Q&A CNC 16/011 – eCDF / PCN – Changes in the presentation of financial expenses and income (2016): practical consequences

Directive 2013/34/EU, which repeals and replaces the 4^th and 7^th Directives of 1978⁵ and 1983⁶, modernised the profit and loss account layout⁷ (renamed in the French version of the directive⁸).

Furthermore, as part of the work to transpose into Luxembourg law the provisions of directive 2013/34/EU relating to balance sheet and profit and loss account layouts⁹, it was noted that during the legislative reforms of 2002¹⁰ then 2009 -2010^11/12 and 2013¹³, Luxembourg layouts had deviated from European layouts at various points. In view of the objective of European accounting harmonisation underlying directive 2013/34/EU, it was decided to limit as far as possible the deviations of Luxembourg layouts from European layouts.

In this context, the Grand Ducal Regulation of 18 December 2015 has, on the one hand, introduced certain new features provided for by directive 2013/34/EU (e.g.: elimination of the category of extraordinary income and expenses¹⁴ within which certain financial income and expenses were presented) and, on the other hand, proceeded to eliminate a certain number of differences between the financial income and expense captions included within the European profit and loss account layouts and the financial income and expense captions included within the Luxembourg profit and loss account layout.

The main differences between the new and old financial income and expense captions are presented below (point 2.).

The main differences between the new (2016) and old (2015) captions of financial expense and income (2016) are summarised below. These differences result from a realignment of the financial income and expense captions in the Luxembourg profit and loss account layout with those included in the European layout. The result is a change in approach which is no longer based on a distinction between income from financial fixed assets and income from financial current assets.

To facilitate the transition for undertakings, mapping tables – indicative in nature[1] – are proposed in the appendices.

In this context, the purpose of appendices 1.a) and 1.b) is to facilitate the transition between the accounts under sections 65 “Financial expenses” and 75 “Financial income” of the PCN (2009) and the financial expense and income captions of the profit and loss account (2016). These appendices may prove particularly useful to preparers, especially when drawing up the profit and loss account (2016) based on a trial balance presented in accordance with the PCN (2009).

• Appendix 1.a) – Financial expenses: correspondence between PCN accounts (2009) and profit and loss account captions (2016)

• Appendix 1.b) – Financial income: correspondence between PCN accounts (2009) and profit and loss account captions (2016)

In addition, appendices 2.a) and 2.b) are intended to specify the relationship between the captions of financial assets and financial liabilities in the balance sheet and the captions of financial income and expenses in the profit and loss account and the financial income and expense accounts in the standard chart of accounts (PCN). These appendices may prove particularly useful to preparers, auditors and users when analysing and/or reviewing the annual accounts and the trial balance presented in accordance with the standard chart of accounts (PCN).

• Appendix 2.a) – Relationship between financial asset captions in the balance sheet (2016) and income and expense captions and accounts in the profit and loss account (2016) and the Standard chart of accounts (2009)

• Annex 2.b) – Relationship between financial liability captions in the balance sheet (2016) and expense and income captions and accounts in the profit and loss account (2016) and the Standard chart of accounts (2009)

*

Disclaimer

This document – provided as a courtesy – is an unofficial translation of the French original document entitled “eCDF / PCN – modifications dans la présentation des charges et des produits financiers (2016) : 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;
• represent only the opinion of the GIE CNC on a number of doctrinal and interpretative issues.

The administrative or management bodies of undertakings remain responsible under general law for any decision taken on the basis of this document.