2.3. Statement of compliance with IFRS

IFRS 16 „Leases” – was published by the International Accounting Standards Board on 13 January 2016 and approved by the European Commission Regulation No. 2017/1986 of 31 October 2017 (applicable to annual reporting periods beginning on 1 January 2019 or after that date). IFRS 16 requires a lessee to recognise the assets and lease liabilities. The right to use the underlying asset is treated similarly to other non-financial assets and amortised accordingly. Lease liabilities are initially measured based at current value of the lease payments payable during the lease term, discounted by the lease rate if it is not difficult to determine. If such a rate cannot be easily determined, the lessee applies the marginal interest rate. With regard to the types of leases, lessors continue to classify them in accordance with the requirements of IAS 17: as operating leases or finance leases. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. Otherwise, a lease is classified as an operating lease. In finance leases, a lessor recognises finance income over the lease term so as to reflect a constant periodic rate of return on its net investment. A lessor recognises operating lease payments as income on a straight-line basis or another systematic basis if it is more representative of the pattern in which benefits from the use of underlying assets are obtained.
Amendments to IFRS 9 “Financial Instruments” – Prepayment features with negative compensation – were issued by the IASB on October 12, 2017 and approved by the EU on March 22, 2018 (effective for annual reporting periods beginning on or after January 1, 2019). The amendments modify the requirements of IFRS 9 regarding rights for early termination of a contract in order to allow measurement at amortised cost (or at fair value through other comprehensive income) even in the case of negative compensation payments. The changes state that the sign (plus or minus) of the prepayment amount is not relevant – i.e. depending on the interest rate prevailing at the time of termination, a payment may also be made in favour of the contracting party effecting the early repayment. The calculation of this compensation must be the same for both the case of an early repayment penalty and early repayment gain. In addition, the amendments also contain a clarification regarding a modification of financial liability that does not result in the derecognition of the financial liability. In such cases, the carrying amount of the liability is adjusted and the result is recognised in comprehensive income, the effective interest rate is not adjusted.
Amendments to IAS 19 “Employee Benefits” – Plan Amendment, Curtailment or Settlement – were issued by the IASB on February 7, 2018 and approved by the EU on March 13, 2019 (effective for annual reporting periods beginning on or after January 1, 2019). The amendments require entities to use the updated actuarial assumptions to determine current service cost and net interest for the remainder of the annual reporting period.
Amendments to IAS 28 „Investments in Associates and Joint Ventures” – Long-term interests in associates and joint ventures – were issued by the IASB on October 12, 2017 and approved by the EU on February 8, 2019 (effective for annual reporting periods beginning on or after January 1, 2019). The amendments were introduced to clarify that an entity applies IFRS 9 (including impairment regulations) to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied. Changes include the deletion of paragraph 41, as it was merely reiterating the requirements stated in IFRS 9 and had created confusion about the accounting for long-term interests.
Annual Improvements to IFRS Standards (2015-2017 Cycle) – address minor, but necessary, changes to various IFRS Standards (IFRS 3, IFRS 11, IAS 12 and IAS 23) to clarify wording or eliminate inconsistencies between Standards. They were issued by the IASB on December 12, 2017 and approved by the EU on March 14, 2019 (effective for annual reporting periods beginning on or after January 1, 2019). The amendments clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business (IFRS 3); when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business (IFRS 11); an entity recognises the income tax consequences of dividends in the same manner (IAS 12); once a qualifying asset funded through specific borrowings becomes ready for its intended use or sale, the borrowings used for its modernisation become part of the pool of general borrowings (IAS 23).
IFRIC 23 Interpretation ”Uncertainty over Income Tax Treatments” – was issued by the IASB on June 7, 2017 and approved by the EU on October 23, 2018 (effective for annual reporting periods beginning on or after January 1, 2019). It may be unclear how tax law applies to a particular transaction or circumstance, or whether a taxation authority will accept a company’s tax treatment. IAS 12 “Income Taxes” specifies how to account for current and deferred tax, but not how to reflect the effects of uncertainty. IFRIC 23 provides requirements that add to the requirements in IAS 12 by specifying how to reflect the effects of uncertainty in accounting for income taxes.

Amendments to IAS 1 “Presentation of Financial Statements” and IAS 8 ”Accounting Policies, Changes in Accounting Estimates and Errors” – definition of “material” (the amendments were issued by the IASB on October 31, 2018 and are effective for annual reporting periods beginning on or after January 1, 2020). The amendments clarify the definition of “material” and how it should be applied.
Amendments to References to the Conceptual Framework in IFRS Standards (issued by the IASB on March 29, 2018 and are effective for annual reporting periods beginning on or after January 1, 2020). Due to changes in the Conceptual Framework, the IASB updated references to the amended IFRS standards. The document introduces changes to IFRS 2, IFRS 3, MSSF 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22 and SKI-32. It was done to support transition to the revised Conceptual Framework for companies that develop accounting policies using the Conceptual Framework when no IFRS Standard applies to a particular transaction.

IFRS 14 “Regulatory Deferral Accounts” (effective for annual reporting periods beginning on or after January 1, 2016) – the European Commission has decided not to launch the endorsement process of this interim standard and to wait for the final version of standard IFRS 14. The standard permits an entity which is a first-time adopter of International Financial Reporting Standards to continue to account for ‚regulatory deferral account balances’ in accordance with its previous GAAP.
IFRS 17 “Insurance Contracts” (effective for annual reporting periods beginning on or after January 1, 2021) is a new standard which requires insurance liabilities to be measured at a current fulfilment value and provides a more uniform measurement and presentation approach for all insurance contracts. These requirements are designed to achieve the goal of a consistent, principle-based accounting for insurance contracts. IFRS 17 supersedes IFRS 4, “Insurance Contracts” and related interpretations.
Amendments to IFRS 3 “Business combinations – definition of a business” (effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020 and to asset acquisitions that occur on or after the beginning of that period), the changes are intended to improve the definition of a “business”.The amended definition emphasises that the output of a business is to provide goods and services to customers, whereas the previous definition focused on returns in the form of dividends, lower costs or other economic benefits to investors and In addition to amending the wording of the definition, the Board has provided supplementary guidance.
Amendments to IFRS 9 “Financial Instruments”, IAS 39 “Financial Instruments: Recognition and Measurement” and IFRS 7 “Financial Instruments: Disclosures” – Interest rate Benchmark Reform (effective for annual reporting periods beginning on or after January 1, 2020). The amendments:
1. modify specific hedge accounting requirements, so that entities would apply those hedge accounting requirements assuming that the interest rate benchmark – on which the hedged cash flows and cash flows of the hedging instrument are based – is not altered as a result of the interest rate benchmark reform;
2. will mandatorily apply to all hedging relationships that are directly affected by the interest rate benchmark reform;
3. are not intended to provide relief from any other consequences arising from the interest rate benchmark reform (a discontinuation of hedge accounting is still required if a hedging relationship no longer meets the requirements for hedge accounting for reasons other than those specified by the amended Standards);
4. and introduce detailed disclosure requirements regarding the effects of the amendments on an entity’s hedging relationships.
Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” – Sales or contribution of assets between an investor and its associate or joint venture and later amendments (the effective date is deferred until the research project on the equity method has been concluded), the amendments address the conflict between IFRS 10 and IAS 28 and explain that whether the gain or loss arising from transactions between an entity and its associate or joint venture should be recognised in accounting depends on whether the sale or contribution of assets constitute a business.

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