditing enterprise under para 2, which has drawn up the
report.

(4) The annual financial report shall be affixed with the seal of the enterprise.

Art. 35. (1) Compiler of an annual financial report can be a person who meets the requirements for obligatory minimal degree of education and the respective time of service as follows:

1. with higher accountancy economic education and a time of service in the sphere of accountancy, internal and
external financial audit, the tax audits or as a lecturer on accountancy and control, respectively:

•  for master degree - 2 years;

•  for bachelor degree - 3 years;

•  for degree "specialist" - 4 years;

•  with other economic education and 5 years time of service in the accountancy, the external and internal audit, the
tax audits or as a lecturer on accountancy and control;

•  with high economic education and 8 years time of service as an accountant.

•  Compiler of an annual financial report can be a person which has not been convicted for indictable offence
according to chapter five and section I of chapter six of the Special Part of the Penal Code.

•  The Minister of Finance can also determine additional requirements for the persons compiling the annual
financial reports of the budget enterprises.

Art. 36. The compilers of annual financial reports shall be in charge of the organisation of the accountancy activity in the enterprise.

Section III.

Publicity of the annual financial reports

Art. 37. (1) The enterprises shall draw up an annual financial report by March 1 of the next year.

•  The enterprises who have more than half of the stocks, of shares, of the votes or of the members of the bodies of
management in other enterprises shall draw up a consolidated financial report by June 30 of the next year.

•  The bodies of management of the enterprise shall be responsible for the timely drawing up and for the contents of
the annual financial report.

Art. 38. (1) Subject to an independent financial audit by registered auditors shall be the annual financial reports of the enterprises which exceed a minimum of two of the following criteria for the preceding year:

•  sum of the assets of the balance - 500 thousand levs;

•  sum of the net amount of the revenue from the activity - 1 million levs;

•  average number of personnel - 30.

(2) (Amend., SG 91/02) Subject to independent financial audit by registered auditors shall be the annual financial reports of:

•  enterprises drawing up consolidated financial reports with exception of those which do not exceed the criteria
under para 1;

•  enterprises carrying out their activities on the grounds of individual laws (banks, insurers, investment and
insurance enterprises and other), for whom this requirement is stipulated by a normative act;

•  the enterprises -joint-stock companies and limited joint-stock companies;

•  the enterprises who are issuers in the context of the Law for the public offering of securities.

Art. 39. The annual financial reports of the budget enterprises shall not be subject to independent financial audit.

Art. 40. (1) The enterprises under art. 38 shall publish their annual financial report in the form in which it has been endorsed, together with a report on the endorsement drawn up by the registered auditor.

•  The annual financial report shall be published in a daily newspaper, in an economic publication, own publication
or Internet, or according to the requirements of an individual law - within three months upon its acceptance.

•  The annual financial reports of the enterprises subject to independent financial audit shall be presented by June
30 to the representative organisations of the employers determined by the order of art. 36 of the Labour Code.

•  For non-feasance of the obligation under para 3 the enterprise shall be responsible by the order of chapter seven
of this law.

Art. 41. The form, the contents and the periodicity of the financial reports for the purposes of the management of the enterprise shall be determined by its executive body.

Chapter six.

STORING OF THE ACCOUNTANCY INFORMATION

Art. 42. (1) The accountancy information shall be stored by the enterprise by the order stipulated by the Law for the State Archive Fund for the following periods:

•  pay-rolls - 50 years;

•  accountancy registers and financial reports - 10 years;

•  documents for tax control - up to 5 years upon expiration of the prescription period for acquittal of the public
liability certified by these documents;

•  documents for financial audit - until the next internal audit and an audit of the Audit Office;

•  all other carriers - 3 years.

•  The accountancy information can be stored on paper or on a technical carrier and in archives organised by the
enterprise with such a subject of activity, in compliance with the requirements of para 1.

•  Upon entry (transfer) of the accountancy information from paper to a magnetic, optic or other technical carrier
providing its reliable reproduction the paper carrier can be destroyed.

Art. 43. Upon expiration of the term of their storing the carriers (paper or technical) of accountancy information which are not subject to submission to the State Archive Fund can be destroyed.

Art. 44. The movement of the accountancy documents from the moment of their creation or receipt in the enterprise to the moment of destruction or their submission to the State Archive Fund shall be carried out by an order determined by the head of the enterprise.

Art. 45. (1) In termination of the legal terms of employment, the official or contractual relations with the persons under art. 34, para 1 the accountancy documentation shall be submitted to their successors.

•  The conveyance and the receiving under para 1 shall be made by an act in the presence of a commission on the
grounds of a turnover statement drawn up by the date of termination of the legal relations and by an inventory of the
primary documents which have not been accounted for, if there are any.

•  In terminating the legal relations with the head of the enterprise he shall be obliged to submit to his successor the
entire accountancy and other official documentation of the enterprise kept by him.

Chapter seven.

ADMINISTRATIVE PENAL PROVISIONS

Art. 46. (1) Who does not fulfil an obligation ensuing from this law shall be punished by a fine of 100 to 300 levs, and a corporate body and sole entrepreneur shall be punished by a proprietary sanction from 300 to 500 levs. (2) If the offence is committed again a double size fine or proprietary sanction shall be imposed.

Art. 47. (1) Who violates the requirements of art. 21 for taking inventory within the periods determined by the law shall be fined by 200 to 500 levs, and a corporate body and sole entrepreneur shall be punished by a proprietary sanction of 500 to 1500 levs. If the offence is repeated the sanction shall be double.

•  Who violates the requirements of art. 23, para 1 for drawing up annual financial report shall be fined by 500 to
1000 levs, and a corporate body or a sole entrepreneur shall be punished by a proprietary sanction of 2000 to 3000
levs.

•  Who violates the requirements of art. 40 for publishing the annual financial report shall be fined by 1500 to 2000
levs, and corporate bodies and sole entrepreneurs shall be punished by a proprietary sanction from 2000 to 3000 levs.
If the offence is repeated the sanction shall be double.

•  Who violates the requirements for storing accountancy information according to chapter six of this law shall be
fined by 1000 to 2500 levs, and corporate bodies and sole entrepreneurs shall be punished by a proprietary sanction
of 2000 to 5000 levs. If the offence is repeated the sanction shall be double.

•  Who carries out an activity as a specialised accountancy enterprise or specialised audit enterprise without being
registered by the order of the Commercial Law or of the Law for the independent financial audit, as well as a person
- compiler of an annual financial report for whom the requirements of art. 35 have not been met a fine shall be
imposed, and corporate bodies and sole entrepreneurs shall be punished by a proprietary sanction of 1500 to 3000
levs. If the offence is repeated the sanction shall be double.

(6) (Amend., SG 91/02) An enterprise which assigns an independent audit to a person carrying out activity as a registered auditor without being registered by the Law for the independent financial audit shall be punished by a proprietary sanction from 2000 to 10000 levs. If the offence is repeated the sanction shall be 15 000 to 30 000 levs.

Art. 48. (1) The acts for establishing administrative offences shall be issued by the bodies of the tax administration or by the Agency for state internal financial control.

•  The penal provisions shall be issued by the Minister of Finance or by officials authorised by him.

•  The issuance of the acts, the issuance, the appeal and the fulfilment of the penal provisions shall be carried out by
the order of the Law for the administrative offences and penalties.

Additional provisions

§ 1. In the context of this law:

•  "Budget enterprises" are the state and municipal bodies, their structural units and all economic individual bodies
applying budgets, budget accounts, non-budget accounts and funds in the context of the Law for the structure of the
state budget and the Law for the municipal budgets, as well as the state funds and institutions related to the
obligatory public, health and other insurance, the state higher schools, the Bulgarian Academy of Science, the
Bulgarian National Television, the Bulgarian National Radio and other bodies and structural units whose accounts
and operations are included by the Ministry of Finance in the consolidated fiscal programme.

•  "Period of account" is the calendar year (January 1 - December 31).

•  "Fair price" is the sum for which one asset can be exchanged or one liability can be acquitted by a direct
transaction between informed and wishing buyer and seller. It is a sale price, a stock exchange price or a market
price.

•  "Prime cost" is the assessment of the assets produced (created) by the enterprise which does not include the
administrative expenses, the expenses related to sales, the financial and extraordinary expenses.

•  "Independent financial audit of an annual financial report" is the audit determined by the Law for the independent
financial audit.

•  "Related persons" are the persons one of which in a position to control the other or exercise on him a substantial
influence in taking financial decisions and decisions regarding the activity in compliance with the applicable
accountancy standards.

•  "Specialised accountancy enterprise" is every body registered according to the Commercial Law with headquarters
in the Republic of Bulgaria, whose subject of activity also includes organising of accountancy and drawing up
annual, intermediate and other financial reports by the order of this law.

•  "Price of acquisition" is the purchase price plus all expenses related to the transformation of the asset into a status
ready for use.

•  "Repeated" is the offence committed within one-year period from enactment of the penal provision by which the
perpetrator has been punished for the same offence.

•  "Inventory taking" is the process of preparation and actual inspection by various means of the natural and value
parameters of the assets and liabilities of the enterprise by an exactly determined date, juxtaposition of the obtained
results with the accountancy data and establishment of eventual differences.

•  "Usual activity" is a combination of economic operations carried out by a certain enterprise in its normal process
of functioning, as well as such ensuing from or accompanying regularly or incidentally these operations. This is the
activity carried out within the frames of carrying out the subject of activity of the enterprise which is inherent to an
enterprise with similar technical equipment and qualification of the personnel and which does not endue from
extraordinary circumstances and events.

•  "Basic activity" is a combination of economic operations which generate the basic (substantial part) of the
revenue of an enterprise and they do not represent investment activity in their nature in the context of International
Accountancy Standard 7. This is the activity occupying predominant position in comparison with all remaining
activities carried out by the enterprise.

•  "Place of economic activity" is the place of economic activity in the context of § 1, item 13 of the Law for the
corporate income taxation..

•  "Goodwill" is:

•  "positive goodwill" is the excess of the expenses related to the acquisition of the share of the acquirer in the fair
value of the acquired discernible assets and liabilities;

•  "negative goodwill" is the access of the share of the acquirer in the fair value of the acquired discernible assets and
liabilities over the expenses related to the acquisition.

Transitional and concluding provisions

§ 2. This law revokes the Accountancy Law (prom., SG 4/91; amend and suppl., SG 26/92; SG 55/93; SG 21, 33 and 59/96; SG 52/97; SG 21/98; SG 57, 81, 83 and 113/99; SG 1 and 92/00).

§ 3. In art. 39 of the Law for the non-profit corporate bodies (prom., SG 81/00; amend., SG 41/01) para 3 is amended as follows:

"(3) The non-profit corporate bodies established for carrying out socially useful activity, registered in the central registrar of the Ministry of Justice shall be subject to an independent audit under the conditions of the Accountancy Law if they exceed at least one of the following conditions:

•  sum of the balance asset of the preceding year - 500 thousand levs;

•  sum of the revenue from the activity and the net amount of the revenue from sales, as well as the financial revenue
for the preceding year - 1 million levs."

§ 4. The following amendments and supplements are introduced to the Law for the cooperations (prom., SG 113/99; amend., SG 92/00):

1. In art. 15, para 3 item 3 is amended as follows:

"3. determines a registered auditor if the cooperation exceeds a minimum of two of the following criteria for the preceding year:

•  sum of the balance asset of the preceding year - 500 thousand levs;

•  sum of the revenue from the activity and the net amount of the revenue from sales, as well as the financial revenue
for the preceding year - 1 million levs.

•  average number of personnel - 30 persons;".

2. Art. 62 is revoked.

§ 5. The provisions of art. 23, para 3 and 4 of this law shall enter into force on January 1, 2005, and those for the enterprises under art. 38, para 2, item 2 and 4 - on January 1, 2003. The earlier implementation of the international accountancy standards shall be admissible by the choice of the enterprise from January 1, 2003.

§ 6. For the medical establishments - trade companies with over 50 percent state and/or municipal participation the provisions of art. 38 of this law shall apply from January 1, 2006.

§ 7. Until the enactment of the International Accountancy Standards shall apply the national accountancy standards adopted by the Council of Ministers.

§ 8. (1) During the period until the complete implementation of the International Accountancy Standards on January 1, 2005 shall continue the activity of the National Accountancy Council established by § 9 of the revoked Accountancy Law as a consultative body to the Ministry of Finance which shall assist the working out of the normative acts for the accountancy.

•  The National Accountancy Council shall work out and adopt a model national chart of accounts which shall have
an advisable nature for the enterprises until the introduction of the International Accountancy Standards.

•  The training of the accountants on the International Accountancy Standards shall be carried out according to a
programme worked out by the National Accountancy Council.

§ 9. The pending administrative penal proceedings shall be concluded by the previous order. § 10. The implementation of the law is assigned to the Council of Ministers.

§11. The law shall enter into force on January 1, 2002 with exception of §3 and 4 which shall enter into force on January 1,2001.

The law was adopted by the 39th National Assembly on November 2, 2001 and was affixed with the official seal of the National Assembly.