The 2013 Accounting Directive. An Austrian Perspective

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1 The 2013 Accounting Directive An Austrian Perspective

History of Austrian Accounting and Reporting Regulations 1897: Handelsgesetzbuch (Austrian Commercial Code) 1938: Reform of Austrian Commercial Code 1965: Introduction of Stock Corporation Act Before

2 History of Austrian Accounting and Reporting Regulations 1897: Handelsgesetzbuch (Austrian Commercial Code) 1938: Reform of Austrian Commercial Code 1965: Introduction of Stock Corporation Act Before 1990: Austrian Commercial Code Act on Companies with Limited Liabilities Stock Corporation Act Other laws: o Austrian Individual and Corporate Income Tax Act o Value Added Tax Act o Austrian Stock Exchange Act o Austrian Capital Marked Act 2

3 1990: Financial Reporting Reform Act (Rechnungslegungsgesetz RLG) Financial statements give a true and fair view General principles (consistency, going-concern, separate valuation, prudence, completeness, accrual basis, materiality, historical cost principle) Presentation of balance sheet and profit and loss account, introduction of notes Consolidation regulation Provisions binding on all undertakings 3

4 1996: EU Company Law Reform Act Detailed description of provisions Deferred taxes Only deferred tax liabilities are mandatory Presentation of balance sheet and profit and loss account Some changes in reserves Notes (maturity of liabilities, details of revenues) Three categories of undertakings Publication requirements for corporations 4

5 Definition section PIEs Fair value General provisions CHANGES BASED DIRECTIVE 2013/34 EU of 26 June 2013 Overriding principles is possible (MS may define the exceptional cases in questions and lay down the relevant special rules) Substance over form (Option) Materiality For presentation and disclosures only (not recognition and measurement) although one term only for immaterial Principle of reliable estimate Recital 22: o o o o o Estimates should be based on prudent judgement of the management of the undertaking Objective basis Experience of similar transactions Even reports from independent experts Events after balance-sheet date 5

6 Provisions no change for provisions which cover liabilities Although change in measurement o Use of best estimate o Fulfilment amount, which implies discounting and consideration of cost increases o Interest rate (balance sheet or/and average) Provisions to cover expenses o Only two cases Omitted maintenance and repair (three months after balance sheet date) Removal of overburden Harmonisation with tax rules 6

7 Provisions for pensions and severance payments No changes in recognition rules Measurement actuarial calculation interest rate Deferred taxes Liability approach and temporary concept mandatory recognition of deferred tax assets and liabilities from temporary differences option for deferred tax assets based on tax loss carry forwards Production costs Mandatory inclusion of reasonable proportion of fixed and variable overhead costs Construction contracts No percentage of completion method for measurement Amount repayable of any debt is greater than amount received -> difference is shown as asset 7

8 Goodwill amortization Useful life or max 10 years Value adjustments have always be to continued, even when reasons have ceased Financial assets Valued at the lower figure to be attributed to them at the balance sheet date Value adjustments may not continue if the reasons have ceased Untaxed reserves will be eliminated (special value adjustments based on tax rules) Own shares Shown in equity section 8

9 Assets -> no changes Capital, reserves and liabilities Separate line for profit or loss brought forward Own shares No untaxed reserves Amounts becoming due and payable within one year and amounts becoming due and payable after more than one year will be shown separately for each item in creditors section Profit and loss account Presentation of Balance Sheet No extraordinary income or loss 9

10 Other Regulations Full harmonisations of rules for small undertakings Categories of undertakings and groups All limits will be applied; MS for exceeding thresholds will not be applied Holding exemption (Art 3[12]) Thresholds will be calculated on consolidated basis No exemptions for micro-undertakings Notes and management report All Articles regarding notes will be applied accordingly Report on payment to governments (country to country reporting) All Articles will be applied accordingly 10

11 Consolidated Financial Statements Requirement for consolidation Only based on managed on a unified basis, no more shareholdings required Changes in rules for exemptions from consolidation o Especially with respect to parent undertakings outside to EU (Art 22.8) o Book value method for capital consolidation will be ceased 11

12 General requirement (Art 34) Statutory auditor shall also Auditing a) Express an opinion on: i. whether the management report is consistent with the financial statements for the same financial year, and ii. whether the management report has been prepared in accordance with the applicable legal requirements; b) state whether, in the light of the knowledge and understanding of the undertaking and its environment obtained in the course of audit, he, she or it has identified material misstatements in the management report, and shall give an indication of the nature of any such misstatements Audit reporting (Art 28) Signing of the audit report Signature of the statutory auditor 12

13 Thank you very much Contact: Gerhard Prachner PwC Wirtschaftsprüfung GmbH Erdbergstraße Vienna, Austria 13

Introduction to the New EU Accounting Directive

Standing for trust and integrity Introduction to the New EU Accounting Directive FEE federates professional institutes across Europe 2 45 professional institutes of accountants and auditors 33 European