The accounting of Hungarian subsidiaries belonging to international corporate groups is more complex than that of a purely Hungarian company, as they must comply not only with Hungarian regulations but also with group expectations and international accounting standards.
What does the dual compliance requirement mean in accounting?
In addition to complying with Hungarian accounting and tax regulations, subsidiaries must also prepare reports for the parent company. This includes meeting consolidation requirements and providing data in accordance with international accounting standards (e.g. IFRS). As a result, the accounting records must be understandable not only to the Hungarian authorities and the Court of Registration, but also to the parent company’s finance, controlling, and audit teams.
Meeting deadlines is also much more challenging in these cases: owners often expect shorter closing and reporting deadlines than those required by law. They also frequently request monthly or even weekly reports. Therefore, it is important to take these requirements into account when designing the accounting processes.
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The accounting logic and the structure of the reports may also differ.
The timing of the recognition of revenues and expenses, the valuation and depreciation of assets, the treatment of provisions and impairments, and even the accounting for leases and long-term contracts may differ. Accountants working for international corporate groups therefore do much more than simply process data; they actually interpret it.
Transactions between group entities require special attention.
For transactions within the corporate group, it is important that they are documented by contract, that the economic substance is adequately substantiated, and that the transfer pricing rules are taken into account.
Audits are required more frequently
For international corporate groups, an annual statutory audit, internal audit, and group-level audit are often required. This involves more coordination and a greater documentation burden. The accounting records must be easy to review and explain. This requires an accounting background with experience in international accounting and large companies, which not only records the data but also understands the context.
Accounting Specialties of Hungarian Subsidiaries Owned by Foreign Businesses and Corporate Groups
