• Portugal is included in the IFAD GAAP Convergence Studies
• National Professional Organisation Website:Ordem dos Revisores Oficiais de Contas
• Response to IFAC Member Body Survey on Standard Setting and Regulation

Update for October 2009
Update for January 2003
Update for October 2001
Update for May 2001

Adoption of IFRSs in Europe Effective in 2005

In June 2002, the European Union adopted an IAS Regulation requiring European companies listed in an EU securities market, including banks and insurance companies, to prepare their consolidated financial statements in accordance with IFRSs starting with financial statements for financial year 2005 onwards. EU countries have the option to:

• Require or permit IFRSs for unlisted companies.
• Require or permit IFRSs in parent company (unconsolidated) financial statements.
• Permit companies whose only listed securities are debt securities to delay IFRS adoption until 2007.
• Permit companies that are listed on exchanges outside of the EU and that currently prepare their primary financial statements using a non-EU GAAP (in most cases this would be US GAAP) to delay IFRS adoption until 2007.

The European IAS regulation applies not only to the 27 EU Member States but also to the three members of the European Economic Area (EEA) – Iceland, Liechtenstein, and Norway.

Portugal is an EU Member State. Consequently, Portuguese companies companies listed in an EU/EEA securities market will follow IFRSs starting in 2005. In January 2005, the European Commission published the results of a survey of the 25 EU member states and the 3 EEA member states on their plans regarding the four options above. For information on each country's plans, click to download:

• Table on Use of IFRS Options in 27 Member and 3 EEA States (PDF 52k)

The European Commission has adopted the following wording for use in the notes to the accounts and in the audit reports of companies subject to EU Regulation 1606/2002/EC (the 'IAS regulation'):

• "in accordance with International Financial Reporting Standards as adopted by the EU" or
• "in accordance with IFRSs as adopted by the EU".

Companies may also state, in a footnote, compliance with IFRSs as adopted by the IASB, if that is the case.

Two publications from Deloitte Portugal

Deloitte Portugal has released two publications (which are in Portuguese) relating to the new financial reporting framework in Portugal that will be effective on 1 January 2010, known as Sistema de Normalização Contabilística, or SNC:

• Guide to the SNC: Getting on the Right Track (PDF 873k). This 72-page publication explains the accounting requirements of the SNC and includes a comparison with IFRSs.
• Guide to the SNC: Breaking News on Tax (PDF 479k). This 28-page publication highlights the main tax effects resulting from the adoption of SNC.

This new directive, mandatory for individual and consolidated financial statements for financial periods starting on or after January 1, 2003, deals with the recognition, measurement and disclosures of Environmental Issues.

The criteria to recognise and measure environmental liabilities are in line with IAS 37, Provisions, Contingent Liabilities and Contingent Assets, that is to say, they should be recognised when an entity has a present obligation as a result of a past event, an outflow of resource to settle the obligation is probable and the amount can be reliably estimated. Obligations that meet the criteria of a contingent liability should not be recognised but are to be disclosed.

Offsetting with expected reimbursements is not allowed unless the company has a legal right, and intends to set the liability for the net amount.

Environmental liabilities should be recognised in the income statement in the year they occur. An asset may be recognised in certain exceptional circumstances. Discounting is allowed if its effect is considered relevant in the company's financial statements.

A list of the necessary disclosures including, but not limited to, a description of the liability, the amounts recognised in the year either as an asset or in the income statement, and the methods used to measure the liability is provided. Additional disclosures to be made in the management report (mandatory in accordance with the Portuguese commercial code) including the company's policy to deal with environmental risks are also defined.

Basically the new accounting directive is in line with IAS 12 (revised 2000).

In July 2000, the CNC issued accounting directive 27 - Segmental Reporting. This new standard is mandatory for listed companies and for all companies that decide to present segment information, for accounting periods beginning on or after January 1, 2001. Basically, this standard is in line with IAS 14.

Currently, the CNC is working on two new projects related to deferred taxes and financial instruments (options) although first drafts are still being finalised.

A commission has also been created in order to study the possibility of issuing a new accounting code.