In line with the European Commission's (EC) Regulation No. 1606/2002, listed companies in Belgium are required to use International Financial Reporting Standards (IFRSs) as endorsed by the European Union for preparation of consolidated accounts. As far as the options available for member states to permit or require international standards in other types of accounts for different types of companies are concerned, the 2008 EC report on the implementation of Regulation No. 1606/2002 asserts that Belgium requires IFRSs in the annual accounts of listed real estate investment companies and will consider permitting IFRSs in the annual accounts for other companies (listed and unlisted), once the tax and legal aspects of this decision are evaluated. Further, the use of IFRSs is permitted in the consolidated accounts of all other companies and is required in the consolidated accounts of credit institutions and investment firms. Companies that are not required to use IFRSs or choose not to use them follow the Belgian Generally Accepted Accounting Principles, which, according to a number of publications on the subject, differ from their international equivalents. However, as noted in the 2007 European Committee of Central Balance Sheet Data Offices, in December 2003 the Accounting Standards Committee (ASC) published the "Policy plan concerning the application of the IFRS Regulation and the convergence of the Belgian accounting law towards IFRS" with the objective of "adjusting" the Belgian accounting framework to IFRSs. As of June 2008, there is insufficient information publicly available as to the progress made in eliminating differences between the Belgian and international requirements.

General Overview

A 2005 self-assessment report prepared by the Institute of Public Accountants and Tax Consultants (IEC) and submitted to the International Federation of Accountants (IFAC) describes the regulatory and standard-setting framework for financial reporting in Belgium. Requirements for the preparation of fincial statement of listed companies are contained in the Royal Decree of December 4, 2003, and Articles 97-106 of the Company Code of 2001, which are supplemented by the Euronext Rule Book. Belgian private companies prepare financial statements pursuant to Articles 97-106 of the Company Code of 2001 and the Law on Accounting and the Annual Accounts of Companies of 1975. Foreign private companies follow Article 107 of the Company Code of 2001, supplemented by the Royal Decree of January 30, 2001. The Accounting Standard Commission (ASC), which is supervised by the Ministry of Economic Affairs, issues the Belgian accounting standards and provides technical advice to the authorities responsible for establishing the accounting regulation. A number of publications on the Belgian Generally Accepted Accounting Principles point out to the differences between the Belgian framework and the International Fincial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB). According to the European Committee of Central Balance Sheet Data Offices' 2007 report, "the main differences between Belgian legislation and IFRS are chiefly based on the prudence principle and on the existence of a tax burden that heavily influences Belgian rules, since Belgian financial statements are the main basis for corporate tax returns" (p. 12). A 2006 PricewaterhouseCoopers (PWC) publication titled "Similarities and Differences: A Comparison of IFRS, U.S. GAAP and Belgian GAAP," examines the differences in detail.

However, as noted by the European Committee of Central Balance Sheet Data Offices, in December 2003 the ASC published the "Policy Plan Concerning the Application of the IFRS Regulation and the Convergence of the Belgian Accounting Law towards IFRS," with the objective to initiate "a practical adjustment of the current Belgian accounting framework to the IFRS standards" (p. 12). This has prompted the establishment of three working groups with a focus on the following issues: tax law, company law, and small and medium-size enterprises. As of June 2008, there is no information publicly available as to the progress made in eliminating differences between Belgian and international requirements.

Nevertheless, on July 19, 2002, the European Commission (EC) Regulation No 1606/2002 was passed by the European Parliament and the European Council of Ministers requiring the adoption of IFRSs issued by the IASB. Under this regulation, EU-listed companies are required to prepare their consolidated financial statements using IFRSs endorsed by the European Union starting January 1, 2005. As far as the options available for member states to permit or require international standards in other types of accounts for different types of companies are concerned, the Belgian Government introduced in a series of Royal Decrees the requirements for preparation of financial statements. According to the 2008 EC report on the implementation of the Regulation No. 1606/2002, Belgium requires IFRSs in the annual accounts of listed real estate investment companies (Royal Decree of June 21, 2006) and will consider permitting IFRSs in the annual accounts for other companies (listed and unlisted), once the tax and legal aspects of this decision are evaluated. Further, the use of IFRSs is permitted in the consolidated accounts of all other companies and is required, in accordance with the Royal Decree of December 5, 2006, in the consolidated accounts of credit institutions and investment firms. Companies that are not required to use IFRSs or choose not to use them follow the Belgian GAAP which, according to a number of publications on the subject, differ from their international equivalents.

Per the 2005 IEC self-assessment, the 2002 Law on the Supervision of the Financial Sector and on Financial Services establishes that the Banking, Finance, and Insurance Commission (CBFA), the sole regulatory body for the Belgian financial sector, monitors and enforces compliance with accounting, reporting, or auditing requirements for all financial institutions. The IFAC website notes that the Institute of Auditors and the IEC are full members of IFAC.

The Principles

IFRS 1: First-time Adoption of International Financial Reporting Standards (effective 2006)

NC

According to a 2006 PWC comparison of IFRSs and Belgian GAAP, IFRS 1 is "not applicable" under Belgian GAAP.

IFRS 2: Share-based Payment (effective 2005)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, accounting for share-based payments is not addressed in Belgian GAAP.

IFRS 3: Business Combinations (effective 2004)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, IFRS 3 and Belgian GAAP are different.

IFRS 4: Insurance Contracts (effective 2006)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, IFRS 4 and Belgian GAAP are different.

IFRS 5: Non-current Assets Held for Sale and Discontinued Operations (effective 2005)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, the Belgian GAAP do not contain requirements comparable to IFRS 5.

IFRS 6: Exploration for and Evaluation of Mineral Resources (effective 2006)

II

There is insufficient publicly available information as to Belgium's compliance with this principle.

IFRS 7: Financial Instruments: Disclosures (effective 2007)

II

There is insufficient publicly available information as to Belgium's compliance with this principle.

IAS 1: Presentation of Financial Statements (effective 2007)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, this standard is not applicable under Belgian GAAP.

IAS 2: Inventories (effective 2005)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, IFRS and the Belgian GAAP define Inventories in the same way and value them using the same approach However, the Belgian GAAP do not specifically address a cost formula as does IAS 2.

IAS 7: Cash Flow Statements (effective 1994)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, IAS 7 and the Belgian GAAP are different.

IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors (effective 2005)

NC

The requirements of this IFRS, according to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, are not specifically addressed by the Belgian GAAP.

IAS 10: Events after the Reporting Period (effective 2005)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, IAS 10 and Belgian GAAP are similar but with some differences.

IAS 11: Construction Contracts (effective 1995)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, IAS 11 and Belgian GAAP are similar; however, some differences exist.

IAS 12: Income Taxes (effective 2001)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, IFRS "require[s] full provision for deferred tax" while the Belgian GAAP offer no standard on accounting for deferred income taxes.

IAS 14: Segment Reporting (effective 1998)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, the Belgian GAAP do not specifically address the topic of Segment Reporting.

IAS 16: Property, Plant and Equipment (effective 2005)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, IAS 16 differs from Belgian GAAP.

IAS 17: Leases (effective 2005)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, IAS 17 and the Belgian GAAP are different.

IAS 18: Revenue (effective 1995)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, IAS 18 and the Belgian GAAP are similar; however, some differences exist.

IAS 19: Employee Benefits (effective 2006)

NC

The information provided by the PricewaterhouseCoopers 2006 comparison of IFRSs and Belgian GAAP mentions different employment benefits including termination and pension benefits, and all of these differ from IAS 19 Employee Benefits.

IAS 20: Accounting for Government Grants and Disclosure of Government Assistance (effective 1984)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, the Belgian GAAP do not specifically address the requirements of IAS 20..

IAS 21: The Effects of Changes in Foreign Exchange Rates (effective 2005)

NC

The PricewaterhouseCoopers 2006 comparison of IFRSs and Belgian GAAP do not cover the Effects of Changes in Foreign Exchange Rates.

IAS 23: Borrowing Costs (effective 1995)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, the Belgian GAAP and IAS 23 are different in the way they expense Borrowing Costs.

IAS 24: Related Party Disclosures (effective 2005)

NC

There is insufficient publicly available information as to Belgium's compliance with this standard.

IAS 26: Accounting and Reporting by Retirement Benefit Plans (effective 1998)

NC

There is insufficient publicly available information as to Belgium's compliance with this standard.

IAS 27: Consolidated and Separate Financial Statements (effective 2005)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, the Belgian GAAP and IAS 27 are similar; however, some differences exist.

IAS 28: Investments in Associates (effective 2005)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, the Belgian GAAP and IAS 28 are different.

IAS 29: Financial Reporting in Hyperinflationary Economies (effective 1990)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, the Belgian GAAP do not address IAS 29, however the IFRS standard "would apply."

IAS 31: Interests in Joint Ventures (effective 2005)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, the Belgian GAAP and IAS 31 are different.

IAS 32: Financial Instruments: Disclosure and Presentation (effective 2005)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, the Belgian GAAP offer no "specific guidance" as to the implementation of this principle.

IAS 33: Earnings per Share (effective 2005)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, the Belgian GAAP do not address Earnings per Share.

IAS 34: Interim Financial Reporting (effective 1999)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, the Belgian GAAP and IFRS have different requirements for Interim Financial Reporting.

IAS 36: Impairment of Assets (effective 2004)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, IAS 36 differs from the Belgian GAAP.

IAS 37: Provisions, Contingent Liabilities and Contingent Assets (effective 1999)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, the Belgian GAAP are "broadly similar" to IAS 37; however, some differences exist..

IAS 38: Intangible Assets (effective 2004)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, there are differences between the Belgian GAAP and IFRS regarding the requirements for Intangible Assets.

IAS 39: Financial Instruments: Recognition and Measurement (effective 2006)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, the Belgian GAAP do not cover Financial Instruments: Recognition and Measurement.

IAS 40: Investment Property (effective 2005)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, Belgian GAAP do not contain the requirements of IAS 40 Investment Property.

IAS 41: Agriculture (effective 2003)

NC

According to a 2006 comparison of IFRSs and Belgian GAAP published by PricewaterhouseCoopers, the Belgian GAAP do not address this principle.