REPUBLIC OF LITHUANIA                                     
                  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               
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               
     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               
     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               
     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               
     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               
                            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                      
     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               
                            Chapter 6                                           
    Keeping of Documents, Accounting Registers and Financial                    
     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               
     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                         
     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                                                            
Supreme Council                                                                 
Republic of Lithuania                                                           
18 July 1992                                                                    
No I-2654