International Financial Reporting — IFRS and US GAAP from Spain

Converting financial statements from the Spanish PGC to IFRS or US GAAP is not a trivial chart-of-accounts reclassification exercise. There are substantive differences that directly impact the figures reported to the group and that must be managed with precision to avoid distortions and audit adjustments.

IFRS 16 — Leases: The Spanish PGC maintains the distinction between finance leases (capitalised) and operating leases (expensed). Under IFRS 16, virtually all leases are capitalised on the lessee’s balance sheet. Typical impact on a Spanish subsidiary: asset and liability increase of EUR 500,000 to EUR 5,000,000 (offices, fleet vehicles, equipment). Reported EBITDA improves but higher indebtedness appears.

IFRS 15 — Revenue Recognition: The 5-step model may differ from PGC criteria for complex contracts, especially in service companies with long-term contracts, software licences with service components, or contracts with variable elements (bonuses, volume discounts).

IFRS 9 — Financial Instruments: The classification and measurement model differs from the PGC. The “available for sale” category in the PGC does not exist in IFRS 9. The expected credit loss (ECL) model is forward-looking, versus the PGC’s incurred loss model, affecting client bad-debt provisions.

IFRS 18 — Presentation of Financial Statements (from January 2027): Published by the IASB in April 2024, IFRS 18 replaces IAS 1 and will be mandatory for periods beginning on or after 1 January 2027, with early adoption permitted. It introduces three mandatory P&L categories: Operating, Investing and Financing, with defined subtotals. Many international parents are requesting early adoption in 2026 to align group reporting before the mandatory deadline. Euroaccounts is already preparing clients’ reporting packages for the new IFRS 18 formats.

US GAAP — Additional differences: For subsidiaries reporting to US parents, additional differences exist: ASC 842 (leases with differences vs. IFRS 16 on lease type), ASC 606 (similar to IFRS 15 but with licence differences), and ASC 740 (taxes with specific tax uncertainty treatment).

Each group has its own formats and reporting requirements, but there is a standard minimum content that every consolidation package should include. Euroaccounts prepares the following components monthly:

Financial Statements:

• Profit and Loss Account (P&L): By nature and function, with comparatives vs. budget, forecast and prior year. Breakdown by cost centre, business line or segment if required by the group.
• Balance Sheet: Classified per the group’s format (IFRS or US GAAP), with detail of movements in principal items.
• Cash Flow Statement: Direct or indirect method per the group’s preference, with cash variation reconciliation.

Supplementary Information:

• Variance analysis: Detailed explanation of significant deviations vs. budget and prior year, with impact quantification and proposed corrective actions.
• Intercompany reconciliation: Balances and transactions with other group entities, reconciled and ready for consolidation elimination.
• Management Discussion: Narrative commentary on business evolution, main period events, identified risks and outlook. Written in English, French or Spanish per the parent’s preference.

The complete package is delivered in the group’s specific format, whether through direct upload to the ERP/consolidation tool or in standardised templates. Euroaccounts maintains a historical archive of all reporting packages to facilitate year-end audit and inter-annual comparisons.