New annual reporting guidelines issued in the Netherlands

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28 Jan 2002

On 8 November 2001, the Council for Annual Reporting in The Netherlands issued new guidelines for annual reporting applicable for the year 2002.

Additionally a number of Draft Guidelines have been issued. These new and draft guidelines will result in increased convergence with IAS. The new Guidelines include (among others) the following requirements:

  • Stock options granted to management and staff must be recognised as (staff) costs and expensed if, at the date the options are granted, the exercise price is below the market price (that is, the options having a positive intrinsic value). When there is a subsequent change in the exercise price, thereby leading to the option having a positive intrinsic value, an expense will arise at the date of this subsequent change.
  • The disclosure of EBITA (Earnings Before Interest, Taxes and Amortisation) and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) within the income statement is prohibited. The use of these concepts is only allowed in the notes to the financial statements.
  • Specific guidance on budgets, the composition of equity, classifications to be made in the income statement, as well as the contents of the management board's report for not-for-profit organisations.

The new Draft Guidelines (currently open for comment) include:

  • Extensive guidance on the recognition and measurement of financial instruments, in order to converge closer to IAS 39.
  • Further restrictions on the classification of unusual events as 'extraordinary items' have been imposed, in order to increase compliance with IAS.
  • The effects of a change in accounting policy can no longer be recognised as extraordinary items, when recognised in the profit or loss. The benchmark treatment to report the effects of changes in accounting policies through equity still exists.
  • The effects of changes in estimates can no longer be accounted for retrospectively but need to be accounted for on a prospective basis.
  • Proposed dividends cannot be included in the balance sheet where they have not been approved at year-end. The proposed dividends should be separately disclosed in equity.
  • A new benchmark treatment for the measurement of investments in real estate: fair value, without any depreciation is now the preferred method. The allowed alternative treatment remains cost less accumulated depreciation. This new draft looks for greater convergence with IAS 40.


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