Financial Reporting Law

Financial reporting law sets the legal framework that mandates how financial information is recorded, reported, and disclosed by entities. It defines the obligations of companies to produce financial statements that fairly represent their financial position and performance.

The primary objectives include ensuring transparency, protecting investors and creditors, facilitating market efficiency, and preventing financial fraud and misrepresentation.

Financial reporting law often mandates adherence to recognized accounting frameworks such as the International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP). Slovenia, as an EU member, primarily follows IFRS for consolidated financial statements.

Companies must prepare annual and interim financial statements including balance sheets, income statements, cash flow statements, and notes, following prescribed formats and content requirements under national law and EU directives.

Public interest entities and certain large companies are legally required to have their financial statements audited by independent, licensed auditors to ensure compliance and accuracy.

Regulations require timely disclosure of financial results, material events, related party transactions, and risks to ensure market participants have access to reliable information.

Financial reporting law intersects with corporate governance, requiring boards and audit committees to oversee financial disclosures and internal control systems.

Regulatory authorities such as securities commissions and financial supervisory agencies enforce compliance through inspections, penalties, and legal actions against misreporting or non-compliance.

EU legislation, including the Accounting Directive, Transparency Directive, and the Audit Regulation, harmonizes financial reporting requirements across member states, enhancing comparability and investor protection.

In Slovenia, financial reporting is governed by the Slovenian Companies Act, the Accounting Act, and relevant decrees. Compliance with IFRS is required for certain entities, and oversight is exercised by the Agency for Public Oversight of Auditing and the Securities Market Agency.

Evolving standards, digital reporting (XBRL), integrated reporting, and ESG disclosures present new legal and regulatory challenges for financial reporting.

Advanced reporting software, AI-driven data validation, and blockchain applications are increasingly integrated into financial reporting processes to enhance accuracy and reduce fraud.