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