Providers Accounts [EU]

Table of Contents

Annual accounts of banks and other financial institutions

Council Directive 86/635/EEC on the annual accounts and consolidated accounts of banks and other financial institutions

It seeks to harmonise the format and contents of the annual accounts, including consolidated accounts*, of all financial institutions within the European Union (EU).

Key Points

The directive applies to most credit institutions (e.g. banks) and other financial institutions, with a few exceptions such as:
Greece: ETEBA (National Investment Bank for Industrial Development);
Ireland: industrial and provident societies*;
United Kingdom (1) (UK): friendly societies* and industrial and provident societies.

Standard balance sheet layout: assets and liabilities are presented in decreasing order of liquidity.
There are special rules for certain balance sheet items such as cash in hand, treasury bills, loans and advances to credit institutions, amounts owed to credit institutions, etc.
There are 2 standard profit-and-loss account layouts: a vertical layout and a horizontal layout.
There are special rules for certain items in the profit-and-loss account such as interest receivable, income from securities, net profit or loss on financial operations, etc.
There are valuation rules for assets, financial fixed assets, securities held by credit institutions, transferable securities, loans and advances, variable-yield securities*, and assets and liabilities denominated in foreign currency.

There is a detailed list of the required contents of the notes on the accounts.

There are separate rules relating to the drawing up of consolidated accounts.

Publication of annual accounts is as laid down by national law. Where the annual report is not published, copies must be available at a price which is not more than their administrative cost.
There are special concessions for public savings banks. For example, where statutory auditing is reserved for an existing supervisory body, a separate audit is not required.

Directive 2006/43/EC aims to improve the credibility of financial information and to step up the protection of the EU against financial scandal. It contains, among other things, rules on the requirement for external quality assurance (e.g this quality assurance must be independent of the reviewed statutory auditors and audit firms and subject to public oversight), the use of international standards, duties of the statutory auditors and principles regarding auditors’ independence.

Context

It has applied since 23 December 1986. EU countries had to incorporate it into national law by 31 December 1990.

Consolidated accounts: where the accounts of a group of companies comprising the parent company and its subsidiaries are combined.
Industrial and provident societies: in Ireland and the UK (1), a form of mutual society, which is a legal entity and is owned by its members, run either as a co-operative or for the benefit of the community.
Friendly societies: in the UK (1), a form of mutual association that provides its members with benefits such as life assurance and with relief or maintenance during sickness, unemployment and retirement.
Variable-yield securities: securities whose owners receive an income that may vary over time.

MAIN DOCUMENT

Council Directive 86/635/EEC of 8 December 1986 on the annual accounts and consolidated accounts of banks and other financial institutions (OJ L 372, 31.12.1986, pp. 1–17)

Successive amendments to Directive 86/635/EEC have been incorporated into the basic text. This consolidated version is for information only.

Insurance companies: annual accounts

Directive 91/674/EEC on the annual accounts and consolidated accounts of insurance undertakings

It aims to ensure that the balance sheets of all EU insurance companies have the same layout and the same item headings in order to ensure comparability.

Key Points

The directive applies to all insurance companies or firms except small mutual associations not carrying out insurance business.

It complemented the Fourth Council Directive (Directive 78/660/EEC) on annual accounts of companies with limited liability which has since been repealed and replaced by Directive 2013/34/EU (annual and consolidated financial statements and related reports of certain types of undertakings).

Even if national accounting standards may differ across EU countries, the directive prescribes certain basic information in the interests of greater comparability of consolidated accounts. To this end, the content of the various balance sheet items is determined precisely.

To provide a proper understanding of the financial situation of an insurance companies, the current value of investments, as well as their value based upon the principle of the purchase price or production cost, must be disclosed; disclosure of the current value of investments is also required.

For life assurance provisions use may be made of actuarial methods which may be laid down in national law and with due regard for the actuarial principles recognised.

Lastly, for the calculation of the provision for claims outstanding, any implicit discounting or deduction is prohibited. On the other hand, in the interests of prudence and transparency, precise conditions for recourse to explicit discounting or deduction are defined.

To adapt accounting disclosures to insurance business models, certain requirements are set out relating to the content of the notes on the accounts, e.g. gross premiums broken down by category of activity (accident and health, motor, fire, etc.) and by geographical market.

It must be possible to obtain a copy of accounts and annual reports upon request at a price not exceeding their administrative cost.

It has applied since 23 December 1991 and had to become law in the EU countries by 1 January 1994.

MAIN DOCUMENT

Council Directive 91/674/EEC of 19 December 1991 on the annual accounts and consolidated accounts of insurance undertakings (OJ L 374, 31.12.1991, pp.7-31)

Successive amendments to Directive 91/674/EEC have been incorporated into the original document. This consolidated version is of documentary value only.

Providers Accounts [EU]

Annual accounts of banks and other financial institutions

Key Points

Context

MAIN DOCUMENT

Insurance companies: annual accounts

Key Points

MAIN DOCUMENT

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