On the 2nd of December, the President of the Institute of Accounting and Auditing (ICAC, in its Spanish acronym), Mr. Enrique Rubio gave the Conference “The Reform of the General Accounting Plan”. An issue that in the last days of the year worries and occupies those of us who dedicate ourselves to this profession, given the importance of the reform project of our current General Accounting Plan, and its impact on the vast majority of companies in the country. In this regard, at the beginning of October 2018, the Institute of Accounting and Auditing (ICAC) published the draft of the Royal Decree amending the General Accounting Plan (PGC, in its Spanish acronym) which, despite not having a definitive approval date, is expected to be binding on those Spanish companies that submit annual accounts, the financial year of which begins on the 1st of January 2020.

The main objective of this reform is to adapt and not adopt Spanish Accounting Standards to the relevant differences introduced by the Financial Reporting Standards issued by the IASB, and adopted by the European Union in 2018; that is, IFRS 9 on Financial Instruments and IFRS 15 on Revenue from Contracts with Customers, as well as IFRS 16 on Leases, which was adopted in 2019.

This draft amendment arose from a strategy of convergence between Spanish mandatory standards, Spanish GAAP and Financial Reporting Standards. Governed by the principle, as stated above, of adapting and not adopting IFRS to Spanish regulations, given that the Spanish PGC is maintained in Spain. However, the changes that this reform is presumably going to introduce into Spanish regulation, as well as the differences that will be generated between international and Spanish regulations – due to their total non-adoption – will give rise to additional complexity. In this sense, it is important to highlight the enormous weight that these new regulations have for the financial sector, and especially, the great complexity of their adoption in the Spanish corporate panorama (most of SMEs).

Not unrelated to this difficulty, the draft reform of the General Accounting Plan addresses the situation and, in this sense, it seems to have adopted in its entirety IFRS 15 and partially IFRS 9. At the same time, concepts such as expected loss and hedge accounting are not explicitly included in the draft, in an attempt to simplify the regulations to be applied in Spain, nor is FRS 16 (leasing regulations) adopted due to its complexity.

The fact of partially adopting IFRS 9 and not including IFRS 16 will undoubtedly increase the differences between the two standards over the next few years, mainly with regard to the IFRS reports made from Spain to international groups and in the financial statements to be presented in Spain and which must comply with the regulations in force in our country.

Likewise, there is going to be a difference between the applicable regulations in the Spanish groups that consolidate under the Spanish consolidation regulations, the NOFCAC, and the reports received from their international subsidiaries, especially the Latin American subsidiaries that have adopted IFRS locally.

From Auxadi, we are at your disposal to help you in this analysis.

Do you need more information?

Contact us!

Daniel Martín
Multi-Country Senior Manager

Augusto Berutich
Director. Global Tax

All information contained in this publication is up to date on 2019. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.