The standard is not selected; it applies to you according to your category. Under Article 5 of Law No. 25/2018, microentities apply SKK 15, the simplified standard. Most other entities apply the National Accounting Standards, NAKS. Entities of public interest apply the International Standards, IFRS. For a small business, this is good news, because NAKS 15 keeps accounting documentation to a minimum.
Think of the standards as three rungs on the same ladder.
SKK 15 is the first level, specifically designed for micro-entities. It requires simplified statements and basic recognition and measurement rules. Its purpose is to give a small business an accurate financial snapshot without the burden of full reporting.
Full SKKs are the second level for small, medium, and large units. The schedules are more detailed, with broader explanatory notes and more comprehensive rules on topics such as depreciation, provisions, and inventory.
SNRF, the International Financial Reporting Standards, are the third tier. They are applied by public interest entities, such as banks and insurance companies. A store, a bar, or a professional firm does not have to reach this level.
The full texts of the standards, from SKK 01 through SKK 15 and the SKK for nonprofit organizations, along with the Accounting Act, can be found at National Accounting Standards.
In practice, for the owner the difference is felt in three things: how many pages the reports have, how many explanatory notes need to be prepared, and how much time the accountant devotes to year-end closing. The smaller the unit, the shorter the list.
An architectural studio in Tirana has revenues of 14,000,000 LEK, assets of 6,000,000 LEK, and 4 employees. No micro-entity threshold is exceeded, so the studio is a micro-entity and applies Standard Costing 15.
Her neighbor, a wholesale trading company, has revenues of 220,000,000 LEK, assets of 90,000,000 LEK, and 28 employees. The revenues exceed the threshold for a microenterprise and a small enterprise, while the assets only exceed the microenterprise threshold. Having exceeded two of the three thresholds for a microenterprise, the firm is not a microenterprise and applies full IFRS as a small entity. Both businesses are neighbors, but their accounting year-ends do not match at all. The studio closes the year with a short set of financial statements, while the firm prepares full reporting with notes.
Michael Gerber would say that reporting is a system, not a burden. When the standard is clear from January, closing out December isn't drama, it's procedure.
The standard derives from the category, so the first step is to know the category. Tool A is the micronizer at Finance and Accounting It provides you with the three-digit answer. You can find year-end closing report formats and checklists in the Resource Center.
Article 5 of Law No. 25/2018 establishes the hierarchy of the reporting framework. SKK 15 covers small economic units as defined by the micro-entity under Article 4. The point of professional interest is the upper limit of SKK 15. When the micro-entity grows and changes category, the transition to full SKK requires reclassification of items and completion of comparative notes. It is also worth noting that the voluntary application of a higher standard by a smaller entity is allowed—a choice that makes sense when the entity is seeking bank financing or investors.
The law allows the implementation of a more comprehensive framework in certain cases. But for most small businesses, this only brings additional costs without any benefit. It is only addressed for concrete reasons, for example at the request of a bank or an investor.
Shorter statements, fewer explanatory notes, and a faster, cheaper year-end close. The basic information—how much you earned, what you have, and what you owe—remains complete. We simplify the form, not the truth.
If you want to know for sure which standard applies to you and what that means for your mirrors, ask us no obligation at Contact page.
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