Q&A CNC 16/008 – eCDF / PCN – Deletion of the extraordinary expenses and income category: practical consequences (formerly Q&A PCN 01/2016)

No, there is no obligation.

Pursuant to article 2 of the Grand Ducal Regulation of 10 June 2009⁴, undertakings are authorised not to fill in certain sections of the Standard chart of accounts (PCN) if alternative accounting methods exist or if their activity does not require the use of these sections.

Data collected by the Central Balance Sheet Data Office (Centrale des bilans) tend to confirm that Luxembourgish undertakings make little use of the accounts under section 66 “Extraordinary expenses” and section 76 “Extraordinary income”, with only 9 of the 44 accounts under these two sections being used by more than 500 undertakings (see diagram below):

Yes, this is possible.

Although undertakings are authorised not to fill in certain sections in the Standard chart of accounts (PCN), there is no legal or regulatory provision preventing them from using the PCN accounts, the content and presentation of which have been determined by the Grand Ducal Regulation of 10 June 2009.

As a result, undertakings are still free to use all the accounts included in the Standard chart of accounts (PCN), pending revision of the PCN.

It should be noted that the Grand Ducal Regulation of 10 June 2009 did not introduce a mapping table⁵ governing the articulation between the trial balance accounts in PCN format and the captions / headings of the balance sheet and of the profit and loss account.

In this context, the assignment or grouping of PCN accounts within the sections of the balance sheet and of the profit and loss account is at the discretion of the undertaking’s administrative or management bodies in accordance with general accounting principles and the true and fair view objective.

Without prejudice to the foregoing, it seems useful to provide undertakings with a suggested mapping table for the PCN accounts in section 66 “Extraordinary expenses” and in section 76 “Extraordinary income”.

For the accounts in sections 66 and 76 that are most commonly used by undertakings, the following suggested mapping table is proposed:

For all purposes, a suggested mapping table covering all PCN accounts under sections 66 “Extraordinary expenses” and 76 “Extraordinary income” is provided in the appendix (appendix 1).

As part of its work on the revision of the PCN, CNC questioned the usefulness of maintaining the categories of extraordinary income and of extraordinary expenses within the PCN despite the deletion of the corresponding captions / headings in the profit and loss account.

After careful consideration and review, CNC is considering – as part of the revision of the PCN – proposing the deletion of sections 66 “Extraordinary expenses” and 76 “Extraordinary income” in order to promote – in particular – a more intuitive correspondence between the trial balance accounts in PCN format and the profit and loss account.

This deletion of the accounts under sections 66 and 76 of the PCN would be accompanied – in part – by the creation of new PCN accounts similar to the deleted PCN accounts within other existing sections (e.g.: other operating expenses, other operating income). On the other hand, other PCN accounts would not be replaced following the removal of the underlying concepts (e.g.: allocations to extraordinary value adjustments) by the law of 18 December 2015⁶.

Under this approach, undertakings wishing to do so will still be able to create – for internal management purposes – sub-accounts to meet their needs, for example in order to distinguishbetween normal value adjustments and extraordinary value adjustments. As part of the collection of financial data on the eCDF platform, these sub-accounts will be grouped together – as is currently the case – within existing PCN accounts.

Disclaimer

This document – provided as a courtesy – is an unofficial translation of the French original document entitled “eCDF / PCN – Suppression de la catégorie des charges et des produits exceptionnels : conséquences pratiques”. In case of discrepancy in interpretation, the French version shall prevail.

The “questions and answers” published by the “Commission des normes comptables (CNC)” (Accounting Standards Board):

• are of a general nature and do not refer to the specific situation of any natural or legal person;
• are intended to contribute to the development of accounting doctrine in accordance with Article 73(b) of the amended Law of 19 December 2002 on the trade and companies register, as well as on the bookkeeping and annual accounts of undertakings;
• only represent the opinion of the GIE CNC on a number of doctrinal and interpretative issues.

The administrative or management bodies of undertakings remain responsible in accordance with general law for any decisions taken on the basis of this document.