Any entity filing annual accounts must comply with numerous accounting obligations, most of which are defined in the PCG (General Chart of Accounts).
The accounts should accurately reflect the company's performance and must be presented clearly, honestly, and rigorously.
Keeping regular accounts and having them audited by a statutory auditor (in some cases) helps to ensure that management decisions are accurately reflected in the company's accounts.
Let's review the accounting obligations that a SAS must comply with.
A SAS must keep 2 accounting books up to date
The "day book" summarizes all the transactions that directly affect the company's assets.
The entries are recorded throughout the year and presented according to the standards imposed by the General Chart of Accounts (PCG).
Then comes the "general ledger", which lists all the accounting entries recorded in the daybook, broken down according to the PCG standards applied by the company.
Each income received or each cost spent is assigned to a expense item.
A SAS must produce an annual balance sheet, an income statement and a legal appendix.
The balance sheet at a given date is a statement of the company's assets
It allows third parties to assess its sustainability, its ability to repay its debts, and to know the result for the year.
The balance sheet is a table divided into two parts. The left-hand side, called assets, represents all the uses.
The right-hand side, called liabilities, includes all financing resources.
The income statement results from the company's activity for 12 months
It explains how the result for the year is formed by summarizing the income for the year (called products), which is a source of enrichment, and the costs (called expenses), which is a source of impoverishment.
It allows third parties to assess the company's profitability. It's a table divided into two parts.
The left-hand side includes expenses, or all the consumption of the financial year, or the uses of the activity.
The right-hand side includes the products or all the resources of the financial year's activity.
Also, the legal appendix is an accounting statement.
This includes significant information with the aim of explaining the content of the balance sheet and income statement.
It must help to comply with the principles of a true and fair view, comparability, and continuity of business imposed by the accounting plan.
Above all, it must show that the principle of prudence is being properly applied, which is essential for maintaining the confidence of all stakeholders.
Certain situations make it mandatory to appoint an auditor to certify the financial statements of a company.
Its goal is to ensure that the company's management decisions are accurately reflected in its accounts. It is not, under any circumstances, proof of proper accounting, or a forecast of the company's future results.
Auditors do their work based on historical data, not forecasts.
A SAS is required to appoint an auditor if, at the end of a financial year, it exceeds at least two of the following three thresholds:
- The total of its balance sheet exceeds 4 million euros.
- Its turnover excluding VAT exceeds 8 million euros.
- It has more than 50 employees.
The statutory auditor then steps in from the following financial year.
If the SAS is controlled by one or more other companies, then the appointment of an auditor is automatically required. This applies from the financial year in which this situation arises.
Note: These thresholds have been updated to reflect the adoption of the PACTE law in April 2019, which provides for alignment with European accounting directives.
Finally, remember that in the absence of any obligation, the partners can decide to appoint a statutory auditor if they wish.
Complying with all the rules defined by the tax authorities and the general accounting plan is imperative, under penalty of assessment by the tax authorities, or even criminal proceedings that are far more consequential.
Written by our expert Paul LASBARRERES-CANDAU
September 17, 2018
