3Financial statements
Both the Commercial Code and the Revised Spanish Corporate Enterprises Law state that a set of financial statements comprises a balance sheet, an income statement, a statement reflecting the changes in equity during the period, a cash flow statement and notes to the financial statements, with these documents constituting a set of information for these purposes (a directors’ report is also required, although it is not considered to be a constituent part of the financial statements). However, the cash flow statement and the statement of changes in equity are not obligatory where so established by a legal provision (e.g. for companies that are permitted to prepare a balance sheet in the abridged format, as explained below).
Royal Decree-Law 18/2017 of November 24, 2017, which transposed Directive 2014/95/EU into domestic law introduced the obligation, incumbent upon public-interest entities of a certain size, to include in their directors’ report, or in a separate report, a Non-financial Information Statement containing, as a minimum, an account of the company’s position in relation to environmental and social issues, personnel, respect for human rights and measures to combat bribery and corruption.
In this respect, Law 11/2018 of December 28, 2018, amending the Commercial Code, the revised Capital Companies Law and the Spanish Audit Law increased significantly the number of companies which are under the obligation to disclose the non-financial information statement. Companies meeting the following requirements must file this statement, whether individually or on a consolidated basis:
- That the average number of workers employed by the company or the group, as applicable, during the year is above 250.
- That they are either deemed to be public-interest entities in accordance with the audit legislation, or they meet, for two consecutive years, at each of the year-end dates – on an individual or consolidated basis, as appropriate - at least two of the following tests: (i) total asset items amounting to more than €20,000,000; (ii) annual net revenues exceeding €40,000,000.
The Spanish Commercial Code and Revised Spanish Corporate Enterprises Law provide for accounting principles and measurement bases. Also, the Revised Spanish Corporate Enterprises Law specifies the disclosures to be included in the notes to the financial statements.
The Spanish National Chart of Accounts sets out the contents to be included in the separate financial statements, and its application by all companies is mandatory, regardless of whether their legal form is that of a sole proprietorship or a company, without prejudice to such companies as are in a position to apply the Spanish National Chart of Accounts for small and medium enterprises (SMEs) or the relevant industry adaptations, and constitutes the implementation for accounting purposes of Spanish corporate and commercial legislation.
The content of the Spanish National Chart of Accounts is as follows:
- Part one: Conceptual accounting framework.
- Part two: Recognition and measurement bases.
- Part three: Financial statements.
- Part four: Chart of accounts.
- Part five: Accounting definitions and relationships.
The Standards for the Preparation of Consolidated Financial Statements were approved in Royal Decree 1159/2010, which was amended by Royal Decree 1/2021 of January 12, 2021.
