Financial statements as defined in Article 67 and Article 69 must be based on the accounting standards required by local legislation for incorporated companies – either the applicable financial reporting framework of the relevant country, the International Financial Reporting Standards or the International Financial Reporting Standard for Small and Medium-sized Entities – regardless of the legal structure of the licence applicant/licensee.
Financial statements must be prepared on the assumption that the licence applicant is a going concern, meaning it will continue in operation for the foreseeable future. It is assumed that the licence applicant/licensee has no intention or need to go into liquidation, cease trading or seek protection from creditors pursuant to laws or regulations.
The financial reporting framework, suitable as a basis for the preparation of financial statements, must contain certain underlying principles including:
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fair presentation;
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consistency of presentation;
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accrual basis for accounting;
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separate presentation of each material class of items;
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no offsetting of assets and liabilities or income and expenses.
Notwithstanding that each licence applicant/licensee has to prepare annual financial statements and interim financial statements under its own national accounting practice for incorporated companies, the International Financial Reporting Standards or the International Financial Reporting Standard for Small and Medium-sized Entities, these regulations include specific accounting requirements to be complied with as set out in Annex G.2 to Annex G.6.
The accounting requirements set out in Annex G.2 to Annex G.6 are applicable both to licence applicants and to licensees that are subject to monitoring requirements.