In Sweden, there are two standard setters that issue accounting standards. These are the Swedish Financial Accounting Standards Council (SFASC) and the Swedish Accounting Standards Board (SASB). The standards issued by these organisations apply to different companies.
The SFASC Standards apply primarily to listed companies, although the adoption of these standards by non-listed companies is becoming increasingly common. Companies listed on the Stockholm Stock Exchange are obligated by their listing contract with the stock exchange to report in accordance with the SFASC standards. The SFASC base all their standards on IAS. The SFASC standards only differ from IAS standards when IAS is in conflict with Swedish laws, mainly the Swedish Annual Account Act. For unlisted companies (small, medium and large) the SASB issues standards similar to the SFASC, although with significant relief for small and, to some extent, medium sized companies. The SASB also issues standards and interpretations on specific issues, which are deemed to be of general interest.
The Swedish Financial Accounting Standards Council
Included below are all new standards issued by the SFASC with effective dates during 2001, 2002 and 2003, followed by a brief summary of major differences between the Swedish standard and IAS. Eight Swedish Accounting Standards issued by the SFASC became effective for financial years beginning on or after 1 January 2001. They were:
- SFASC 9, Income Taxes (based on IAS 12).
- SFASC 10, Construction Contracts (based on IAS 11).
- SFASC 11, Revenues (based on IAS 18).
- SFASC 12, Property, Plant and Equipment (based on IAS 16).
- SFASC 13, Associated Company (based on IAS 28).
- SFASC 14, Joint Ventures (based on IAS 31).
- SFASC 18, Earnings per Share (based on IAS 33).
- SFASC 20, Interim Financial Reporting (based on IAS 34).
The major differences between Swedish standards mentioned above and IAS are:
- SFASC 9, Income Taxes, the Swedish requirements differ from IAS in one material aspect. In certain specific cases, a deferred tax liability may be discounted.
- SFASC 12, Property, Plant and Equipment, the Swedish standard allows write-ups in some specific cases, which are not in accordance with IAS 16, Property, Plant and Equipment. (IAS 16 allows systematic revaluations of classes of assets, whereas SFASC 12 only allows revaluations under very strict conditions). SFASC 12 also applies to assets relating to agriculture (IAS 41, Agriculture). Finally, any revaluation of tangible fixed assets does not need to be kept up-to-date.
- SFASC 20, Interim Financial Reporting, according to Swedish requirements, the interim report of the group shall also include profit and loss information relating to the parent company.
Seven new Swedish Accounting Standards issued by the SFASC have become effective for financial years beginning on or after 1 January 2002. Earlier implementation is encouraged. These standards are:
- SFASC 1:00, Business Combinations (based on IAS 22 and 27).
- SFASC 15, Intangible Assets (based on IAS 38).
- SFASC 16, Provision, Contingent Liabilities and Contingent Assets (based on IAS 37).
- SFASC 17, Impairment of Assets (based on IAS 36).
- SFASC 19, Discontinuing Operations (based on IAS 35).
- SFASC 21, Borrowing Costs (based on IAS 23).
- SFASC 22, Presentation of Financial Statements (based on IAS 1).
- SFASC 23, Related Party Disclosures (based on IAS 24).
The major differences between the Swedish standards mentioned above and IAS are:
- SFASC 1:00, Business Combinations, according to Swedish requirements, negative goodwill shall be accounted for as a provision and classified as a liability in the balance sheet. In some cases, subsidiaries can be accounted under the equity method, which is not allowed under IAS. Reverse acquisitions are not covered by SFASC 1:00.
- SFASC 15, Intangible Assets, the Swedish Annual Account Act prescribes that the useful life for an intangible asset shall not exceed 5 years. If the company estimates that the useful life exceeds 5 years, the reason shall be specified. This disclosure requirement is incorporated in the SFASC.
- SFASC 23, Related Party Disclosures, includes certain disclosure requirements concerning transactions with group companies. In some cases, these requirements go further than the requirements in IAS 24, Related Party Disclosures.
Furthermore, listed below is a summary of other material differences between Swedish GAAP and IAS.
- Trading, available-for-sale and derivative financial assets are not recognised at fair value.
- Trading and derivative liabilities are not recognised at fair value.
- Hedge accounting is permitted more widely.
- Pension calculations generally do not use the projected unit credit method, current interest rates or estimates of future salary levels but an accrued benefit obligation based on current salary level.
- There is no requirement to use the primary/secondary basis for segment reporting.
Five exposure drafts issued by the SFASC are proposed to be effective for financial years beginning on or after 1 January 2003, which will reduce some of these differences. They are:
- SFASC Exposure Draft, Financial Instruments: Disclosure and Presentation (based on IAS 32).
- SFASC Exposure Draft, Employee Benefits (based on IAS 19).
- SFASC Exposure Draft, Investment Property (based on IAS 40).
- SFASC Exposure Draft, Events After the Balance Sheet Date (based on IAS 10).
- SFASC Exposure Draft, Segment Reporting (based on IAS 14).
The Swedish Accounting Standards Board
Listed below are the new standards issued by the SASB effective for financial years beginning on or after 1 January 2002
- SASB 2001:1 Income Taxes (based on SFASC 9).
- SASB 2001:2 Transaction Recording.
- SASB 2001:3 Property, Plant and Equipment (based on SFASC 12).
- SASB 2001:4 Statement on How to Account for Inventory Obsolescence.
Areas listed below are those presently being considered by the SASB.
- Impairment of Assets.
- Provisions, Contingent Liabilities and Contingent Assets.
- Intangible Assets.
- Interim Financial Reporting.
- The Effects of Changes in Foreign Exchanges Rates.
- Non-Profit Entities.
- Requirement to Maintain Accounting Records.
The content of each SASB standard is not further described here. In general, these standards are similar to the SFASC equivalent, but with significant relief for smaller companies.