"NEWS July 26, 2016-online the new OIC 10 draft financial statement"

Posted by on Jul 26, 2016

Yesterday, was posted in consultation, on the website of the Italian accounting Body, the draft of the new Oic 10 that aims to define the criteria for the preparation and presentation of financial statements.

At the same time been disclosed even the draft of the new Oic 18 "accruals and deferrals" whose analysis is postponed until a future discussion of this matter.

Continues, so the draft update of national accounting started following the entry into force of Legislative Decree 139/2015.

In connection with the financial report, please note that the previous discipline does not expressly required the drafting as mandatory budget scheme. In this respect, the version of the Oic 10 enacted in 2014 merely recommend the drawing up of the prospectus within the explanatory notes given its informational relevance.

Otherwise, the new legislation applicable to subjects from 2016, budget provides for the compulsory preparation of report for all companies that prepare financial statements in ordinary form in accordance with the provisions of the civil code. Therefore, the cash flow statement is no longer included in the notes, but it is a statement of its own. Article 2423, paragraph 1, cod. CIV. has, in fact, that "administrators should draw up the financial statements, comprising the balance sheet, income statement, cash flow statement and the notes to the financial statements".

By express provision of law, are exempt from the preparation of the financial statements the companies which prepare their financial statements in abbreviated form (2435-great article cod. CIV.) and micro enterprises (article 2435-ter cod. CIV.).

The discipline of reference of the statement is contained in new article 2425-ter cod. CIV. that governs the content by providing that "The financial statements are, to which was referred the budget and for the previous one, the amount and composition of cash and cash equivalents at the beginning and end of the period, and cash flows for the year arising from operating activities, investment, financing, including from operations with associates.

In other words, the rule provides that the representation must be the subject of cash flow, which should be filed separately in one of the following categories:

  1. operating activities;
  2. investment activity;
  3. financing activities.

In that respect, the draft specifies expressly that these categories should be presented in the sequence indicated.

It is, however, devoted a section to some particular cases of financial flows such as interest and dividends, those related to income taxes, as well as those arising from foreign exchange transactions, financial instruments and the purchase or sale of business units.

Indeed, these predictions consistent with the approach followed by the 2014 Edition of the Oic 10; the only significant innovations made in the text of the principle concerns the designation under the diagram of the financial statements of the amount and composition of cash and cash equivalents at the beginning and end of the period, in line with what is expressly required by the standard wording.

With regard to the rules laid down in the first application of the new Oic 10, the draft States that the discipline of the cash flow statement is one of the innovations that must be applied retroactively in accordance with article 12 of Legislative Decree 139/2015. Therefore, you must submit, for comparative purposes, the financial statements of the previous year the reference year.

It highlights that any remarks the principle must be notified no later than September 15, 2016.

Alessandro Bonuzzi