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Global Solutions Director, Accounting & Tax, TMF Group
09 October 2018
Read time
4 minutes

Year-end closing: essential checklist for accountants in Europe

Coordinating group and local company reporting can make year-end closing a complex process. But follow this guide, and you’ll save yourself some late-night headaches.

With year-end closing activities fast-approaching, it’s timely for companies to give some thought to their upcoming European group and local accounting reporting requirements. Performing these essential baseline checks will help your accounting teams align their processes and take some of the complexity away from what can be a particularly stressful quarter.

1. Review filing deadlines

This is the first, very basic check that should be performed by companies. Most of the time, deadlines for group reporting are very tight and much tighter than the deadlines for the preparation of local financial statements. For example in Germany, which ranks 21st in the world for financial compliance complexity, local financial statements need to be prepared and filed by 31 December of the following year. In Belgium, the deadline for the 2018 financial statements is sooner - the end of June 2019. Individual countries typically give accountants more time to prepare and close the accounts, while at group reporting level, the deadlines are usually much tighter. And this difference between deadlines has an impact on the year-end financial closing calendar; the post-balance sheet events and how they are reflected in the financial statement. So take the time to check all relevant filing deadlines before starting any closing procedures. 

2. Check statutory audit and consolidation requirements

There are key differences when you look at the statutory audit from a group versus local reporting perspective. In most EU countries, a statutory audit is required if a certain threshold related to turnover, assets or number of employees is exceeded. Alongside the statutory audit, companies should be mindful of the consolidation requirements, as there are some more thresholds here based on turnover, assets and number of employees. And again these thresholds differ from country-to-country. Companies need to make sure they comply with threshold levels in each country in which they operate. 

3. Note changes in format and filing requirements

There are key differences in the application of IFRS and local GAAP across Europe. In the NetherlandsItaly and Portugal, cash flow statements are not required. This is compared to Germany and France where they are required for consolidated accounts, or for enterprises listed in capital markets with financial statements that follow the IFRS format. Some countries require statements of comprehensive income and income statements that are broadly consistent with IFRS for SMEs and some countries do not require a comprehensive income statement. In France, Germany, Norway, Portugal and Poland, the statement of other comprehensive income does not exist.

Also keep in mind that countries frequently review and make amendments to legislation. What changes in accounting forms, format and filing steps have occurred since the company’s last year-end close? How do these changes impact your group reporting? 

4. Understand the differences in accounting policies and treatments

This area warrants a checklist of its own. All of the following items need to be carefully considered by companies, and it’s crucial to ensure the right level of information is collected in order to identify the correct accounting treatment in accordance with local rules.

  • Check the approach to estimates (group vs local): different approaches commonly exist at local and group levels, for example with pension cost estimates, bonus estimates, holiday accruals and so on.
  • Review provisions and contingencies: the Netherlands allows a provision to be made, even if an obligation may not exist. Meantime, Germany and Italy refer to provisions for all risks, which would seem to go much further than other countries and IFRS.
  • Adjust events: in Germany, strict knowledge at the balance sheet date is required for events to lead to an adjustment, and the strict adoption of knowledge at the balance sheet date is mandatory. Nonetheless, foreseeable risks and losses occurring up to the balance sheet date lead to adjustments if they become known between the balance sheet date and the date of preparation of the financial statements. While in the Netherlands, profit distributions may always lead to adjustments, and dividends proposed and declared after the year-end are included in current liabilities.
  • Check revaluation: options for this exist in some countries (the Netherlands, Romania, Portugal and Poland) and for any companies that have taken up the revaluation option, there would be a clear change. 

5. Collaborate with legal

This is an area that is commonly overlooked, and neglecting this aspect could lead to not only delays in the filing of financial statements, but in extreme cases also penalties. Capture year-end corporate secretarial requirements in your financial close calendar and ensure these requirements are considered alongside other inter-dependencies.

Year-end closing in Europe is always a stressful time, but with some foresight and good planning, it can be performed with no unexpected surprises.

Talk to us

Our accountants and tax compliance experts located across Europe have in-depth knowledge of individual country requirements and accounting policies. We can help your company successfully integrate these differences into group financial close processes.

Need more information? Explore our accounting services and contact us today.

Where do European countries rank globally for accounting and tax complexity? Download the 2018 Financial Complexity Index to find out.

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