In 2004, the World Bank published a Report on the Observance of Standards and Codes (ROSC) on Accounting and Auditing in Slovenia which recommended, among other issues, that public interest entities adopt International Financial Reporting Standards (IFRSs). In line with the European Commission (EC) Regulation No 1606/2002, Slovenia requires IFRSs in the consolidated accounts of listed companies. Moreover, Slovenia opted to permit but not require listed companies to use IFRSs in their annual accounts. Slovenia also permits the use of IFRSs in the annual and consolidated accounts of all types of companies which decide to use IFRSs for at least five years. Further, banks and insurance companies are required to use IFRSs in their annual and consolidated accounts. All other companies apply Slovenian Accounting Standards (SASs). In its 2004 ROSC, however, the World Bank found some fundamental differences between SASs and IFRSs. In December 2005, Slovenia promulgated a revised set of SASs with effective date January 1, 2006. According to a 2006 presentation by Meta Duhovnik of the Slovenian Institute of Auditors (SIA), SASs are a simplified version of IFRSs suitable for the needs of the Small and Medium-size Enterprises (SMEs) and are basically in line with the Fourth EU Company Law Directive. SASs cover a wider scope of activities than IFRSs and also provide internal accounting guidelines.

General Overview

In 2004, the World Bank published a Report on the Observance of Standards and Codes (ROSC) on Accounting and Auditing in Slovenia and recommended, among other things, that public-interest entities adopt International Financial Reporting Standards (IFRSs). Pursuant to the European Commission (EC) Regulation No 1606/2002, starting January 1, 2005, all European Union (EU) listed companies are required to prepare consolidated accounts following IFRSs as endorsed by the EC. Member states may decide as well to extend this permission or this requirement to other companies with respect to their consolidated accounts and/or annual accounts. Accordingly, Slovenia opted to permit but not require listed companies to use IFRSs in their annual accounts. Slovenia also permits the use of IFRSs in the annual and consolidated accounts of all types of companies which decide to use IFRSs for at least five years. Further, banks and insurance companies are required to use IFRSs in their annual and consolidated accounts. Slovenian companies whose securities are only admitted on a regulated market of any EU member state may defer the application of IFRSs until 2007. However, companies whose securities are admitted to public trading in a non-member state and which, for that purpose, have been using internationally accepted standards since a financial year that started prior to the publication of the IAS Regulation in the Official Journal (OJ) may not defer the application of IFRSs until 2007 (2006).

All other companies apply Slovenian Accounting Standards (SASs). In its 2004 ROSC, the World Bank concluded that changes in the SASs were considered a "massive step toward harmonization" (p. 13) with IFRSs; however, some differences were deemed fundamental. These differences were mainly related to the capitalization of foreign exchange losses, the definition of extraordinary items, the capitalization of start-up costs, treasury stock, and long-term receivables. According to a 2006 IB Grant Thornton report, in December 2005, a revised set of SASs was promulgated in the Official Gazette with an effective date of January 1, 2006. In its 2007 self-assessment prepared as part of the International Federation of Accountants' (IFAC) member body compliance program, the SIA points out that the "Slovenian Accounting Standards are in line with International Financial Reporting Standards" (p. 75). According to a 2006 presentation by Meta Duhovnik of the Slovenian Institute of Auditors (SIA), SASs are a simplified version of IFRSs suitable for the needs of the Small and Medium-size Enterprises (SMEs) and are basically in line with the Fourth EU Company Law Directive. SASs cover a wider scope of activities than IFRSs and also provide internal accounting guidelines. Duhovnik describes SASs as "an original merger of the national accounting theory and the international requirements defined in IFRSs and EU directives" (p.10). As of April 2006, there were 30 general and 10 specific SASs. The 2001 version of SASs has been translated into English; the translation of the 2006 SASs is in process.

The Slovenian Company Act of 1993 governs the application of SASs. Under the Auditing Act, the SIA, which is a member of the International Federation of Accountants (IFAC), adopts and publishes accounting and auditing standards. According to the World Bank's 2004 ROSC, within the SIA, the Slovenian Accounting Standards Committee is responsible for preparing SASs, and the Professional Council of the Institute finally enacts them. The approved standards are published in the Official Journal of the Republic of Slovenia, in the Institute's publication, and in a handbook published by the Institute.

According to the 2004 WB ROSC, the Securities Market Agency (SMA) and the Insurance Supervision Agency (ISA), which regulate the securities and insurance market respectively, do not set accounting standards; however, the ISA issues prudential regulations that affect the compilation of financial statements of insurance companies. For example, the ISA issued a decision on rules and minimum standards relating to the calculation of technical provisions and on the method of valuation of accounting items and compiling financial statements . Under the Securities Market Act, the SMA has the power to impose fines in case of non-compliance with accounting and disclosure requirements.

The 2005 SIA report states that the Bank of Slovenia (BoS) is the banking supervisory agency and sets special requirements with regard to financial reporting for banks and similar financial institutions. These additional requirements are set forth in regulations based on the Banking Act and relate to (1) the sorts and schemas of financial statements; (2) the detailed substance of annual reports; (3) the way of valuation of accounting items and the way of preparing accounting reports; and (4) the detailed substance and the way of submitting monthly reports about the accounting balances and transactions to the BoS. Non-banking financial institutions are supervised by the SMA. Additional requirements to the accounting standards for non-banking financial institutions are prescribed on the basis of the respective special laws. The 2005 SIA report also notes that the Ljubljana Stock Exchange (LSE) monitors and enforces financial reporting standards through special rules prepared on the basis of the Securities Market Act. Possible sanctions include internal warnings, public warnings, and, ultimately, the withdrawal from the stock exchange (SIA 2005).

The Principles

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

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

IFRS 2: Share-based Payment (effective 2005)

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

IFRS 3: Business Combinations (effective 2004)

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

IFRS 4: Insurance Contracts (effective 2006)

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

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

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

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

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

IFRS 7: Financial Instruments: Disclosures (effective 2007)

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

IAS 1: Presentation of Financial Statements (effective 2007)

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

IAS 2: Inventories (effective 2005)

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

IAS 7: Cash Flow Statements (effective 1994)

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

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

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

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

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

IAS 11: Construction Contracts (effective 1995)

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

IAS 12: Income Taxes (effective 2001)

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

IAS 14: Segment Reporting (effective 1998)

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

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

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

IAS 17: Leases (effective 2005)

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

IAS 18: Revenue (effective 1995)

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

IAS 19: Employee Benefits (effective 2006)

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

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

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

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

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

IAS 23: Borrowing Costs (effective 1995)

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

IAS 24: Related Party Disclosures (effective 2005)

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

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

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

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

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

IAS 28: Investments in Associates (effective 2005)

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

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

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

IAS 31: Interests in Joint Ventures (effective 2005)

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

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

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

IAS 33: Earnings per Share (effective 2005)

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

IAS 34: Interim Financial Reporting (effective 1999)

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

IAS 36: Impairment of Assets (effective 2004)

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

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

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

IAS 38: Intangible Assets (effective 2004)

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

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

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

IAS 40: Investment Property (effective 2005)

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

IAS 41: Agriculture (effective 2003)

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