Il nuovo PGC ed i principi contabili per le PMI in Spagna

Transcription

1 Il nuovo PGC ed i principi contabili per le PMI in Spagna 2 February 2010 Dr. José M. Bové Vice-president, FEE

2 Content About FEE About the New General Accounting Plan 2

3 Federating Member Bodies 43 professional institutes of accountants 32 European countries, including all 27 EU 3

4 Representing the profession Combined membership of more than professional accountants In public practice, small and big firms, government, and education All contributing to a more efficient, transparent, and sustainable European economy Recognising the public interest 4

5 Adding value to members Making representations to the EU Institutions and to international organisations Identifying, analysing and influencing relevant public policy developments Promoting co-operation among Members 5

6 The Regulation 1606/2002: Individual accounts of all companies Consolidated accounts of non-listed groups IFRS OPTIONAL SPANISH DECISION GRADUAL PROCESS OF REFORM 6

7 How it is structured 7

8 Thresholds NPGC NPGC-SMEs Micro Total Balance (euros) Total Turnover (euros) Number of Employees P&L abridged Exemption consolidation. Exemption: - Cash flow statement - Audit. - Management Report 8

9 Key features of the Spanish Accounting Reform Process of convergence with IAS/IFRS EC Regulations : reduction of options and provision of financial statements layouts Do not imply a direct application of IAS/IFRS. Still in force Accounting Plans for specific sectors and other previously published rules. 9

10 Not Direct applicability of IFRS Regarding compulsory application of IAS/IFRS-UE in case of transactions if their accounting treatment is not provided by the principles and accounting rules generally accepted in Spain. Answer: - There is a Convergence vocation; notwithstanding that the PGC can restrict some options in the EC Regulations or apply directly some criteria included in the EC Directives. - The Spanish Standards are of Stand-alone nature, the direct use of IAS/IFRS-UE is not allowed, although the IAS/IFRS can be taken as a compulsory reference in drafting any new accounting rule. - In the absence of a rule or a interpretation in a National Standard regarding a specific transaction, managers should use their professional criteria to define an accounting rule according to the Conceptual Framework included in PGC and to the criteria in the Spanish GAAPs. This also may include relevant accounting practices used in a specific sector. Source: Binding consultation to ICAC nº 1 ICAC publication nº 74/june

11 MEDIUM SIZE ENTITIES 11

12 NPGC - STRUCTURE The NPGC, (Nuevo Plan General de Contabilidad, Royal Decree 1514/2007) has a structure similar to the 1990 and 1973 Spanish Accounting Plans, to facilitate its use. Part I: Accounting Framework. Part II: Recognition and measurement (Accounting Standards) Part III: Annual Accounts (including layouts) Parts IV and V: Chart of accounts and definitions and accounts (voluntary guide) 12

13 NPGC - Accounting Framework Is the set of fundamentals, principles and basic concepts that underlie the preparation of the financial statements. Fundamental principle: True and Fair View Accounting Principles: Going Concern Accrual basis Uniformity Prudence No compensation Materiality 13

14 Recognition and Measurement ELEMENT IFRS PGC PROPERTY PLAN AND EQUIPMENT Exchange transactions Cost or Fair Value Fair Value or book value Cost or Production + Interest +PV removing Fair Value Non Cash contributions Fair Value Fair Value Financial lease Tangible asset or Intangible asset The deferred financial charge is not capitalized Tangible asset or Intangible asset The deferred financial charge is not capitalized Loss of utility Impairment Impairment Same criteria for Investment properties 14

15 Recognition and Measurement ELEMENT IFRS PGC INTANGIBLE ASSETS Cost or Fair Value Cost or Production + Interest +PV removing Preliminary expenses Expenses Expenses Research Expenses Can be capitalized. Amortization 5 years Goodwill Capitalized. Impairment test Capitalized. Impairment test 15

16 Recognition and Measurement ELEMENT IFRS PGC INVENTORIES Method lower of cost and net realizable value FIFO or weighted average cost formula Acquisition or production cost with some adjustments FIFO or weighted average cost formula INCOME TAXES Temporary differences Temporary differences FINANCIAL INSTRUMENTS Changes in Accounting criteria Errors in previous financial years Changes in Accounting Estimates Fair Value Retroactive application Retroactive application Prospective application Notes to the accounts Fair Value Retroactive application Retroactive application Prospective application Notes to the accounts 16

17 Annual Accounts - Layouts SMEs Layout Abridged Normal micro SME Balance Sheet Balance Sheet P&L Balance Sheet P&L Changes in net equity Notes Changes in net equity Notes P&L Changes in net equity Cash Flow statement Notes Assets <1000 <2850 <2850 <11400 All other Turnover <2000 <5700 <5700 <22800 Employees <10 <50 <50 <250 17

18 NPGC for SMEs 18

19 NPGC for SMEs This version of the Standart is to be used by companies under the audit tresholds: Two of the following conditions: - total assets under total turnover under total number of employees under 50 19

20 NPGC for SMEs Royal Decree 1515/2007 which endorses PGC for SMEs and specific accounting criteria for micro entities SCOPE PGC for SMEs: art 2 RD Thresholds: (meeting 2 of the following criteria during two consecutive accounting years) Total Assets under euros. Net turnover under euros. Average number of employees during the financial year under 50. The option should be mantained at least during three consecutive accounting years If the company belongs to a group, the thresholds refer to the combined amounts of all the entities belonging to the group. The amounts to which the thresholds refer are those resulting from the use of the applicable accounting plan in the last accounting year 20

21 Exceptions: NPGC for SMEs never applicable Entities with shares in quoted market, or multilateral trading systems Entities which are part of a Group that must consolidate its annual accounts Entities with functional currency other than EURO Financial Entities that obtain funds/money from others and assume obligations with them, or entities managing these operations 21

22 General Overview It is complementary to the PGC, has the same content except for: Non usual Transactions (for instance: business combinations), which are not included. Simplified criteria, for instance: Financial instruments It should be applied in a comprehensive way Issues not included in the SME-PGC held for sale and discontinued operations) PGC (except for non-current assets 22

23 Not included in the SME-PGC Goodwill Compound financial instruments Hedging accounting Liabilities for retirement benefit plans Share-based payment Business combination Merger, spin-off and non-cash contribution of a business between companies belonging to the same group. PGC 23

24 Structure The same as the PGC: Part I: Accounting Framework Part II: Recognition and measurement (Accounting Standards) Part III: Annual Accounts (including layouts) Parts IV and V: Chart of accounts and definitions and accounts (voluntary guide) 24

25 Accounting Standards Recognition and measurement Property, plant and equipment (tangible assets) Investment property Intangible assets Leases Financial Instruments Income taxes Inventories Revenue Grants, donations and legacies 25

26 Property Plan and equipment Measurement at recognition: cost Costs of dismantling, removing and restoring -> Elements of cost. Financial expense -> Element of Cost. Commercial exchange -> Fair Value. Measurement after recognition: cost model Depreciation -> Residual value and useful life shall be reviewed at least at each financial year-end. Impairment -> Reversable loss that reduces the book value of the asset. 26

27 Investment Property Definition: property held to earn rentals or for capital appreciation or both, rather than for: Use in the production or supply of goods or services or for administrative purposes; or Sale in the ordinary course of business. Measurement at recognition: cost. Measurement after recognition: cost model. 27

28 Intangible Assets Identifiable non-monetary assets without physical presence. Measurement at recognition: cost Measurement after recognition: cost model. Useful life can be finite or indefinite. Research expenditure-> Option of recognising an intangible asset if it fulfils certain requirements. Amortisation :The useful life cannot be longer than 5 years. Development expenditure -> Option of recognising an intangible asset if it fulfils certain requirements. It is presumed (iuris tantum) that the useful life is 5 years. 28

29 Intangible Assets Goodwill is not amortised, but commercial law obliges to build a special reserve (account 1143 Goodwill reserve), debiting to the profit of each year (account 129), a 5% of the goodwill. This mechanism restricts de distribution of profits until the reserve covers the amount of the goodwill shown in the b/s. The procedure operates independently from the impairment test results. The result is the same as if the GW were sistematically amortised in a period of 20 years!. 29

30 Intangible Assets Intellectual Property Transferring rights Other intangible assets Amortisation and any accumulated impairment losses according to General standard for Intangible assets Computer software Amortisation and recognition criteria for developement costs Rights over leased assets Amortisation according to the useful life of the investment or the period agreed on the contract if shorter 30

31 Leases Finance leases and other contracts of similar nature: Registration according to the nature of the underlying asset. In general terms -> tangible assets. Financial statements of lessees: At the begining of the lease term, it will be recognised as asset and liability at amounts equal to the fair value of the leased property. Transaction cost: element of cost (asset) Measurement after recognition for liability: amortised cost 31

32 Financial Instruments 32

33 Simplified criteria in PGC for SMEs: Not considered in SME-PGC available-for-sale financial assets. In PGC- SMEs: 1) debt instruments are classified as financial assets at amortised cost. 2) equity instruments are classified as financial assets at cost. Not considered in SME-PGC: other financial assets/liabilities at fair value through profit or loss. Regarding the transaction costs of financial assets and liabilities at amortised cost, at their inception, entities have the option to register them in profit and loss account as an expense. Hybrid instruments are measured at fair value with changes in fair value recognised in profit or loss without separation. 33

34 FINANCIAL INSTRUMENTS: CATEGORIES 1 Financial assets at amortised cost 2 Financial assets held for trading 3 Financial assets at cost -Trade accounts receivable (customers, debitors) -Non-Trade accounts receivable (selling noncurrent assets),advance payment, bonds and deposits, dividends payable, request payment) X X Bonds receivable and other debt instruments. X X (selling short term) Equity instruments of other entities. Derivatives under potentially favourable conditions. (futures, financial options, swaps, etc.) Investments in subsidiaries, associates or joint ventures. X (selling short term) X X X ACCOUNTING CRITERIA : Amortised cost Fair value through profit or loss Cost 34

35 Financial Instruments FINANCIAL INSTRUMENTS: CATEGORIES 1 Financial liabilities at amortised cost 2 Financial liabilities held for trading Trade accounts payable: suppliers, unsecured creditors. X Loans from financial institutions X Debt instrument and others securities issued: bonds and notes payable. Loans and credit from non-financial institutions (buying assets non-current), bonds and deposits received,. X X Derivatives under potentially unfavourable conditions. (futures, financial options, swaps, etc.) X ACCOUNTING CRITERIA: Amortised cost Fair value through profit or loss 35

36 Income Taxes Balance sheet liability method. Carrying amount versus tax base of an asset or liability. Temporary differences that are not timing differences are limited to grants, donations or legacies received from third parties nonpartners. Current tax versus deferred tax 36

37 Inventories Financial expenses will be an element of cost if the period of production is longer than one year The standard does not permit the use of LIFO formula to measure the cost of inventaries. Preference for the Weighted Average method; FIFO as option Inventories of a service provider: to be valued at the cost of their production. 37

38 Revenue Requirements for recognising revenue from the sale of goods: The entity has transferred to the buyer the significant risks and rewards of ownership of goods; The entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; The amount of revenue can be measured reliably; It is probable that the economic benefits associated with the transaction will flow to the entity; and The costs incurred or to be incurred in respect of the transaction can be measured reliably. 38

39 Revenue Requirements for recognising revenue from rendering of services: Revenue associated with the transaction shall be recognised by reference to the stage of porcentage of completion method when the outcome can be estimated reliably. Requirements: The amount of revenue and costs (incurred and pending) can be measured reliably; It is probable that the economic benefits associated with the transaction will flow to the entity; and The stage of completion of the transaction at the end of the reporting period can be measured reliably. If it does not fulfil the requirements revenue will be recognised only to the extent of the expenses recognised that are recoverable. 39

40 Grants, donations They will be registered initially as equity. Depending of the purpose, they will be recognised in profit or loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which they are intended to compensate. 40

41 Annual Accounts Balance Sheet Profit and Loss account Statement of changes in equity. A unique document contains all changes in equity. Notes of the accounts (minimum information). There are models with a defined format, with concret names and compulsory application. Statement of cash flows is voluntary application, but in case of formulating according to PGC 41

42 MICRO-ENTITIES 42

43 Micro-entities Scope Companies that have opted to apply PGC for SMEs and must have had during two consecutive accounting years, on its balance sheet date of each one, at least two of the three conditions: Assets total not over euros. Net turnover not over euros. Average number of employees during the financial year not over

44 Micro-entities In case of belonging to a group: combined calculation from the group entities. If one company decides to use the accounting criteria for micros, has to maintain them during three years, unless thresholds conditions change. 44

45 Micro-entities Finance lease: accounting treatment similar to operating lease. Payment = expense + notes Income taxes: only current tax. Payment =expense + notes 45

46 conclusions The Spanish accounting reform presents three levels of simplification: medium, small and micro. Auditors are confronted with the NPGC version,- medium size companies. More simplification for micro-entities Annual accounts are more complex to prepare, since more disclosures are required. Financial instruments note is too long Good experience for SMP s WE ARE ALL LEARNING!! 46

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