Approved by Decree-Law no. 158/2009 dated July 13, the national model for accounting standards is characterized by its affinity to the accounting legislation implemented by the European Union (EU), associated to the International accounting standards (IAS) and International Financial Reporting Standards (IFRS) issued by the International accounting standards Board (IASB), while keeping some distinctive elements, such as, for example, a code of supplementary accounts.
On 2 June 2015, Decree-Law 98/2015 was published, which updated the accounting standardization system, with major changes to Decree-Law 158/2009, namely, transposing into Portuguese law Directive 2013/34/EU of 26 June 2013.
The (SNC) accounting standards are mandatory for the following entities:
- Companies comprised by the Companies Code (CSC);
- Individual companies regulated by the Commercial Code;
- Individual establishments of Limited Liability;
- Public Companies;
- Joint Ventures and European Economic Interest Grouping;
- Non-profit sector entities.
The (SNC) accounting standards create three levels of structure for accounting standards:
Level 1 - Employing international accounting standards (IAS/IFRS) – as adopted by the European Union. As of 2005, companies listed in the Stock Exchange are obligated to use international accounting standards.
- The need for a universal accounting language implies that assets and liabilities are measured according to the same criteria;
- Financial reporting rules should be uniform so that an investor can evaluate a company independently of its economic, financial or social context.
Level 2 - Employing accounting standards and financial reporting (NCRF) – national standards applicable to companies with a mitigated degree of disclosure, considering that their records are not targeted to investors in regulated markets. For all other companies, in other words, companies not listed, each country has produced their own set of norms, based on accounting and financial reporting standards. In Portugal these are designated by the acronym NCRF: Normas Contabilísticas e de Relato Financeiro (accounting standards Financial Reporting).
The following table provides the equivalences between the NCRF and IAS/IFRS:
|Accounting and Financial Reporting Standards||N.IASB|
|NCRF 1 - Structure and Content of Financial Statements||IAS 1|
|NCRF 2 - Statement of Cash Flows||IAS 7|
|NCRF 3 - Adopting NCRF for the first time||IFRS 1|
|NCRF 4 - Accounting Policies, Changes in Accounting Estimates and Errors||IAS 8|
|NCRF 5 - Related Party Disclosures||IAS 24|
|NCRF 6 - Intangible Assets||IAS 38|
|NCRF 7 - Fixed Tangible Assets||IAS 16|
|NCRF 8 - Non-current Assets Held for Sale and Discontinued Operations||IFRS 5|
|NCRF 9 - Leases||IAS 17|
|NCRF 10 - Borrowing Costs||IAS 23|
|NCRF 11 - Investment Property||IAS 40|
|NCRF 12 - Impairment of Assets||IAS 36|
|NCRF 13 - Interests in Joint Ventures and Investment in Associates||IAS 28 e 31|
|NCRF 14 - Business Combination||IFRS 3|
|NCRF 15 - Investments in subsidiaries and Consolidation||IAS 27|
|NCRF 16 - Exploration for and Evaluation of. Mineral Resources||IFRS 6|
|NCRF 17 - Agriculture||IAS 41|
|NCRF 18 - Inventory||IAS 2|
|NCRF 19 - Construction Contracts||IAS 11|
|NCRF 20 - Revenue||IAS 18|
|NCRF 21 - Provisions, Contingent Liabilities and Contingent Assets||IAS 37|
|NCRF 22 - Subsidies and other Forms of Government Assistance||IAS 20|
|NCRF 23 - Changes in Foreign Exchange Rate||IAS 21|
|NCRF 24 - Events After the Reporting Period||IAS 10|
|NCRF 25 - Income Taxes||IAS 12|
|NCRF 26 - Environmental Issues||-|
|NCRF 27 - Financial Instruments||IAS 32+39+7|
|NCRF 28 - Employee Benefits||IAS 19|
Level 3 - (Simplified Regime) Employment of accounting standards and Financial Reporting for small entities (NCRF-PE) – standards which correspond to an even simpler application of NCRF. Level 3 contemplates Small Companies which do not exceed two of the following three limits:
- € 8,000,000 of total net sales and other income;
- € 4,000,000 total balance;
- 50 employees (average number during reporting period).
However, these entities can choose to aply the NCRF above.
The standards for Accounting and financial reporting for small entities (NCRF-PE) encompass the main aspects of recognition, measuring and disclosure of the corresponding accounting standards and financial reporting (NCRF), with the exception of the following:
- NCRF 2 – Statement of Cash Flows
- NCRF 5 – Related Party Disclosures
- NCRF 8 – Non-current Assets Held for Sale and Discontinued Operations
- NCRF 11 – Investment Properties
- NCRF 12 – Impairment of Assets
- NCRF 13 – Interests in Joint Ventures and Investment in Associates
- NCRF 14 – Business Combination
- NCRF 15 – Investments in subsidiaries and Consolidation
- NCRF 16 – Exploration for and Evaluation of Mineral Resources
- NCRF 24 – Events After the Reporting Period
Code of Accounts in Portugal
Approved by Ordinance no. 1011/2009 dated September 9, is an accounting instrument of mandatory use for entities subject to the (SNC) accounting standards, and may also be used by entities, which under the terms of article 4 of the referenced decree-law, employ the international standards of accounting, given the obvious benefits thereof for the comparison of financial demonstrations.
The document does not intend to be exhaustive, containing, essentially, a summary table of accounts, the code for accounts (coded list of accounts) and notes for contextualization.
To review the above referenced Ordinance no. 1011/2009, follow this link (in Portuguese): Portaria 1011 2009_CC.pdf
If you wish to know more about the SNC – standard for accounting, contact us or consult the official site for the Commission for Standardized Accounting.