Financial Crime World

Portugal’s Financial Reporting Requirements Align with EU Standards

As a member of the European Union (EU), Portugal is subject to rigorous accounting, auditing, and financial reporting requirements set forth by EU regulations and directives. The country’s national laws and regulations ensure compliance with these standards, guaranteeing transparency and consistency in financial reporting across all business entities.

National Laws and Regulations

The Decree-Law No. 262/1986, as amended by Decree-Law No. 9/2022, sets the Companies Code (Código das Sociedades Comerciais) which establishes basic reporting functions for all businesses and requires companies to maintain accounting books and prepare annual financial statements.

Accounting Standards

The Comissão de Normalização Contabilística (CNC), under the Ministry of Finance, is responsible for setting accounting standards for corporate and public sector entities. The Sistema de Normalização Contabilistica (SNC) established by Decree-Law No. 158/2009 and amended by Decree-Law No. 98/2015 outlines different financial reporting requirements based on entity size and nature.

  • Portugal’s national standards are largely based on International Financial Reporting Standards (IFRS), with some deviations from the global standard.
  • The country has not adopted IFRS for Small-and Medium-Sized Entities, nor are there plans to do so. However, certain corporate sector companies can apply IFRS for their consolidated financial statements under specific circumstances.

Financial Sector Regulators

Financial sector regulators, including:

  • Banco de Portugal
  • Autoridade de Supervisão de Seguros e Fundos de Pensões (ASF)
  • Comissão do Mercado de Valores Mobiliários (CMVM)

have adopted EU-endorsed IFRS for consolidated financial statements. These regulators are empowered to set accounting and financial reporting requirements for companies under their supervision.

Audit Requirements

The Law No. 140/2015, as amended by Law No. 99-A/2021, transposes the EU Audit Directive and Regulation (EU) No 537/2014. The law directly adopts International Standards on Auditing (ISA) issued by the International Auditing and Assurance Standards Board (IAASB), requiring statutory audits to be performed according to ISA.

  • Public limited liability companies (S.A.) are required to undergo an annual audit.
  • Private limited companies (LDA) must have their financial statements audited annually if they exceed specific thresholds.
  • Public interest entities, including listed companies, credit institutions, and insurance companies, are also required to be audited in accordance with the law.

Conclusion

Portugal’s financial reporting requirements ensure that businesses and public sector entities maintain transparency and consistency in their financial reporting, aligning with EU standards and promoting a stable and trustworthy business environment.