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Spain

International Financial Reporting Standards

Summary
As a result of European Commission Regulation (EC) No 1606/2002, since January 1, 2005 all European Union (EU) listed companies have been required to prepare consolidated accounts following International Financial Reporting Standards (IFRSs) endorsed by the EC. Member States may decide as well to extend this permission or this requirement to other companies as regards the preparation of their consolidated accounts and/or their annual accounts. Spain opted for the extended use of IFRSs. Starting 2005, unlisted groups are allowed to apply either Spanish General Accepted Accounting Principles (GAAP) or IFRSs. Other companies must follow Spanish Generally Accepted Accounting Principles (GAAP). The Deloitte IAS Plus website indicates that as a result of corporate and accounting law reforms in Spain, new Spanish GAAP applicable for individual companies and unlisted consolidated groups was adopted in 2006, effective 2008. Although based on IFRSs, Deloitte notes, the new Spanish GAAP differ from IFRSs.

    General Overview

    On July 19, 2002, European Commission Regulation (EC) No 1606/2002 was passed by the European Parliament and the European Council of Ministers requiring the adoption of International Financial Reporting Standards (IFRSs), formerly International Accounting Standards (IASs), issued by the International Accounting Standards Board.. As a result of the Regulation, all European Union (EU) listed companies are required to prepare their consolidated financial statements following IFRSs endorsed by the EC from January 1, 2005. Member States may decide as well to extend this permission or this requirement to other companies as regards the preparation of their consolidated accounts and/or their annual accounts. In line with the European Commission's (EC) Regulation No. 1606/2002, listed companies in Spain are required to use IFRSs as endorsed by the European Union for preparation of consolidated accounts.
    According to the International Monetary Fund's 2006 Financial System Stability Assessment, Spain's accounting and auditing professions are well-developed, and in general are in accordance with internationally accepted rules and practices.
    Spain opted for the extended use of IFRSs, according to the European Committee's Central Balance Sheet Data Offices (CBSO). While it is mandatory for listed companies to adopt IFRSs in its entirety, non-listed companies are permitted to apply either Spanish General Accepted Accounting Principles (GAAP) or IFRSs. More specifically, unlisted companies have the choice to use IFRSs or Spanish GAAP in their consolidated accounts. The IAS Plus website indicates that corporate and accounting law reforms in Spain has led Parliament to enact new Spanish GAAP in 2006, effective 2008. The proposal, according to the 2007 CBSO report, contains modifications to current accounting framework for individual companies, in addition to some amendments in the Commercial Code, the Private Limited Companies Law and the General Chart of Accounts. The new Spanish GAAP, based on IFRSs but not equivalent as differences still exist, applies to individual companies and unlisted consolidated groups. According to the CBSO's 2005 report, the Institute of Accounting and Auditing (ICAC) Committee published a report in June 2002 on the possibility of IFRSs adoption. The report concluded that the new Spanish standard setting process should take into account the IFRSs framework. The findings of the publication, per the CBSO's 2007 report, have led Spain to develop a new set of accounting rules with the aim to be consistent with IFRSs by eliminating IFRSs alternatives. The plan is to implement the new framework sometime in 2008, however some corporative organizations are worried that the time allowed for adoption of the new standards is too short. The CBSO's 2007 report also notes that the ICAC is working on the establishment of a new set of rules for small and medium enterprises that will be in line with national GAAP and IFRSs.
    According to the CBSO's 2007 report, the Spanish Accounting Standards and legal framework are based on the Commercial Code, the Private Limited Companies Law, the General Chart of Accounts of 1990, the regulations for preparing consolidated annual accounts of 1991 and ICAC resolutions to extend and clarify the general standards. Spain's Central Bank is responsible for the accounting regulation of financial companies.
    Pursuant to the Royal Decree 302 of March 17, 1989, the ICAC is the national auditing and accounting standard setter, according to the Institute of Auditors of Spain's (ICJCE) 2005 self-assessment. The ICAC is a government agency within the Ministry of Finance that develops accounting and auditing standards. Per the ICJCE's 2007 self-assessment, the ICJCE is a member of the ICAC as well as a member of the International Federation of Accountants. The committee, which comprises members from the auditing profession, regulators and the ICAC, is an advisory one and does not make decisions. The ICJCE is involved in proposing the content, but the standards are issued by the regulator, the ICAC.
    In order to apply simplified accounting rules, which are different from National GAAP and IFRSs, the ICJCE's 2005 self-assessment indicates that companies, pursuant to the Royal Decree 296/2004 on the Simplified Accounting Regime, are required to have the following criteria: (1) assets equal to 1,000,000 Euro; (2) annual turnover equal to 2,000,000 Euro; and (3) an average number of employees equal to 10. Simplified accounting regime differs from National GAAP and IFRSs.


    The Principles

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

    There is no publicly available information as to Spain's compliance with this principle.

    IFRS 2: Share-based Payment (effective 2005)

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, Spain does not have accounting rules about share-based payments.

    IFRS 3: Business Combinations (effective 2004)

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IFRS 3 and Spanish GAAP.

    IFRS 4: Insurance Contracts (effective 2006)

    There is no publicly available information as to Spain's compliance with this principle.

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

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, Spain does not have accounting rules about non-current assets held for sale and discontinued operations

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

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, no special accounting rules are issued for companies operating with mineral resources.

    IFRS 7: Financial Instruments: Disclosures (effective 2007)

    There is no publicly available information as to Spain's compliance with this principle.

    IAS 1: Presentation of Financial Statements (effective 2007)

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 1 and Spanish GAAP.

    IAS 2: Inventories (effective 2005)

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 2 and Spanish GAAP.

    IAS 7: Cash Flow Statements (effective 1994)

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 7 and Spanish GAAP as cash-flow statements are not required in Spain.

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

    There is no publicly available information as to Spain's compliance with this principle.

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

    There is no publicly available information as to Spain's compliance with this principle.

    IAS 11: Construction Contracts (effective 1995)

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 11 and Spanish GAAP.

    IAS 12: Income Taxes (effective 2001)

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 12 and Spanish GAAP.

    IAS 14: Segment Reporting (effective 1998)

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 14 and Spanish GAAP as Segment Reporting is not required in Spain.

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

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 16 and Spanish GAAP.

    IAS 17: Leases (effective 2005)

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 17 and Spanish GAAP.

    IAS 18: Revenue (effective 1995)

    There is no publicly available information as to Spain's compliance with this principle.

    IAS 19: Employee Benefits (effective 2006)

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 19 and Spanish GAAP.

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

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 20 and Spanish GAAP.

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

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 21 and Spanish GAAP.

    IAS 23: Borrowing Costs (effective 1995)

    There is no publicly available information as to Spain's compliance with this principle.

    IAS 24: Related Party Disclosures (effective 2005)

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 24 and Spanish GAAP as information on related party transactions is less developed in Spain.

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

    There is no publicly available information as to Spain's compliance with this principle.

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

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 27 and Spanish GAAP as the consolidation of small subsidiaries is not required in Spain.

    IAS 28: Investments in Associates (effective 2005)

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 28 and Spanish GAAP.

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

    There is no publicly available information as to Spain's compliance with this principle.

    IAS 31: Interests in Joint Ventures (effective 2005)

    There is no publicly available information as to Spain's compliance with this principle.

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

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 32 and Spanish GAAP.

    IAS 33: Earnings per Share (effective 2005)

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 33 and Spanish GAAP as earnings per share are not required in Spain.

    IAS 34: Interim Financial Reporting (effective 1999)

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 34 and Spanish GAAP as interim financial reporting is not required in Spain.

    IAS 36: Impairment of Assets (effective 2004)

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 36 and Spanish GAAP

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

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, requirements under Spanish GAAP are slightly different from those under IFRSs.

    IAS 38: Intangible Assets (effective 2004)

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 38 and Spanish GAAP.

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

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 39 and Spanish GAAP.

    IAS 40: Investment Property (effective 2005)

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 40 and Spanish GAAP.

    IAS 41: Agriculture (effective 2003)

    According to a 2005 comparison of Spanish GAAP and IFRSs published by the European Committee of CBSO, there are differences between IAS 41 and Spanish GAAP.

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    Sources of Assessment

    Deloitte & Touche Tohmasu IAS Plus website. Accessed on August 21, 2008. (Deloitte IAS Plus website)

    European Commission, "Planned Implementation of the IAS Regulation (1606/2002) in the EU and EEA," February 25, 2008. Available from European Union website. Accessed on August 22, 2008. (EC 2008)

    European Committee of Central Balance Sheet Data Offices, "III Working Group on IFRS Impact and CBSO Databases: IFRS Impact," October 14, 2005. Available from Bank of Spain website. Accessed on August 22, 2008. (CBSO 2005)

    European Committee of Central Balance Sheet Data Offices, III Working Group on IFRS Impact and CBSO Databases, "IFRS Impact," Document No. 1, October 2007. Available from Bank of Spain website. Accessed on June 26, 2008. (CBSO 2007)

    Institute of Auditors of Spain, "Response to the IFAC Part 2, SMO Self-Assessment Questionnaire," Self-assessment prepared as a part of the International Federation of Accountants' Member Body Compliance Program, April 2007. Available from International Federation of Accountants website. Accessed on August 27, 2008. (ICJCE 2007)

    Relevant Organizations

    Central Bank of Spain - Banco de España (BdE)

    Committee of European Securities Regulators (CESR)

    Directorate General of Insurance and Pension Funds - Direccion General de Seguros y Fondos de Pensiones (DGSFP)

    European Accounting Regulatory Committee (ARC)

    European Federation of Accountants - Fédération des Experts Comptables Européens (FEE)

    European Financial Reporting Advisory Group (EFRAG)

    Institute of Accounting and Auditing - Instituto de Contabilidad y Auditoria de Cuentas (ICAC)

    Institute of Auditors of Spain - Instituto de Censores Jurados de Cuentas de España (ICJCE) (in Spanish only)

    Ministry of Economy - Ministerio de Economia y Hacienda (MoE)

    Securities Exchange Commission - Comisión Nacional del Mercado de Valores (CNMV)

    Spanish Accounting and Business Adminitration Association - Asociacion España de Contabilidad y Administracion de Empresas (AECA) (in Spanish only)



    Relevant Legislation/Regulation

    Commercial Code, 1885 - Código de Comercio, 1885 (in Spanish only)

    Companies Law approved by Royal Decree 1564/1989, 1989 - Ley de Sociedades Anónimas aprovado por el Decreto Real 1564/1989, 1989 (in Spanish only)

    Private Limited Companies Law, 1995 - Ley de Sociedades de Responsabilidad Limitada, 1995 (in Spanish only)

    Royal Decree approving the General Chart of Accounts No. 1514/2007, 2007

    Real Decreto por el que se aprueba el Plan General de Contabilidad No. 1514/2007, 2007 (in Spanish only)

    Royal Decree approving the By-Law and Organic Structure of the Institute of Accounting and Auditing No. 302/1989, 1989 - Real Decreto 302/1989 por el que se aprueba el Estatuto y la estructura orgánica del Instituto de Contabilidad y Auditoría de Cuentas No. 302/1989, 1989 (in Spanish only)

    Royal Decree approving the General Chart of Accounts for Small and Medium-sized Enterprises and Specific Accounting Requirements for Microenterprises No. 1515/2007, 2007 - Real Decreto, de 16 de noviembre, por el que se aprueba el Plan General de Contabilidad de Pequeñas y Medianas Empresas y los criterios contables específicos para microempresas No. 1515/2007, 2007 (in Spanish only)

    Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the Application of International Accounting Standards, 2002

    EU Accounting-Related Directives



    Supplementary Sources

    International Federation of Accountants website. Accessed on August 21, 2008. (IFAC website)

    International Monetary Fund, "Spain: Financial System Stability Assessment, including Reports on the Observance of Standards and Codes on the following topics: Banking Supervision, Insurance Supervision, Securities Supervision, Payment Systems, Securities Settlement Systems, and Financial Policy Transparency," Country Report No. 06/212, Washington, D.C: IMF, June 2006. Available from International Monetary Fund website. Accessed on August 21, 2008. (IMF 2006a)

    International Monetary Fund, "Spain: Financial Sector Assessment Program - Detailed Assessment of Compliance with the Basel Core Principles for Effective Banking Supervision," Country Report No. 06/218, Washington, D.C.: IMF, June 2006. Available from International Monetary Fund website. Accessed on August 21, 2008. (IMF 2006b)

    International Monetary Fund, "Spain: 2007 Article IV Consultation--Staff Report; Staff Statement; and Public Information Notice on the Executive Board Discussion," Country Report No. 07/175, Washington, D.C.: IMF, May 2007. Available from International Monetary Fund website. Accessed on August 21, 2008. (IMF 2007)

    Institute of Auditors of Spain, "Assessment of the Regulatory and Standard-Setting Framework," Self-assessment prepared as a part of the International Federation of Accountants' Member Body Compliance Program, March 2005. Available from International Federation of Accountants website. Accessed on August 22, 2008. (ICJCE 2005)
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