The most difficult questions in the financial statements are rarely resolved from the accounting records alone. Whether an old trade receivable can still be collected, or whether there is a buyer for goods in inventory, is known in sales and in the warehouse, not at the accounting firm. That is why it is worth setting aside time with your accountant for a few questions before the year end.
When the financial year ends in December, autumn is a good time to start the groundwork. The financial statements are of course not prepared in advance, but in the autumn there is still time to obtain the information that cannot be found in the accounting records: from sales, from the warehouse, from the lender or from the owners themselves.
The list below is written for small Finnish limited liability companies that prepare their financial statements under the Finnish Accounting Act and the Finnish Government Decree on information presented in the financial statements of small and micro undertakings. The list is not exhaustive, but these seven issues come up in almost every set of financial statements, whether or not the company has an auditor.
1. Are income and expenses allocated to the correct financial year?
In the financial statements, the accrual principle is decisive: income is recognised when the goods or services have been delivered to the customer, and expenses when the factor of production has been received (Accounting Act, Chapter 2, Section 3). The invoice date or payment date is therefore not decisive. A service delivered to a customer in December is income of the financial year that is ending, even if the invoice is only sent in January. Correspondingly, a service invoiced in advance does not become this year's income merely because it has been invoiced. Minor items do not need to be adjusted to the accrual basis unless their combined effect is material (Chapter 3, Section 4), but what counts as minor is worth agreeing with your accountant in advance.
Go through with your accountant in particular the deliveries around the turn of the year, unbilled work, advance payments received and contract fees that cover several months. On the personnel cost side, the checklist should include at least the accrual of holiday pay and any performance bonuses.
Your accountant cannot know the status of work in progress without help. Ask sales or site management for a short account of what has already been delivered to the customer, what remains to be done and what has been agreed in the contract, because the billing list does not show whether the work has been done.
2. Can the value of inventory be justified?
Inventory is recorded in the balance sheet at acquisition cost. If the probable replacement cost or selling price of the goods at the end of the financial year is lower than the acquisition cost, the difference must be recognised as an expense (Accounting Act, Chapter 5, Section 6). The fact that the goods are on the shelf does not in itself justify their balance sheet value.
Ask the warehouse already in the autumn for a list of slow-moving, damaged and obsolete products and find out what is planned for them. A clearance sale, a return to the supplier and scrapping lead to different valuations. To support the valuation, keep realised selling prices, offers or other evidence from which the price estimate has been derived.
At the same time, agree on the stocktaking practices: who counts, who investigates differences against the inventory records and how goods movements around the turn of the year are taken into account. Also remember goods held in external warehouses and goods owned by others that are stored on your own premises. If the company has an auditor, it is worth agreeing the timing of the stocktake with them before the count date is fixed. As a rule, the auditor attends the stocktake when inventory is a material item.
3. Which trade receivables will actually be collected?
Take an ageing analysis of trade receivables and go through the oldest invoices one by one. Find out whether the delay is due to an oversight, a dispute over the invoice or the customer's payment difficulties, and check whether any agreed payment plan has been followed.
A receivable may be carried in the balance sheet at no more than its probable value (Accounting Act, Chapter 5, Section 2). In its statement KILA 2135/2026 issued in April 2026, the Finnish Accounting Board (KILA) confirmed that debt collection is not a precondition for a write-down. Collection measures may refine the estimate of the receivable's value, but the write-down is based on the estimate, regardless of whether the receivable has been passed to debt collection. The Board's position has been the same since 2008: if non-payment is at least as likely as payment, the item is recognised as an expense, and an internal voucher stating the reason is prepared as the basis for the entry.
On the other hand, late payment alone does not make a receivable a credit loss. The decision rests on an assessment of whether payment will be received, and the grounds for that assessment should be documented. “The customer will pay later” is a weak explanation unless it is supported, for example, by instalments actually received or other information on the customer's situation. Tax deductibility is assessed separately, and the Board did not take a position on it.
4. Are transactions with related parties clear?
Compile the significant transactions involving owners, management and group companies: loans, rents, management service charges and asset sales. Ask the same questions about each of them. What has been bought or sold, why was the arrangement made and what is the price based on? Compare the invoicing with the contract in force. If the terms have been changed along the way, make sure the changes are documented as well.
The obligation to disclose in the notes is assessed separately. Under the small and micro undertakings decree, information must be given on transactions with related parties if they are material and have not been carried out on normal market terms. For transactions carried out on normal terms, the parties and amounts are disclosed if the information is necessary to give a true and fair view (Decree, Chapter 3, Section 10). Related parties under the decree are legal persons in a relationship of control or associated undertaking, as well as the managing director, members and deputy members of the board of directors and persons belonging to corresponding bodies. The related-party concept of the Finnish Limited Liability Companies Act is broader and covers, for example, an owner exercising control even if that owner does not sit on the board, and the auditor in any case examines related parties more broadly than the decree's definition. Loans granted to the managing director and members of the board are also subject to their own disclosure requirements (Chapter 3, Section 9).
Provide your accountant with a compiled account of the transactions. The relationships between the parties should not be left for them to infer from names in the general ledger.
5. Do loan balances match the agreements?
Request up-to-date balances and repayment schedules for loans, compare them with the accounting records and investigate any differences. At the same time, check interest rates, repayment holidays, collateral and any changes agreed during the financial year.
The original term of a loan does not determine how the remaining debt is presented in the balance sheet. The portion of the debt that falls due within one year of the balance sheet date is current liabilities (Accounting Act, Chapter 4, Section 7). The same split applies to the company's receivables.
A loan received from an owner is documented as carefully as a bank loan. Draw up a written promissory note showing the amount, the interest rate and the repayment terms. If, on the other hand, the company has lent money to an owner or to another company, check whether the loan has been repaid as agreed and what the value of the receivable is.
If a financing agreement contains conditions relating, for example, to the equity ratio or to profit (covenants), calculate in good time whether they are met. It is easier to discuss with the lender on the basis of your own calculation than to explain a deviation discovered at the last minute.
6. Is equity sufficient – and is there enough cash?
Ask your accountant for an estimate of the result for the financial year and of the amount of equity. If equity is tight, calculate what write-downs of receivables or inventory and expenses not yet recorded would do to it. The bottom line of a preliminary income statement is not a sufficient basis for the review.
Monitoring equity is the board's task throughout the year. If the board finds that equity is negative, a registration notification of the loss of share capital must be filed without delay (Limited Liability Companies Act, Chapter 20, Section 23, PRH guidance). The matter cannot be left to wait until the financial statements are completed. The notification is filed in the YTJ service and currently costs 55 euros. The entry can be removed by a separate notification accompanied by a balance sheet showing that equity is again more than half of the share capital; if the share capital is zero, positive equity is sufficient. If the company is required to appoint an auditor, the balance sheet and the other account presented of the increases in equity must be audited.
The calculation follows special rules of the Limited Liability Companies Act, so it does not always correspond to the total equity in the balance sheet. A capital loan under the Limited Liability Companies Act is included in equity in the calculation, as are accumulated depreciation difference and voluntary provisions, for which a reasoned account must be given in the notes. An ordinary repayable shareholder loan, by contrast, does not remedy the situation: the company receives cash, but incurs a liability of the same amount. If the owner wishes to strengthen the company, a capital loan helps in this calculation but is presented in the balance sheet between equity and liabilities, whereas an investment in the reserve for invested unrestricted equity also strengthens equity in the balance sheet. A capital loan is also subject to the conditions of Accounting Act, Chapter 5, Section 5c. The alternatives and their conditions are worth reviewing with an adviser before the year end.
Alongside the equity review, prepare a cash flow forecast showing when customer payments come in and when salaries, taxes, purchase invoices and loan repayments fall due. Identify the months in which outgoings fall due before income, and arrange any additional financing in good time.
7. Are the necessary documents available behind the figures?
Gather contracts, balance confirmations, stocktaking material, calculations and decisions so that someone other than the person who prepared them can find them. In the balance sheet specifications, check in particular balances that have remained unchanged from one year to the next: what do they consist of, and why are they still in the balance sheet?
Every entry must be based on a voucher that verifies the business transaction (Accounting Act, Chapter 2, Section 5). The same applies to the notes: a note must be based on a voucher verifying its content, unless the basis is otherwise evident (Chapter 2, Section 5b). For judgemental decisions, such as write-downs of receivables and inventory, it is worth writing a short justification showing what information was available and why the estimate ended up where it did.
Also agree who takes care of the signatures, the general meeting documents and the registration of the financial statements. A limited liability company must file its financial statements with the Finnish Trade Register within eight months of the end of the financial year. In July 2026, the Finnish Patent and Registration Office (PRH) reminded companies that a fee is charged for late filing: 150 euros for a delay of up to 2 months, 300 euros for 2–4 months and 600 euros for more than 4 months or for failure to file. If the financial statements are filed late for two or more consecutive financial years, the fee is doubled (PRH press release 27.7.2026). Most companies file their financial statements together with their tax return. They are forwarded to the Trade Register only if the attachment has been prepared exactly in accordance with the Finnish Tax Administration's instructions, so check the registration from the Trade Register extract sent by PRH or in the Virre service.
Start with the balances you cannot explain
Not everything has to be resolved in a single meeting. Take the latest balance sheet, mark the items whose content or value you cannot explain, and agree with your accountant who will obtain the missing information and by when.
If a question has a significant effect on the result, equity or the notes, raise it with your auditor now. Asking a question in the autumn is easier than explaining a solution in the spring, when the financial statements are already waiting to be signed.
Do you need an auditor or would you like to discuss the preparation of your upcoming financial statements? Get in touch, and we will go through your company's situation.