Accounting News Deloitte Czech Republic. February 2018

Transcription

1 Accounting News Deloitte Czech February 2018

2 Amendment to Regulation No. 500/2002 Coll., for Businesses, from 1 January New Publications by Deloitte Czech EU Endorsement Process Deloitte s Plus year in review On 15 December 2017, an amendment to the implementing regulation to the Accounting Act for businesses maintaining double entry accounting records was published in the Collection of Laws under number 441/2017 Coll. The reasons for the amendment to Regulation No. 500/2002 Coll., for businesses maintaining double entry accounting records, included particularly the transposition of certain optional provisions of the EU Accounting Directive, the amendment to Regulation No. 501/2002 Coll., for banks and other financial institutions, as well as changes in other legal regulations or specifications of existing provisions. The main changes brought by the amendment to the Regulation include: 1. Change in the balance sheet item B. Fixed assets Last year s amendment to the Accounting Act regarding the presentation in the financial statements added the option of dividing assets into current and non current, which allowed for a unified classification of assets in the reporting entity s financial statements in line with EU regulations. The amendment to the Regulation reacts to the amendment to the Accounting Act by changing the current balance sheet item from B. Dlouhodobý majetek (Fixed assets) to B. Stálá aktiva (Non current assets). 2. Cancellation of the possibility to capitalise research costs Intangible results of research will not be reported as part of intangible fixed assets, since they do not meet the criteria for being recognised as intangible fixed assets. In line with transitional guidance, this provision does not concern intangible results of research that were reported before the amendment to the Regulation entered into force, i.e. before 1 January A reporting entity that reported intangible results of research and development under item B.I.1. Research and development will continue to depreciate these assets and report them under item B.I.4. Other intangible fixed assets until their disposal. Therefore, only costs of development can now be reported as part of intangible fixed assets. A relevant reminder in this respect is that Section 28 (7), which has been included in the Accounting Act since 1 January 2016,

3 3 New Publications by Deloitte Czech EU Endorsement Process Deloitte s Plus year in review limits the payments of shares in profit if the costs of development are reported as part of assets in the balance sheet. 3. Specification of amortisation of goodwill and intangible results of development The provisions concerning the amortisation of goodwill and intangible results of development were moved to Section 56 and made more precise: If the useful life of goodwill and intangible results of development cannot be estimated, the reporting entity decides on the period of amortisation of goodwill or negative goodwill and intangible results of development, which must not be shorter than 60 months and longer than 120 months; the reporting entity shall explain the selected period by way of disclosure in the notes to its financial statements. 4. Expansion of the possibilities for presenting accruals and deferrals in the balance sheet Reporting entities now have the option to choose if they wish to present accrued and deferred expenses and income in the balance sheet in separate section D (as it was the case until now), or as part of receivables or payables (under item C.II.3. Deferred expenses and accrued income and C.II.3. Accrued expenses and deferred income ). The reporting entity shall select the presentation treatment no later than at the balance sheet date. The combination of both presentation methods is not possible and the same method must be used for both assets and liabilities. 5. New item A.IV.1. Retained earnings or accumulated loss brought forward In order to simplify the reporting of retained profit or loss of prior years, the amendment cancels the two separate items A.IV.1. Retained earnings brought forward and A.IV.2. Accumulated loss brought forward and combines them into a new item, which will contain the transferred retained earnings brought forward and the transferred accumulated loss brought forward. 6. Addition of information about item amounts for the previous reporting period in the cash flow statement Until now, comparability of the individual items between two reporting periods was required for the balance sheet, profit and loss account and statement of changes in equity. Starting from the reporting period

4 4 New Publications by Deloitte Czech EU Endorsement Process Deloitte s Plus year in review beginning in 2016, the statement of changes in equity and the cash flow statement are a new obligatory part of the financial statements of large and medium sized reporting entities and should therefore be prepared using the same methodology, i.e. including the previous reporting period. The amendment to the Regulation confirms that the information about item amounts for the previous reporting period should be included in the cash flow statement as well. 7. Presentation, measurement and disclosure of financial instruments A new paragraph 10 was added to Section 3, dealing with the area of derivatives by reference to the current wording of the Regulation for Banks, and the current provisions of Sections 52 and 53 (Valuation gains or losses on the application of fair value of hedging derivatives and derivatives for trading) were removed for redundancy. The purpose of the amendment in this area was to fix the legal status for presentation, measurement and disclosure of financial instruments and related transactions in line with Regulation No. 501/2002 Coll., for Banks, as amended as of 31 December 2017, because the amendment to the Regulation for Banks as of 1 January 2018 eliminates the previous provisions and refers to 9 Financial Instruments for the presentation of financial instruments, their measurement and disclosure. Maintaining the current approach for business reporting entities will mean a significant simplification since they will not have to transition to 9 in the area of derivatives accounting. 8. New method of valuation of assets at fair value in the event of category change of the reporting entity A new accounting method was added to Section 61c, addressing the valuation of assets at fair value if the category of the reporting entity changes to or from micro reporting entity, since the Accounting Act does not allow micro reporting entities (except the ones listed in the Act) to value assets at fair value. Changes in fair values of assets reported under item A.II Gains or losses from the revaluation of assets and liabilities will be reported under item A.IV.3. Other profit or loss.

5 5 New Publications by Deloitte Czech EU Endorsement Process 9. New provision on the transformation of a reporting entity which is not a business corporation Following the amendment to the Accounting Act valid from 1 January 2017, a new Section 54c was added to the Regulation, addressing the transformation of a reporting entity which is not a business corporation it will follow the same provisions of the Regulation as business corporations. The amendment to the Regulation also fine tunes certain other provisions in a legislative and technical respect, which will not lead to any changes in practice. The amendment to the Regulation came into force on 1 January 2018 and it will apply for reporting periods beginning on or after 1 January The full text of Regulation No. 500/2002 Coll. can be found here. Deloitte s Plus year in review

6 Amendment to the Czech Accounting 6 New Publications by Deloitte Czech EU Endorsement Process Deloitte s Plus year in review On 22 December 2017, the Financial Newsletter (Finanční zpravodaj) published changes to Czech Accounting Standards for reporting entities maintaining accounting records under Regulation No. 500/2002 Coll., effective from 1 January Most of the changes are related to the changes in Regulation No. 500/2002 Coll. (see the article above). Changes have been made to the following standards: CAS 002 Opening and closing accounting books CAS 008 Operations with securities and equity investments CAS 009 Derivatives CAS 013 Tangible and intangible fixed assets CAS 017 Settlement relations CAS 018 Capital accounts and long term payables The full text of the changes in Czech Accounting can be found here.

7 Closing Out New Publications by Deloitte Czech EU Endorsement Process Deloitte s Plus year in review This article provides a high level overview of the new and revised Standards and Interpretations that are effective for December 2017 calendar year ends and subsequent accounting periods. Entities are, however, generally permitted to adopt the new and revised Standards and Interpretations in advance of their effective dates (refer to individual Standards and Interpretations for additional details). This article provides a summary of s and interpretations that an entity may elect to apply for the year ended 31 December A word of caution regarding early adoption of Standards and Interpretations in the case of entities that prepare financial statements according to as adopted by the European Union (EU). Standards, Interpretations and amendments to the existing standards, which were not endorsed for use in the EU, cannot be applied by the entities preparing their financial statements in accordance with as adopted by the EU. Where applicable, we have made reference to past issues of Accounting News dealing with the specific Standard or Interpretation in greater detail. These past newsletters are also available at As always, entities should refer to the Standards and Interpretations themselves to identify all of the changes that may affect their particular circumstances. Where a Standard or Interpretation is adopted in advance of its effective date, disclosure of that fact is generally required. Even where there is no intention to implement a Standard or Interpretation in advance of its effective date, entities need to be aware of new Standards and Interpretations as they are issued, in order to comply with the requirement included in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to disclose in their financial statements the potential impact of Standards and Interpretations in issue but not yet effective. This requirement is valid irrespective of whether a Standard or Interpretation have already been endorsed in the EU. We therefore recommend reviewing further newly issued amendments to standards and interpretations that will be approved by the date of the issuance of a company s financial statements. We will be providing updates on these developments on and in our Accounting News. The effective dates of s issued by the IASB and s as adopted by the EU can be different.

8 8 New Publications by Deloitte Czech EU Endorsement Process New and Revised Standards and Interpretations The following tables provide a list of new and revised Standards and Interpretations in issue as of 20 January 2018 that are either effective, or available for early adoption, for 31 December 2017 calendar year ends. All of the newsletters referred to may be found here. Effective for the 31 December 2017 year ends Deloitte s Plus year in review Amendments to Standards IAS 7 IAS Amendments to IAS 7 Disclosure Initiative Amendments to IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses Amendments to 12 (included in the Annual Improvements to s Cycle) Effective for annual periods beginning on or after Effective in the EU for annual periods beginning on or after Accounting news 1 January January 2017 March January January 2017 February January 2017 Not endorsed for use in December 2016

9 9 New Publications by Deloitte Czech EU Endorsement Process Deloitte s Plus year in review Available for early adoption for the 31 December 2017 year ends New Standards Effective for annual periods beginning on or after Effective in the EU for annual periods beginning on or after Accounting news 9 Financial Instruments 1 January January 2018 December 2009 November 2010 September 2012 January 2014 September 2014 January Revenue from Contracts with Customers 1 January January 2018 July 2014 May 2016 December 2016 May 2017 September Leases 1 January January 2019 February 2016 March 2016 April 2016 July 2016 December Insurance contracts 1 January 2021 Not endorsed for use in July 2017

10 10 New Publications by Deloitte Czech EU Endorsement Process Deloitte s Plus year in review Amendments to Standards a IAS 28 IAS 28 IAS 40 Různé Různé Amendments to 2 Classification and Measurement of Share -based Payment Transactions Amendments to 4 Applying 9 Financial Instruments with 4 Insurance Contracts Amendments to 9 Prepayment Features with Negative Compensation Amendments to 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures Amendments to IAS 40 Transfers of Investment Property Annual Improvements to s Cycle Annual Improvements to s Cycle Effective for annual periods beginning on or after Effective in the EU for annual periods beginning on or after 1 January 2018 Not endorsed for use in Accounting news September January January 2018 October January 2019 Not endorsed for use in The effective date was removed temporarily by the IASB Not endorsed for use in 1 January 2019 Not endorsed for use in 1 January 2018 Not endorsed for use in 1. ledna 2017/2018 Not endorsed for use in 1. ledna 2019 Dosud neschváleno k použití v EU November 2017 October 2014 November 2017 December 2016 December 2016 February 2018

11 11 New Publications by Deloitte Czech EU Endorsement Process Interpretation IFRIC 22 Foreign Currency Transactions and Advance Consideration Effective for annual periods beginning on or after Effective in the EU for annual periods beginning on or after 1 January 2018 Not endorsed for use in IFRIC 23 Uncertainty over Income Tax Treatments 1 January 2019 Not endorsed for use in Accounting news January 2017 July 2017 Deloitte s Plus year in review

12 The IASB concludes the New Publications by Deloitte Czech EU Endorsement Process On 12 December 2017, the IASB issued the Annual Improvements to Standards Cycle. The pronouncement contains amendments to four International Financial Reporting Standards (s) as result of the IASB s annual improvements project. 3 Business Combinations and 11 Joint Arrangements Subject of amendment The amendments to 3 clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amend ments to 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business. The Annual Improvements to Standards Cycle include amendments to three s, which have been summarised below. IAS 12 Income Taxes The amendments clarify that all income tax consequences of dividends (i.e. distribution of profits) should be recognised in profit or loss, regardless of how the tax arises. Deloitte s Plus year in review IAS 23 Borrowing Costs The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings. The amendments are all effective for annual periods beginning on or after 1 January 2019.

13 New Publications by Deloitte Czech 13 New Publications by Deloitte Czech EU Endorsement Process Deloitte s Plus year in review Model Financial Statements under as adopted by the EU for the year ended 31 December 2017 in Czech and English The version of the model consolidated financial statements under s as adopted by the EU prepared by the Prague office of Deloitte is available on in both the Czech and English languages. This version should be used by the entities that prepare financial statements in compliance with s as adopted by the EU for the year ended 31 December The main difference between s issued by the IASB and s as adopted by the EU as of 31 December 2017 is in the effective date of some amendments to s. The model financial statements are intended to illustrate the presentation and disclosure requirements of s as adopted by the EU. They also contain additional disclosures that are considered to be best practice, particularly where such disclosures are included in illustrative examples provided with a specific Standard. The publication includes: Section 1 Overview of new and revised s issued as of 15 January 2018: An overview of new and revised s adopted by the EU that are mandatorily effective for the year ended 31 December An overview of new and revised s adopted by the EU that are not yet mandatorily effective but allow early application for the year ended 31 December An overview of new and revised s issued by the IASB but not yet adopted by the EU. Section 2 Model financial statements of International GAAP Holdings Limited for the year ended 31 December 2017 under s as adopted by the EU. The version of model consolidated financial statements under as issued by the IASB for the year ended 31 December 2017 is available on The following versions are available there: model financial statements 2017 (without early adoption of any standard); model financial statements 2017 (with early application of 15 Revenue from Contracts with Customers);

14 14 New Publications by Deloitte Czech EU Endorsement Process Deloitte s Plus year in review International GAAP Bank Limited Illustrative disclosures under 7 as amended by 9 Financial Instruments. compliance, presentation and disclosure checklist 2017 In October 2017, Deloitte s Global Office released the compliance, presentation and disclosure checklist for This checklist is developed to assist the users in determining whether they complied with: The recognition, and measurement requirements; and Presentation and disclosure requirements set out in the s in issue as of 30 April The items in this questionnaire are referenced to the applicable sections of the s. The checklist is in Excel, formatted to allow the recording of a review of financial statements, with a place to indicate yes/no/irrelevant for each recognition, measurement, presentation and disclosure item. You can download the Compliance, Presentation and Disclosure checklist 2017 for free.

15 EU Endorsement Process 15 New Publications by Deloitte Czech EU Endorsement Process Deloitte s Plus year in review The European Financial Reporting Advisory Group (EFRAG) updated its report showing the status of endorsement of each, including standards, interpretations, and amendments, most recently on 17 January As of 20 January 2018, the following IASB pronouncements are awaiting European Commission endorsement for use in the EU: Standards 14 Regulatory Deferral Accounts (issued in January 2014) - the European Commission has decided not to launch the endorsement process of this interim standard and to wait for the final standard 17 Insurance contracts (issued in May 2017) Amendments Amendments to 2 Classification and Measurement of Share-based Payment Transactions (issued in June 2016) Amendments to 9 Prepayment Features with Negative Compensation (issued in October 2017) Amendments to 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (issued in September 2014) Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures (issued in October 2017) Amendments to IAS 40 Transfers of Investment Property (issued in December 2016) Annual Improvements to Standards Cycle (issued in December 2016) Interpretation IFRIC 22 Foreign Currency Transactions and Advance Consideration (issued in December 2016) IFRIC 23 Uncertainty over Income Tax Treatments (issued in June 2017) Click here for the Endorsement Status Report. Annual Improvements to Standards Cycle (issued in December 2017)

16 Invitation to Spring Seminar 16 New Publications by Deloitte Czech EU Endorsement Process Deloitte s Plus year in review 16 New Standard on Leases We would like to invite you to Deloitte s spring seminar on International Financial Reporting Standards, this time dedicated to new 16 Leases. 16 replaces IAS 17 Leases and the related interpretations and will be effective for the reporting periods starting on 1 January The standard was endorsed for use in the EU in November In the seminar, we will inform you about the key issues of this long-awaited standard, which predominantly introduces major changes in terms of lessees as operating leases will newly be recognised in the balance sheet. The application of the requirements arising from the standard will be illustrated in a number of practical examples. We will also provide answers to your inquiries in the seminar. The seminar is predominantly intended for accountants, economists and financial managers of projects relating to and for all who want to know more about. The seminar will be held in Prague in the Czech language and will be delivered by our professionals. Date Prague: 16 May 2018 More information is available at:

17 Deloitte s Plus year in review 17 New Publications by Deloitte Czech EU Endorsement Process We trust that many of our readers have already discovered the secrets of Deloitte s publications issued on us and refer to them when searching for answers on reporting and presentation questions. During 2017 a number of extensive publications on hot topics in the accounting world were issued and made available to the readers. You may access the list and summary of the most frequently read articles and publications through the following link: us/news/2018/01/2017-in review and we hope you will find it useful. We are not surprised that topics such as new revenue recognition standard, changes to leasing and goodwill impairment are on this top of the list. We believe you will have a great year 2018 and Deloitte s news and publications will remain on your radar. Deloitte s Plus year in review

18 Contact Should you have any questions regarding the matters outlined in this publication, please reach out to your contact person from Deloitte s Audit function, Deloitte s technical desk at CZ_TechnicalDesk@deloittece.com or one of the following specialists: New Publications by Deloitte Czech EU Endorsement Process Czech Accounting Jarmila Rázková jrazkova@deloittece.com and Martin Tesař mtesar@deloittece.com Soňa Plachá splacha@deloittece.com Deloitte Advisory, s. r. o. Nile House, Karolinská 654/2, Praha 8 - Karlín, Czech Tel.: Gabriela Jindřišková gjindriskova@deloittece.com Deloitte s Plus year in review Subscribe to dreport and other newsletters and invitations here en

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