Commission Regulation (EU) 2023/2822 as regards International Accounting Standard 1

Commission Regulation (EU) 2023/2822 with respect to the applicability of international accounting standards has been published in the Official Journal (OJ) of the EU. The regulation modifies Commission Regulation (EU) 2023/1803 which sets out the international accounting standards to be applied by public companies in accordance with Regulation (EC) No 1606/2002 by revising the International Accounting Standard 1 (IAS 1) which provides standards for the presentation of financial statements. Specifically, the purpose of the modifications is to account for recently introduced amendments to IAS 1 by the International Accounting Standards Board which revised IAS 1 to clarify the distinction between current and non-current liabilities (e.g. loan arrangements) for purposes of classifying such liabilities in the statement of financial position. Thereafter, current liabilities are those that are expected to be settled within the next 12 months or where
– a company expects to settle the liability in its normal operating cycle;
– a company holds the liability primarily for the purpose of trading;
– the liability is due to be settled within 12 months after the reporting period; or
– a company does not have the right at the end of the reporting period to defer settlement of the liability for at least 12 months after the reporting period.
As the Commission – in consultation with the European Financial Reporting Advisory Group (EFRAG) – found these changes to be worth adopting, the Annex to Regulation (EC) No 2023/1803 is now being changed accordingly.
The newly revised standard must be applied by public companies for financial years starting January 1, 2024.