Hungarian entities now have more time to prepare for the full
implementation of International Financial Reporting Standards
Since 1 January 2016, Hungarian Accounting law has allowed
Hungarian companies to use the International Financial Reporting
Standards (IFRS) instead of statutory regulation. This staged
transition to IFRS saw minor rule changes implemented on 16 June
2016. Affected companies are required to implement IFRS from 1
The following entities may (or may choose not to) draw up their
annual reports in accordance with IFRS:
From 1 January
From 1 January
securities are listed on a regular market of any Member State of
European Economic Area
directly or indirectly by a parent company which prepares its
consolidated annual report in accordance with IFRS
under the Concession Act for the pursuit of an activity subject to
concession, or entitled to enter into a concession contract, or
classified as a concession company
by the National Bank of Hungary
manages state or local government asset, property
to statutory audit
of a foreign company which is exempt from the statutory audit
institution, financial enterprise equivalent to credit institution
under prudential requirements
provided for in the Act on the Business of Insurance
health fund, mutual aid fund
The regulation determines the following additional terms to
implement the IFRS:
an audit report of a statutory
registered auditor or audit firm qualified for the application of
the IFRS is required in proof of preparedness for transition to the
entities shall report their
transition to the IFRS to the state tax authority, the Central
Statistics Office and the National Bank of Hungary (if the activity
of the company is supervised by the National Bank of Hungary). The
reporting deadline is at least 90 days before the transition, but
in 2016 as the first obligation, it was 15 January 2016
entities shall report some of their
equity details based on the statutory and the IFRS regulation to
the state tax authority, within 15 days of the transition
Based on the differences between the Hungarian Accounting law
and the IFRS, the method and the steps of the transition should be
prepared with care.
Here are some points for entities to consider before making a
decision on the change:
business processes should be
accounting system chosen and
implemented must support the accounting based on the IFRS, and also
an IFRS-qualified accountant as an
employee or accounting company is necessary to fulfil bookkeeping
tasks and taxation
new accounting policies are
permanent and temporary taxable
amounts could be calculated based on the differences, eg.
depreciation of fixed assets, calculation and title of provisions,
calculation and booking method of revenues, valuation of assets and
liabilities, calculation of subsidies, classification of
special tax base modifying items were
adopted in the Hungarian tax laws to handle the difference of
statutory and IFRS' profit before taxation
the first financial report prepared
according to the IFRS needs comparative data and information from
the previous year and years.
companies adopting the IFRSs will benefit from the simplified
reporting and consolidating process in respect of the international
groups. Based on the similar valuation and accounting principles,
the individual reports will be comparable and the preparation of
the consolidated reports will take less time and cost.
Talk to us
Our experts in Hungary can assist with the preparation and
administration of reports in accordance with IFRS.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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As your business reflects on both the changing shape of the Solvency II timetable and the eventual move to a new IFRS standard for insurance contracts, how can a durable platform for regulatory and financial reporting in the future?
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