A company in Lithuania has to provide reports to Tax Inspectorate, Social Security Fund, Department of Statistics, Center of Registers, Customs Department and migration offices. It may be difficult for a foreigner to manage accounting and bookkeeping – he needs to know Lithuanian language, legislation of Lithuania and to understand accounting and bookkeeping requirements. Non-compliance with the annual report requirements or failure to pay taxes will result in troubles with authorities. Each Lithuanian company must have a bookkeeper who will help to prepare the needed reports and submit them to state authorities as well as provide advice on what taxes one must pay.

Accounting reforms in Lithuania
Lithuania has been one of the front runners in kick-starting transition to the International Public Sector Accounting Standards (IPSAS), with consolidated financial reports on state and municipal levels. Transition to this system has been a challenge and required preparation.

Not only the reforms encompassed a change of accounting principles but also aimed to increase the effectiveness of accounting function itself. Policy makers at central and municipal levels began working on reforms five years before. Preparatory phase included pilot programs by several public sector organizations, as well as development of regulations, detailed accounting manuals and instructions for transition. Extensive training for public sector accountants and completion of standardized IT solutions took place. Implementation of a centralized IT solution for national financial statements for more than 4 000 public organizations was a different deal.

Public reception
These changes ere not a painless transformation process. They demanded changes in the qualifications of all public sector accountants and initially were treated with a high level of resistance. Strong political support and firm leadership from the Ministry of Finance were crucial in ensuring their successful implementation. There was still a one year delay from the original launch date. That was due to a lack of preparation by public sector organizations.

Current state and results
The system is firmly in place and there has already been two cycles of financial statements based on the IPSAS. To safeguard reforms, the Ministry of Finance is now focusing on amending standards and other regulations. This is deploying support to a call centre set up to deal with IPSAS enquiries and delivering on site training to improve the quality of financial data.

Future prospects
Implementing reforms has been one step in transformation of public financial system. To maximize potential advantages of this system country needs to have a consistent vision on public finance reform as a whole. Lithuania, having implemented the IPSAS, has strengthened qualification of public sector accountants and IT systems used for its government accounting. Process is ongoing and the country still faces many challenges; the successful implementation of IPSAS has given a crucial head start toward achieving public finance excellence.

Annual report
The annual report typically includes the following:

Management report
Balance sheet
Income statement
Cash flow statement
Statement of changes in equity
Notes to the annual accounts