Financial Crime World

Financial Reporting Requirements in Portugal Get a Boost with New Decrees

Lisbon, Portugal - A Step Towards International Standards

In an effort to bring financial reporting in line with international standards and enhance transparency, the Portuguese government has issued two decrees aimed at updating the national accounting standardization system. The new regulations, which came into effect on June 2, 2015, transpose EU Directive 2013/34/EU of June 26, 2013, into domestic law.

Entities Required to Comply with Financial Reporting Requirements

The new decrees make financial reporting requirements mandatory for a range of entities, including:

  • Companies listed on the stock exchange
  • Individual establishments of limited liability
  • Public companies
  • Co-ops
  • Joint ventures
  • European Economic Interest Groupings (EEIGs)
  • Non-profit sector organizations

Accounting Standards and Structure

The accounting standards, known as SNC, have three levels of structure:

Level 1: Employ international accounting standards (IAS/IFRS)

Level 2: Use national standards applicable to companies with a mitigated degree of disclosure

Level 3: Designed for small entities, offering a simplified application of the national standards

Code of Supplementary Accounts

The new decrees also introduce a code of supplementary accounts, which is an accounting instrument of mandatory use for entities subject to the SNC accounting standards. The code provides:

  • A summary table of accounts
  • A coded list of accounts
  • Notes for contextualization

Emphasis on Uniform Accounting Language and Transparency

The Portuguese government has emphasized the need for a universal accounting language to ensure that assets and liabilities are measured according to the same criteria. Financial reporting rules should be uniform, allowing investors to evaluate companies independently of their economic, financial or social context.

Welcome Response from the Business Community

The new regulations have been welcomed by the business community, which sees them as an important step towards enhancing transparency and accountability in financial reporting.