Simplified note requirements for small companies
Changes to the Norwegian Accounting Act (NAA) regarding simplified note requirements for small companies took place 1 July 2021. The changes are a result of the EU-Directive putting limits on what can be required of small entities. The purpose is to have simplified rules for small businesses.
The NAA § 1-6 defines a small company as being a reporting entity that does not fall within the definition of large companies in NAA § 1-5 (such as companies with listed shares/bonds and certain regulated businesses), and that does not exceed two of the three thresholds: income of NOK 70 million, a balance sum of NOK 35 million, and number of average full-time employees not exceeding 50.
The biggest change for small reporting entities is all the note requirements that no longer are required. The following previous requirements have been repealed:
- NAA 7-35- It is no longer necessary to elaborate any further on the use of the principles, it is just necessary to state which accounting principle one applies
- NAA § 7-35 second paragraph – The effect of a change in accounting principles, errors in previous annual accounts and correction of these kinds of errors, as well as reclassifications, are no longer a note requirement
- NAA 7-35 fourth paragraph –If the accounts are presented in a currency other than the accounting currency one does no longer need to disclose the accounting currency and the conversion rate in notes
- Parts of the provision of NAA 7-36 – There isno longer a requirement to give note information about group relations and affiliates
- NAA 5-8and § 7-37 – There is no longer a requirement to disclose acquisition cost for financial instruments and derivatives valued at fair value
- NAA 7-38 second paragraph – It is not necessary to specify operating costs that are not specified by typein the income statement
- NAA 7-39- No requirement to inform about change in the depreciation plan for fixed assets
- NAA § 7-39 fourth paragraph – Not required to disclose research and development costs
- NAA § 7-40 fourth paragraph – Not required to disclose a specification of other provisions for liabilities (NAA § 6-2 D I nr 3)
- NAA 7-42 first to third paragraph – You no longer have to expose/state who has the right to vote, the share capital, the ownersetc. in your notes
- NAA § 7-44 -There is no longer a requirement to give note information about the salary, remuneration, severance pay etc. to the general manager, members of the board or the corporate assembly
- NAA 7-43 a- The note requirement of mandatory occupational pension is abolished
- NAA 7-45 is partially changed – The provision on loans or collateral in favour of the general manager and chairman of the board, will partially be changed. It will be adapted to the provision in the directive
In addition, one other important change is made to the notes, but applies for all companies, not only the small ones: Note information to the balance sheet and the income statement shall be listed in the same order as the lines in the balance sheet and the income statement ( NAA § 7-1 a).
Anette Burum: firstname.lastname@example.org