LAW
Number. 25/2018
For Accounting and Financial Statements
In support of Articles 78 and 83, paragraph 1, of the Constitution, on the proposal of the Council of Ministers,
Parliament
of the Republic of Albania
SET:
Chapter I
General Provisions
Article 1
Objective
This law establishes the general principles and rules for the preparation and components of financial statements, the determination of applicable accounting standards, and the maintenance of accounting records.
Neni 2
Scope of application
This law is enforced by:
a) economic units that have profit-making objectives, regardless of their legal form or of any special legal requirements that may apply to them;
b) non-profit economic units, except in cases where their financial statements and accounting are subject to special laws or regulations.
Article 3
Definitions
In this law, the following terms have these meanings:
1. “Bookkeeping” is the chronological recording in the journal and in accounts of all economic transactions and events pertaining to an economic unit.
2. “Accounting system” is the system used to identify, record, measure, classify, and present the financial data of an economic unit's activities.
3. “Accounting standards” are the general principles or rules issued by the body responsible for accounting standard-setting, as defined by this law and the regulations issued pursuant to it, which serve as the basis for selecting accounting treatments or methods applied in the preparation of financial statements.
4. “International Financial Reporting Standards” (IFRS) are the standards and interpretations developed and published by the International Accounting Standards Board, translated into Albanian under the responsibility of the National Accounting Council, without changes from the original English text, made mandatory for implementation by order of the minister responsible for finance.
5. “National Accounting Standards” (NAS) are the standards drafted and published by the National Accounting Council, which are declared mandatory for implementation by order of the minister responsible for finance.
6. “Economic units” are legal and natural persons, public and private, with or without profit-making purposes, that carry out activities and have permanent establishments in the Republic of Albania. Excluded from this definition are the units of general government, pursuant to Law No. 9936 of June 26, 2008, “On the Management of the Budgetary System in the Republic of Albania,“ as amended.
7. “Profit-generating economic units” are economic units that produce and supply products, goods, and services for sale in order to generate profits that are expected to be distributed to the investors in their capital.
8. “Nonprofit economic unit” (or “Nonprofit Organization” or "NPO") means all other economic units that do not meet the definition set forth in paragraph 7 of this article or are recognized as such by applicable law.
9. “Economic unit of public interest” has the same meaning as in Law No. 10,091 of March 5, 2009, “On statutory audit, the organization of the profession of statutory auditors and approved accountants,” as amended.
10. “A typical economic and financial unit type“holding”are the economic units whose sole purpose is to acquire shares or equity stakes in other units and to manage these shares and stakes in order to turn them into profit, without being directly or indirectly involved in the management of those units, but without impairing their rights as shareholders.
11. “Group of economic units” is the group composed of a parent economic unit and all the units controlled by it.
12. “Participation interest” means rights in the capital of other economic units, whether or not represented by certificates, which, by creating a strong link with those other economic units, are intended to facilitate the activities of the economic unit holding those rights. Ownership of a portion of the capital of another economic unit is presumed to constitute a participation interest when it exceeds the 20 percent threshold.
13. “Consolidated financial statements” are the statements that present financial information about the group as a single economic entity.
14. “Accounting document” means the primary document, the supplementary document, and the accounting records (books) prepared on paper or on electronic media:
a) The basic documents contain the initial records of every event and economic transaction.;
b) supplementary documents are bearers of information obtained from the primary documents;
c) Accounting records (ledgers) are carriers of information recorded chronologically and systematically of the effects of economic transactions carried out, derived from primary or supporting documents.
15. “Computerized record” means any accounting document authorized by the relevant authorities, created on computer media using non-manipulable software programs and printable at any time.
16. “Functional currency” is the currency of the principal economic environment in which the economic unit operates.
17. “Presentation currency” is the currency in which the economic entity's financial statements are presented.
18. “Person responsible for preparing the financial statements” is the employed person, the natural person licensed as an approved accountant or statutory auditor, as well as the legal person organized as an audit firm or accounting firm, that provides accounting services under an employment contract or service agreement with the economic unit and bears responsibility for preparing the financial statements.
Article 4
Categories of economic units and groups
1. For the purposes of this law, depending on the criteria they meet, economic units are classified into:
1.1. Microeconomic unit – economic units that, as of the reporting date, do not exceed the thresholds for at least two of the following three criteria:
a) asset, 15 million lek;
b) income from economic activity (turnover), 30 million lek;
c) the average number of employees during the reporting period, 10.
1.2. Small economic units – economic units, not micro, which as of the reporting date do not exceed the thresholds for at least two of the following three criteria:
a) asset, 150 million lek;
b) income from economic activity (turnover), 300 million lekë;
c) the average number of employees during the reporting period, 50.
1.3. Medium economic units – economic units that are neither micro nor small and that, as of the reporting date, do not exceed the thresholds for at least two of the following three criteria:
a) asset, 750 million lek;
b) income from economic activity (turnover), 1,500 million lek;
c) the average number of employees during the reporting period, 250.
1.4. Large economic units – economic units that, as of the reporting date, exceed the thresholds for at least two of the following three criteria:
a) asset, 750 million lek;
b) income from economic activity (turnover), 1,500 million lek;
c) the average number of employees during the reporting period, 250.
2. For the purposes of this law, depending on the criteria they meet, groups of economic units are classified as:
2.1. Small groups – groups of business entities which, as of the parent entity's reporting date, after consolidation, do not exceed the thresholds for at least two of the following three criteria:
a) asset, 150 million lek;
b) income from economic activity (turnover), 300 million lekë;
c) the average number of employees during the reporting period, 50.
2.2. Medium-sized groups – groups of economic units that are not small, which, as at the parent company's reporting date, after consolidation, do not exceed the limits of at least two of the following three criteria:
a) asset, 750 million lek;
b) income from economic activity (turnover), 1,500 million lek;
c) the average number of employees during the reporting period, 250.
2.3. Large groups – groups of business entities which, as of the parent entity's reporting date, after consolidation, exceed the thresholds for at least two of the following three criteria:
a) asset, 750 million lek;
b) income from economic activity (turnover), 1,500 million lek;
c) the average number of employees during the reporting period, 250.
3. If the total assets and total revenues from economic activities in the group's consolidated financial statements are calculated before making eliminations of transactions between entities within the group, then the limits specified respectively in points 2.1., 2.2. and 2.3. of this article are increased by 20 percent.
4. The thresholds for the criteria of total assets or income from economic activity (turnover), provided for in paragraphs 1 and 2 of this article, are increased every three years, in proportion, according to Annex 1, an integral part of this law, with the aim of their full alignment in 2028 with the criteria set out in the relevant European Union legislation.
5. When, on the reporting date, an economic entity or a group of economic entities exceeds or falls below the thresholds of two of the three criteria set out in paragraphs 1 and 2 of this article, the classification under those paragraphs or the applicable accounting standards is affected only if this occurs for two consecutive reporting periods.
6. After the full alignment of the limits, in accordance with paragraph 3 of this article, with the limits provided for in the relevant Union legislation, in order to adjust for the effects of inflation, the National Accounting Council shall, at least once every 5 years, to review and, when necessary, propose changes to the criteria of paragraphs 1 and 2 of this article, based on the measurement of inflation, which shall be approved by order of the minister responsible for finance.
Article 5
Accounting standards applied in the preparation of financial statements
1. Economic units subject to this law, except in the cases provided for in paragraphs 2 and 3 of this article, must apply the IFRS for the preparation of financial statements.
2. Public interest economic entities, as well as the regulators of public interest economic entities operating in the field of lending and insurance, must apply the SNRFs for the preparation of financial statements. Only public interest entities, as defined in Article 2(23)(c) of Law No. 10,091 of March 5, 2009, “On statutory audit, the organization of the profession of statutory auditors and approved accountants,” as amended, which do not exceed the criteria set forth in Article 4, paragraph 1.3 of this law.
3. Other economic units, beyond those provided for in paragraph 2 of this article, may voluntarily apply SNRFs when preparing financial statements.
Chapter II
General Provisions on Accounting Documents
AND FINANCIAL STATEMENTS
Article 6
Bookkeeping
All economic units subject to this law organize their accounting records and financial reporting on the basis of the principles and methods established by the National Council of Accounting or the International Accounting Standards Board, depending on the applicable accounting standards.
Article 7
Accounting document
1. Accounting records are supported by accounting documents, in documentary or electronic form, that ensure their reliability. The accounting document is kept as documentary evidence for the entire period specified in Article 8 of this law.
2. For each accounting entry, the origin, nature, date, and content of the transaction or economic event must be recorded.
Article 8
Retention of accounting documents
1. Accounting documents are kept at the headquarters where the economic activity of the economic unit takes place for 10 consecutive years after the close of the reporting period to which they belong, except for those for which a longer retention period is prescribed by law or by another subordinate act. The same retention period also applies to electronic documents (media) and their printouts.
2. The group's financial statements are maintained by the parent company.
Article 9
Reporting period
1. The reporting period lasts 12 months.
2. The reporting period begins on January 1 and ends on December 31. Exemptions for special activities, upon the recommendation of the National Accounting Council, are approved by the minister responsible for finance.
3. The duration of the reporting period, in cases of the start or cessation of activity, may be shorter or longer than 12 months, but in any event it may not be shorter than 3 months or longer than 15 months.
4. In the event that the reporting period exceeds 12 months, then the start/end time shall be no earlier than the last quarter and no later than the first quarter of the preceding/following period.
Article 10
Language and monetary unit of accounting records and financial statements
1. Accounting records are kept in the Albanian language and amounts are expressed in the functional currency.
2. Financial statements are presented in the Albanian language and values are expressed in the national monetary unit.
3. Documents drawn up in a foreign language and/or in a foreign currency, received from and/or sent to foreign economic units that do not have a permanent establishment in the Republic of Albania, must comply with the requirements of paragraph 1 of this article.
4. Economic units record economic activities:
a) in national currency units or in foreign currency units, when the latter is the functional currency; or
b) in foreign monetary units, converting them into the national monetary unit in accordance with the applicable accounting standards, when the latter is the functional currency.
5. Financial statements may be presented in rounded figures, provided this does not result in a loss of information that would affect the users of these statements.
Chapter III
Components of Financial Statements
Article 11
The purpose of financial statements
1. Financial statements are prepared clearly, in accordance with this law and the applicable financial reporting standards, and present the financial position, financial performance, changes in equity/net assets, and cash flows of economic entities truthfully and reliably.
2. The financial statements in this law refer to individual financial statements and consolidated financial statements.
Article 12
Consolidated financial statements
1. Economic groups subject to this law prepare consolidated financial statements.
2. Small groups are exempt from the obligation to prepare consolidated financial statements and a consolidated management report, unless any of the group's entities is a public-interest economic entity.
3. The parent economic entity and all entities controlled by it must be included in the consolidation, regardless of where the controlled entities operate or where they are headquartered.
Article 13
Components of financial statements
1. Annual financial statements, except in cases specifically provided for by the National Accounting Standards or the International Financial Reporting Standards, must at a minimum include:
a) the statement of financial position;
b) the performance statement (the income and expense statement);
c) notes to the financial statements.
2. Medium, large, and publicly interest economic units, in addition to what is provided for in paragraph 1 of this article, also prepare the following statements:
a) the statement of comprehensive income;
b) the statement of cash flows;
c) the statement of changes in equity.
3. Micronets, unlike what is provided for in paragraphs 1 and 2 of this article, shall draw up:
a) a condensed statement of financial position;
b) a condensed statement of performance (the income and expense statement);
c) abbreviated notes to the financial statements.
4. The rules for micro-units, as set out in paragraph 3 of this Article, do not apply to investment economic units or financial economic units of the type “holding”.
5. Nonprofit economic units (NPEs) prepare financial statements as follows:
a) the statement of financial position;
b) the activity report;
c) the statement of cash flows;
c) explanatory notes.
Article 14
Special adjustments for the statement of financial position
1. When development costs are allowed to be included in “Assets” and their value has not been fully amortized, a distribution of profit is not permitted if the total of reserves and retained earnings is not at least equal to the unamortized value of the development costs.
2. When the gain recognized from participation interest, as shown in the statement of performance, exceeds the amount of dividends collected or to be collected, the difference allocated to reserves shall not be distributed to shareholders.
Article 15
Inventory of assets and liabilities
1. Economic units subject to this law must verify, at least once during the reporting period, the existence and valuation of assets, of liabilities and its equity, through the inventorying of these items and the corresponding accounting documents in accordance with the inventory regulation drafted by the National Council of Accounting.
2. The management body of the economic unit is responsible for the procedures followed to inventory assets and liabilities, with the aim of presenting the assets and liabilities items in the financial statements with fairness and reliability.
Article 16
Explanatory notes
1. Explanatory notes, as a rule, are presented in the order in which the items appear in the statement of financial position and in the statement of performance.
2. All business entities, in addition to the requirements set forth in the applicable accounting standards, must present in the explanatory notes the average number of employees during the reporting period.
3. Medium, large, and public interest economic units, beyond the requirements set out in paragraph 2 of this article or in the applicable accounting standards, must present in the explanatory notes:
a) the amount of salaries paid to the members of the executive, management and supervisory bodies for the reporting period, due to their responsibilities and any commitment arising or undertaken in connection with pensions for former members of such bodies, showing the total amount for each category of the body, provided that the disclosure of this information would not result in the identification of the financial situation of a specific member of such a body;
b) the average number of employees during the reporting period, broken down by categories and, if not separately presented in the income and expense statement, personnel costs related to the reporting period, broken down into wages, social security costs, and pension costs;
c) the name and registered office for each of the economic units in which the economic unit, either itself or through a person acting on its behalf but for the account of the economic unit, holds a participation interest, indicating the percentage of the capital owned, the amount of capital and reserves and the profit or loss for the most recent reporting period of the economic unit in question for which the financial statements have been approved.
As stated above, it is not applied by the parent economic unit in cases where:
i) the business entity in which the parent business entity holds an equity interest is included in the consolidated financial statements prepared by the parent business entity or in the consolidated financial statements of a larger group of business entities;
ii) this participation interest has been treated by the parent economic unit in its annual financial statements;
c) the existence of any participation certificates, convertible debt, share purchase rights, options or securities or similar rights, indicating their number and the rights they confer;
d) the name, registered office, and legal form of each economic unit in which the economic unit is a general partner;
dh) the name and registered office of the economic entity that prepares the consolidated financial statements of the largest group of economic entities, to which the entity belongs as a controlled entity;
e) the name and address of the economic unit that prepares the consolidated financial statements of the smaller group of economic units, to which the economic unit belongs as a controlled entity that is included, as well as in the group of economic entities referred to in subparagraph “dh” of this point;
e) the place where copies of the consolidated financial statements referred to in paragraphs (d) and (e) of this item may be obtained, provided they are available.
4. Medium, large, and public interest entities, in addition to the requirements provided in paragraphs 2 and 3 of this article or in the applicable accounting standards, must present in the explanatory notes the total fees for the reporting period, requested by each statutory auditor or audit firm in connection with the statutory audit of the annual financial statements, and the total fees charged by each statutory auditor or audit firm for assurance services, for tax advisory services, and for other non-audit services.
Article 17
Activity Progress Report
1. Economic units subject to this law prepare a report on the progress of their activities, which, through a comprehensive analysis, fairly presents the economic unit's development and performance, accompanied by a description of the main risks and uncertainties it may face. In order to present the development, performance, and position of the entity as clearly as possible, the report shall include the key financial and, where possible, non-financial performance indicators related to its activities, including information on environmental and employee matters. The analysis should, where possible, include references and additional explanations for the amounts reported in the financial statements for the reporting period.
2. The activity progress report must also show:
a) possible future developments of the economic unit;
b) activities in the field of research and development;
c) information relating to the acquisition of its own shares;
c) the existence of branches of the economic unit;
d) for the use of financial instruments by the economic unit and when it is material to the assessment of assets, liabilities, financial position, income and loss:
i) financial risk management policies and objectives;
ii) the exposure of the economic unit to price risk, credit risk, liquidity risk, and cash flow risk.
3. Exempted from the obligation to prepare the activity progress report:
a) micronits;
b) small economic units, provided that they disclose in the explanatory notes the data on the purchase of their own shares;
c) non-profit economic units for which the figure for assets or revenues in the financial statements does not exceed 30 million lekë.
Article 18
Non-financial report
1. Large undertakings of public interest that exceed the criterion of an average of 500 employees, during the reporting period, must include in the activity performance report a non-financial report, which contains the necessary information for a better understanding of the development of the economic unit itself, performance, position and impact of its activities in relation to the environment, social and employment issues, respect for human rights, anti-corruption and bribery matters, including:
a) a brief description of the economic unit's business model;
b) a description of the policies followed by the economic unit regarding these matters, including the implementation of the process of systematic inquiry and verification of the accuracy of the financial statements (due diligence);
c) the benefits of these policies;
c) the principal risk related to matters concerning the economic unit's operating activity, including, where necessary, business relationships, products or services that are likely to cause mutual impact and how the economic unit manages its risk;
d) Key non-financial performance indicators related to specific businesses.
2. When the economic unit does not follow policies regarding one or more of the above issues, the non-financial report must provide a clear and reasonable explanation as to why it has acted in that way.
3. The non-financial report referred to in paragraph 1 of this article, where possible, should provide references and additional explanations of the values reported in the annual financial statements.
4. A business entity that is a controlled entity shall be exempt from the obligation provided in paragraph 1 of this article if that business entity and its subsidiaries are included in the consolidated statement of operations of another business entity.
5. The statutory auditor or audit firm must verify, in accordance with International Auditing Standards, whether the non-financial report/consolidated non-financial report has been prepared.
Article 19
Internal Management Report
1. Economic units of public interest include in their activity performance report a report on the internal governance of the economic unit. This report contains, at a minimum, the following information:
a) the reference, as follows, as the case may be:
i) the rules/codes for the internal management of the economic unit, the subject of which is the unit;
ii) the rules/codes for the internal governance of the economic unit that the unit has voluntarily chosen to implement;
iii) all relevant information on the economic unit's internal governance practices that go beyond the requirements of legislation;
b) a description of the main features of the economic unit's internal control and risk management systems related to financial reporting;
c) the composition and functioning of the executive management and supervisory bodies and their committees;
c) a description of the various policies implemented regarding the executive management and supervisory bodies of the economic unit with respect to aspects such as age, gender, or educational and professional background; the objectives of these various policies; how they have been implemented; and the results for the reporting period.
2. When the economic unit does not act in accordance with the rules/of the company's internal governance code referred to in point 1, letter “a”, subpoints “i” and “ii”, the economic unit must provide an explanation of which parts of the internal governance code it does not apply and the reasons for these deviations; When the economic unit has decided not to link to the provisions of an internal governance code mentioned in point 1, letter “a”, subpoints “i” and “ii”, of this article, it explains the reasons for this.
3. Small and medium-sized enterprises of public interest are exempt from the obligations provided in paragraph 1(c) of this article.
4. The information required by paragraph 1 of this article is presented as a separate section of the activity progress report and is published together with the activity progress report.
Article 20
Consolidated Statement of Operations
1. The parent economic entity, in cases where it is required to prepare consolidated financial statements, must also prepare the consolidated statement of operations, based on the requirements of Articles 17, 18, and 19 of this law, taking into account the essential adjustments, in such a way as to enable an assessment of the overall position of the economic units included in the consolidation.
2. In the consolidated statement of operations, the adjustments required by Articles 17, 18, and 19 of this Law shall be presented as follows:
a) when reporting data on its own shares repurchased, the consolidated statement of operations discloses the number and nominal value or, in the absence of a nominal value, the carrying amount of all shares of the parent entity held by that parent entity, its controlled entities, or a person acting on its behalf but for the account of those entities. This information must be disclosed in the notes to the consolidated financial statements;
b) When reporting on internal control and risk management systems, the report on the economic unit's internal governance mentions the key characteristics of the internal control and risk management systems for the economic units included in the consolidation, taken as a whole.
Article 21
Reporting on payments made to state institutions
1. Large economic units and all economic units of public interest that are active in the extractive industry or in the harvesting of forest timber must prepare and publish an annual report on payments made to state institutions. This report shall be submitted together with the other reports required by the provisions of this law.
Active economic units in the extractive industry are considered those units that carry out activities in the exploration, research, discovery, development, and extraction of minerals, oil, natural gas, or others, as defined by applicable legislation.
2. For the purposes of this article, a public-interest economic unit is treated as a large economic unit, regardless of its income, activity, assets, or average number of employees during the reporting period.
3. It is not necessary for the report to take into account any payment, whether in the form of a single payment or a series of related payments, if it is below 13.5 million lek within a reporting period.
4. The payment report provides the following information regarding economic activities during the relevant reporting period:
a) the total amount of payments made to state institutions;
b) the total amount for the following type of payment:
i) production rights;
ii) taxes in accordance with the applicable tax legislation;
iii) mineral rent;
iv) dividends;
v) rewards for signing, discovery, and production;
vi) fees, taxes, and other payments in connection with licenses and/or concessions;
vii) payment for infrastructure improvements.
5. When a state institution receives payments in kind, they are reported by value and, where applicable, by volume. Appropriate notes are provided to explain how the value was determined.
6. Any large economic unit or any economic unit of public interest, which is active in the extractive industry or in the exploitation of forests for timber, if it is required to prepare consolidated financial statements, it must also prepare a consolidated report on payments made to state institutions, in accordance with the above points of this article.
The parent unit is considered active in the extractive industry or forest exploitation if any of the economic units it controls is active in the extractive industry or forest exploitation.
The consolidated report includes only payments that are the result of extraction operations and/or operations related to forest exploitation.
7. The obligation to prepare the consolidated report referred to in paragraph 6 of this Article does not apply to the parent economic entity of a small or medium group, except where any of the participating economic entities is an entity of public interest.
8. In the consolidated report of payments made to state institutions, there is no need to include an economic unit, including a public interest economic unit, when at least one of the following conditions is met:
a) severe long-term restrictions significantly impede the parent economic unit in exercising its rights over the assets or in managing this economic unit;
b) in extremely rare cases, when the information necessary for the preparation of the consolidated report on payments made to state institutions, in accordance with this article, cannot be obtained without disproportionate costs or without unjustified delay;
c) the shares of this economic unit are held solely for their subsequent resale.
The above exclusions apply only if they have been used in connection with consolidated financial statements.
Article 22
Deposit and publication of financial statements
1. Economic units, within 7 months from the reporting date, shall file for publication with the relevant authority where they are registered the annual financial statements, the report on the progress of activities/the consolidated statement of activities, the audit report, in cases where the preparation of these documents is mandatory, in accordance with the requirements of applicable legislation.
2. Medium, large, and public interest economic units must publish annual financial statements, the management report/the consolidated statement of operations, the audit report, in cases where the preparation of these documents is mandatory, also on their official websites, no later than 7 months from the reporting date.
3. Non-profit economic units, subject to this law, unless otherwise provided by any legal provision, are required to publish the annual financial statements on their official websites, if the figure of assets or revenues in the financial statements exceeds the amount of 30 million lek. These entities must prepare a performance report on their activities, which will be published together with the annual financial statements. The format of this report and the instructions for its completion are drafted and approved by the National Council of Accounting.
Article 23
Responsibilities
1. The executive management body of the economic unit and the supervisory body, in accordance with the powers granted to them by law, are jointly and severally responsible for ensuring that the annual financial statements and the activity performance report/the consolidated statement of operations of the economic unit, are prepared and published in accordance with the requirements of this law, its implementing regulations, and the approved accounting standards.
2. The statutory audit of the financial statements does not relieve the executive management body and the supervisory body of the economic entity of the responsibilities set out in paragraph 1 of this article.
3. The financial statements are signed by the legal representative of the economic unit and the person responsible for preparing the financial statements.
Chapter IV
National Accounting Council
Article 24
Status and tasks
1. The National Accounting Council is an independent public professional body and has legal personality.
2. The National Accounting Council is responsible for:
a) to develop national accounting standards in accordance with the requirements of this law and in coherence with the International Financial Reporting Standards.
If for reasons of domestic legislation and accounting practices, the National Accounting Council deems it necessary to depart from the application of certain international standards, it has the authority to do so, only after explaining and justifying the reasons for this action, without prejudice to the requirements set forth in Article 3, paragraph 4, of this law;
b) to develop an accounting system which, in addition to national accounting standards, establishes the rules for maintaining accounting records, as well as the formats for financial statements;
c) to identify needs and propose solutions for improving accounting methods for record-keeping and for qualifications;
c) to interpret and generalize the problems arising from accounting practice and standards, which it presents in the form of accounting guidelines;
d) to examine and provide opinions on all draft laws and draft regulatory sub-legislative acts that contain provisions on accounting and the preparation of accounts related to economic entities subject to this law, as well as to accounting-based professions.;
d) to establish relationships with domestic and foreign professional organizations and to participate in national and international accounting activities;
e) to publish on the institution's official website the National Accounting Standards and the International Financial Reporting Standards, which are mandatory to apply. It also has the right to publish other materials, not mandatory for implementation, for informational purposes and objectives, in connection with accounting maintenance and the preparation of financial statements.;
e) to publish the National Accounting Standards and other materials for implementation in connection with these standards;
f) to monitor the implementation of accounting and financial reporting standards;
g) to organize round tables, seminars, conferences and other similar events, with the aim of increasing transparency through the involvement of stakeholders in the process of improving financial reporting, informing stakeholders about developments in this field, as well as promoting the proper implementation of IFRSs by economic entities.
Article 25
Composition and mandate
1. The National Accounting Council is composed of 7 members, of whom:
a) a member is proposed by the professional organization for statutory audit;
b) a member is proposed by professional accounting associations;
c) one member is proposed by the chambers of commerce (representatives of large economic units or economic units of public interest) or by the association of banks;
c) three members are proposed by the ministry responsible for finance, one of whom is a representative of the body responsible for revenue administration;
d) one member is proposed by the Public Oversight Board.
2. Members of the National Accounting Council are appointed by order of the minister responsible for finance.
3. Members of the National Accounting Council serve a four-year term and may be reappointed only once with the approval of the minister responsible for finance.
4. Candidates for membership on the National Accounting Council must have an education in accounting and/or finance, as well as expertise in accounting theory and methodology or be practitioners in the field of accounting.
5. Members of the National Accounting Council are engaged on a part-time basis to carry out their duties.
6. The activities of the National Accounting Council are supported by an administrative structure with employed personnel. The structure, staffing levels, employees' salaries, and members' honoraria of this council are approved by a decision of the Council of Ministers.
7. A member of the National Accounting Council may be removed from office before the expiration of their term, upon the proposal of the National Accounting Council, by order of the minister responsible for finance, only in cases where they:
a) dies;
b) resigns;
c) becomes incapacitated due to illness;
c) commits a criminal act;
d) does not meet the requirements set forth in the internal regulations of the National Council of Accountants.
Article 26
Organization and functioning
1. The organization and functioning of the National Accounting Council, the special requirements a candidate must meet to be a member of the council, the selection procedures and cases for the dismissal of members, the procedures for drafting national accounting standards and other products, performed by members of this council or by third parties, are determined in its operating regulations, which are approved by the Council of Ministers.
2. The Chairman and Vice Chairman of the National Council of Accountancy are elected by the council members, in accordance with the procedures set forth in the internal regulations.
Article 27
Reporting
1. The National Accounting Council shall submit a written report to the minister responsible for finance within the first quarter of the following year regarding its annual activities.
2. The report, as provided in paragraph 1 of this article, which also details the issues identified during the monitoring of the preparation of the financial statements, as well as the suggested solutions, is sent for information to the Public Oversight Board within the deadline specified in paragraph 1 of this article.
3. The annual report is published on the official website of the National Council of Accountancy within the deadline specified in paragraph 1 of this article.
Article 28
Sources of financing
1. The activities of the National Accounting Council are financed by the state budget. It is also entitled to use the revenues it generates from the work it performs.
2. The National Accounting Council may use funding, donations, or sponsorships from domestic and foreign financial and professional entities and organizations, in accordance with applicable legislation.
Article 29
Violations and penalties
Failure to comply with the requirements of this law, depending on the damage caused, is subject to administrative, civil, or criminal measures, in accordance with applicable legislation.
Chapter V
Transitional and Final Provisions
Article 30
Regulations
The Council of Ministers is charged with adopting, within six months from the date this law enters into force, the sub-legislative acts specified in Article 25, paragraph 6, and Article 26, paragraph 1, of this law.
Article 31
Transitional provision
1. Notwithstanding the provisions of Article 25, paragraphs 1 and 2, the entry into force of this law shall not affect the unfinished terms of the members of the National Council of Accounting, who shall continue to serve until the adoption of its operating regulations, pursuant to Article 26, paragraph 1, and the issuance of the order by the minister responsible for finance, pursuant to Article 25, paragraph 2, of this law.
In the event of referral, pursuant to Article 25, paragraph 3, of this law, the limits on the renewal of terms of office for members of the National Accounting Council shall be calculated from the time when the relevant body was first established and began functioning.
2. Notwithstanding the provisions set forth in Article 25, paragraph 6, of this law, the entry into force of this law shall not affect or interrupt the employment relationships of the administrative structure supporting the National Accounting Council.
3. Upon the entry into force of this law, the National Council of Accounting shall take the necessary measures to review the accounting standards in accordance with the requirements of this law.
Article 32
Cancellations
Law No. 9228, dated April 29, 2004, The Law on Accounting and Financial Statements, as amended, and any acts that conflict with the provisions of this law are repealed.
Article 33
Entry into force
This law takes effect on January 1, 2019.
Approved on May 10, 2018
Proclaimed by Decree No. 10786, dated May 17, 2018, of the President of the Republic of Albania, Ilir Meta.
Annex 1 (thousand lek)
| Size | 2019–2021 | 2022–2024 | 2025–2027 | 2028 |
| Micronation | ||||
| Assets | ≤ 15,000 | ≤ 25,000 | ≤ 35,000 | ≤ 47,500 |
| Revenues from economic activity (turnover) | ≤ 30,000 | fifty thousand | ≤ 70,000 | ≤ 95,000 |
| Number of employees | ≤ 10 | ≤ 10 | ≤ 10 | ≤ 10 |
| Small economic units | ||||
| Assets | one hundred fifty thousand | ≤ 250,000 | ≤ 350,000 | ≤ 540,000 |
| Revenues from economic activity (turnover) | three hundred thousand | ≤ 500,000 | ≤ 700,000 | ≤ 1,080,000 |
| Number of employees | ≤ 50 | ≤ 50 | ≤ 50 | ≤ 50 |
| Medium-sized economic units | ||||
| Assets | ≤ 750,000 | ≤ 1,250,000 | ≤ 2,000,000 | ≤ 2,700,000 |
| Revenues from economic activity (turnover) | one million five hundred thousand | ≤ 2,500,000 | ≤ 4,000,000 | ≤ 5,400,000 |
| Number of employees | ≤ 250 | ≤ 250 | ≤ 250 | ≤ 250 |
| Large economic units | ||||
| Assets | ≥ 750,000 | one million two hundred fifty thousand | two million | ≥ 2,700,000 |
| Revenues from economic activity (turnover) | one million five hundred thousand | ≥ 2,500,000 | ≥ 4,000,000 | ≥ 5,400,000 |
| Number of employees | ≥ 250 | ≥ 250 | ≥ 250 | ≥ 250 |
| Small groups | ||||
| Assets | one hundred fifty thousand | ≤ 250,000 | ≤ 350,000 | ≤ 540,000 |
| Revenues from economic activity (turnover) | three hundred thousand | ≤ 500,000 | ≤ 700,000 | ≤ 1,080,000 |
| Number of employees | ≤ 50 | ≤ 50 | ≤ 50 | ≤ 50 |
| Middle groups | ||||
| Assets | ≤ 750,000 | ≤ 1,250,000 | ≤ 2,000,000 | ≤ 2,700,000 |
| Revenues from economic activity (turnover) | one million five hundred thousand | ≤ 2,500,000 | ≤ 4,000,000 | ≤ 5,400,000 |
| Number of employees | ≤ 250 | ≤ 250 | ≤ 250 | ≤ 250 |
| Large groups | ||||
| Assets | ≥ 750,000 | one million two hundred fifty thousand | two million | ≥ 2,700,000 |
| Revenues from economic activity (turnover) | one million five hundred thousand | ≥ 2,500,000 | ≥ 4,000,000 | ≥ 5,400,000 |
| Number of employees | ≥ 250 | ≥ 250 | ≥ 250 | ≥ 250 |
[1] This law has been partially aligned with Directive 2013/34/EU of the European Parliament and of the Council, of 26 June 2013, “On annual financial statements, consolidated financial statements and related reports of certain types of undertakings”, which amends Directive 2006/43/EC of the European Parliament and of the Council and repeals Council Directives 78/660/EEC and 83/349/EEC”, as amended by Directive 2014/95/EC of the European Parliament and of the Council, of 22 October 2014, and Council Directive 2014/102/EU, of 7 November 2014. CELEX number 32013L0034, Official Journal of the European Union, L Series, no. 182, June 29, 2013, page 19–76.
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Source: Official Form