Although for businesses with a standard fiscal year the annual closing period runs in Hungary from January to the end of May, accountants prepare for this task throughout the year. To make the process as smooth as possible, it is advisable to complete certain year-end tasks during an interim closing toward the end of the year.
Why is interim closing important?
An interim closing is necessary if:
- the company is required to prepare interim financial statements (we will cover this case in detail in an upcoming article), or
- an interim audit is to be performed.
However, it is worth considering even when not mandatory, simply to make the annual closing easier. An interim closing not only supports year-end closig but also improves financial planning and management decision-making.
Interim closing: Key tasks and benefits
By performing an interim closing, accountants can bring forward many tasks that are otherwise only required – and common – as part of the annual closing. This gives the company a timely and clearer picture for making business decisions affecting the next year. Below are the main tasks to review.
Reconciliation of general accounting and legal principles
It is worth considering the need to update accounting policies during the year, especially in the event of new activities or regulatory changes.
It is essential to review thresholds that may affect the format of financial statements or the need for new obligations. What needs to be reviewed:
- Audit obligation: If the company has recently become subject to statutory audit and this was not verified after the previous closing, an interim closing helps identify this. This allows the company’s management to prepare for the year-end audit and select the independent auditor with whom it wishes to work in a timely manner.
- Format of financial statements: If the company previously prepared simplified financial statements but is now required to prepare full annual statements, it is better to be aware of this during the year.
- Tax obligations exceeding specified limits: A company becomes liable to declare certain tax obligations if it exceeds certain business size or other indicators, so it is also crucial to examine these at the latest during the interim closing.
Reviewing contracts and agreements related to new business activities allows for prior consultation on appropriate accounting treatment – especially important if the new activity requires special accounting practices.
Balance sheet reconciliation
As part of the interim closing, it is advisable to review the general ledger, identify incorrect entries, and reconcile transactions that differ significantly from previous years.
Capitalization and classification of tangible assets, setting useful life, accounting for advances on investments, and documenting disposals and sales (e.g., disposal reports, invoices) are also areas that are handled by the accountant during the year, but it may be crucial to review their completeness as part of the interim closing.
Particular attention must be paid to checking employee advances, customer and supplier balances, advances, and invoice completeness and accuracy. Special attention should be paid to checking the existence and accuracy of invoices issued in the online invoice system of the Hungarian tax authority, as validation requirements have tightened significantly since September 2025. With regard to invoices, it is particularly important to review the VAT rules applied and to identify special items, such as project-based services.
Among the company’s transactions, it is essential to reconcile new credit and loan agreements and related interest, and to verify new related-party transactions with transfer pricing experts, including the report of IC (intercompany) partners.
It is advisable to compare equity and reserves with company registry and resolutions. If there have been any changes, these must be followed up in the accounts on the basis of the relevant documents, as must the balance of the development reserve and any changes thereto. It is also worth examining the need to accrue provisions. If a prior-year provision is no longer justified, its release at year-end should be discussed.
Income statement reconciliation
Companies need up-to-date profit&loss figures in their accounting, aligned with payroll and tax accounts. During interim closing, the following tasks help ensure accuracy and speed up and make the year-end closing more efficient:
- Payroll and accounting alignment: Verify that payroll data matches the general ledger and track any adjustments.
- Tax account review: Regular checking of the tax account, control of VAT reconciliation, and monitoring of quarterly tax payments are essential to ensure that all tax obligations are declared and paid on time and that the general ledger balances match the tax account.
- Accruals management: Review prior-year accrual releases and identify current-year items affecting multiple periods contributes to the preparation of an accurate income statement.
- Monitoring expenses: Ensure monthly and quarterly expenses are properly recorded and identify missing invoices for complete cost accounting.
Benefits of interim general ledger review
An interim closing and general ledger review not only make the accountant’s job easier but also provide significant benefits for the company. It enables faster response to financial changes, greater transparency for management and owners, and give a true picture of the company’s financial, asset and income position during the year. This significantly reduces year-end risks, making interim closing the key to a smooth and efficient annual closing.
For more than 25 years, the accounting experts of WTS Klient Hungary have supported clients in making the most optimal business decisions. Contact us if you need a thorough, experienced accounting team that not only performs mandatory tasks but also offers solutions to help achieve your business goals – such as an interim closing. Our accounting professionals are ready to assist you!
This article provides general information and does not constitute advice.
