The Institute of Accounting of the Republic of Lithuania

Wednesday, September 7, 2005

The Institute of Accounting of the Republic of Lithuania

The role of a National

Accounting Standards Setter in the European

Union


Overarching aim• Improvements to national accounting

system– from rules based (tax liked) rules approved by

Ministry of Finance– to independent standards setting system

• full convergence with– European Union (EU) Directives – in respect to current situation in Lithuania

achieved by


• active cooperation with– relevant EU institutions responsible for

accounting issues and– International Accounting Standards

Board and– other national accounting standards

setters of EU countries

and


• enlightenment of professional society– of international practice in accounting

by– translating IAS/IFRS and – giving explanations for application by– articles in professional journals and

discussions in conferences while– inviting experts of IASB

executed by


• the Institute of Accounting of the Republic of Lithuania (IoA) – the non-profit organization – established in under the Law of

Accounting

whose activity

is


• preparation of national accounting standards (Business Accounting Standards (BAS));

• training of accounting professionals;• participation in the IASB and EU

institutions activity concerning accounting issues

and


structure

The Institute of Accounting of the Republic of Lithuania

Founders – the highest

body of the

Institute

the Board of Standards –

approvesBAS and

methodical recommenda –

tions

the Adminis –tration – runs the

activity of the Institute

thatare


– Ministry of Finances – 50 % voting rights and

– Private audit companies and autonomous professional organizations – 50 % voting rights


Objectives of the Accounting Standards Board•principles guiding the

establish of BAS:–principle 1 – independent

standard setting:– independent board members– meetings of board could be attended by

public– thorough due process– no political influence

and


– principal 2 – practice based standards:• methodical recommendations for• each BAS• based on realistic situations in practice• prepared along with relevant standard

leadto


–high quality standards•understandable•enforceable•transparent and comparable information

… to help users to make economic decisions.


•preparing and / or amending BAS: – procedure:

•working draft•co-ordination draft

–outgoing for the coordination with different institutions

•discussion draft•confirmed business accounting standard


– practice•BAS, approved and published till 1

January, 2005– 25 BAS concerning – implementation guidance on financial

reporting together

•with methodical recommendations for each standard

exactly


• BAS 1 Financial reporting• BAS 2 Balance sheet• BAS 3 Income statement• BAS 4 Statement of changes in equity• BAS 5 Cash flow statement• BAS 6 Explanatory notes• BAS 7 Changes in accounting policies,

accounting estimates and correction of errors

• BAS 8 Equity• BAS 9 Inventories• BAS 10 Revenue from sales


• BAS 11 Cost of sales and operating costs• BAS 12 Non-current tangible assets• BAS 13 Intangible assets• BAS 14 Business combinations• BAS 15 Investments in associates• BAS 16 Consolidated Financial Statements

and Investments in Subsidiaries• BAS 17 Biological assets• BAS 18 Financial assets and financial

obligations• BAS 19 Provisions, contingent liabilities and

contingent assets, and events occurring after the balance sheet date


• BAS 20 Operating lease, financial lease and loan-for-use

• BAS 21 Grants and subsidies• BAS 22 Changes in foreign exchange rates• BAS 23 Impairment of assets• BAS 24 Income tax• BAS 25 Construction and other long term

contracts

thatare


• announced immediately as approved – in the official publication of Lithuanian – on website of IoA

• all standards and methodical recommendations as well as discussion drafts – in Lithuanian language

• all standards – in English language

www.apskaitosinstitutas.lt

http://www.apskaitosinstitutas.lt/


•projects on the agenda–at the point of exposure draft

»amendments for BAS 12 Property, plant and equipment

»BAS 29 Interim financial reporting»BAS 35 Reorganization of the

companies»BAS 36 Unlimited liability legal

entities accounting– at the point of discussion paper

»BAS 30 Related parties»BAS 34 Segment reporting


•addressing urgent issues promptly– standards – if

• widespread and • practical relevance with• necessity to prepare in short time

– inquiries from different entities• in 10 days – if not arguable• in one month – if arguable


• International cooperation with

– relevant EU institutions – ARC, EFRAG, – IASB – national standard-setters of other EU

countries – Latvia, Estonia and etc. for


– participation actively in the process of development of EU Directives and setting/amending IAS/IFRS for

– international practice and explanations according relevant issues and

– personal practice to share


•structure of the Standards Board– 4 full-time and 5 part-time members– sole responsibility for setting agenda

and standards– presently from different institutions and

companies exactly


– 1 member − Ministry of Finance– 2 members − audit and accounting

professionals– 1 member − Securities Commission– 1 member − Insurance Supervisory Commission – 4 members – full time members

… and 2 representatives from Tax Department as permanent visiting participants

that


• the Standards Board’s work is supported by:– 4 technical staff that– consist of

• 2 experts of accounting – prepares standards, methodical

recommendations and– answers to inquiries

• linguist – gives explanations over phrase of provisions

• lawyer – gives explanations of compliance with other laws and


• the Standards Board’s work is financed from: – state budget– commercial activity of IoA

• publishing – binders of BAS and methodical recommendations

• seminars and courses – for accounting and audit professionals


Early changes

• Change of founders– exclusion of private audit companies

• Withdrawal of commercial activity as– to be financed only from state budget

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The Institute of Accounting of the Republic of Lithuania

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