New Estonian GAAP - accounting principles fully harmonised with IFRS but less disclosure required

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02 Aug 2003

Estonian GAAP will be harmonised with IFRS and cross-referenced to applicable IFRS paragraphs.

Any differences in the local standards compared to IFRS must be explained and justified. The accounting principles in the new standards of Estonian GAAP are fully harmonised with IFRS (in very rare cases simplified methods are allowed) but they will require less disclosure than IFRS. In areas that are not covered by the guidelines of Estonian GAAP, the IFRS treatment is recommended, but not mandatory.

The Estonian Accounting Standards Board (EASB) has already rewritten most of its standards and brought them in line with the requirements of the new law and IFRS.

Large companies are expected to choose the full IFRS option, small and medium-size companies are likely to use revised Estonian GAAP ('simplified IFRS') as their accounting framework.

Very likely, 2003 profit and equity will be substantially the same under IFRS and Estonian GAAP, but Estonian GAAP financials will be less informative than IFRS financial statements.

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