3 Accounting standards and interpretations in force since 1 January 2014
Commission Regulation (EU) No 1254/2012 of 11 December 2012 officially endorsed IFRS 10 – Consolidated Financial Statements, IFRS 11 – Joint Arrangements and IFRS 12 – Disclosures of Interests in Other Entities, as well as revised versions of IAS 27 – Separate Financial Statements and IAS 28 – Investments in Associates and Joint Ventures.
IFRS 10 – Consolidated Financial Statements (hereinafter “IFRS 10”) and the revised version of IAS 27 –Separate Financial Statements (hereinafter “IAS 27”) set out, respectively, the principles to be adopted for the presentation and preparation of consolidated and separate financial statements. IFRS 10 provides, inter alia, a new definition of control to be applied uniformly to all companies (including special purpose vehicles). According to this definition, a company controls an investee when it is exposed or has rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The standard lists the factors to be considered when assessing whether control exists, which include, inter alia, potential rights, protective rights, and whether there are agency or franchising agreements in place. The new provisions also recognise the possibility of exercising control over an investee even without holding the majority of voting rights due to a fragmented ownership structure or the passive attitude of other investors.
Based on the investors' rights and obligations, IFRS 11 – Joint Arrangements (hereinafter “IFRS 11”) identifies two types of joint arrangements (joint operations and joint ventures), establishes the criteria for identifying joint control and governs the subsequent accounting treatment to be adopted for recognition purposes. For the recognition of joint ventures, the new provisions indicate the equity method as the only permitted treatment, removing the possibility of using proportional consolidation. The updated version of IAS 28 defines, inter alia, the accounting treatment to be adopted in the event of the total or partial divestment of a holding in an associate or joint venture. IFRS 12 – Disclosures of Interests in Other Entities (hereinafter “IFRS 12”) specifies the disclosure requirements relating to subsidiaries and associates, joint ventures and joint operations, and unconsolidated structured entities, specifically requiring explanation of the significant assumptions made (and any changes thereto) for the purposes of determining control or joint control, and in the latter case whether or not said joint control should be classed as a joint venture or a joint operation.
Commission Regulation (EU) No 1256/2012 of 13 December 2012 officially endorsed Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32), which clarifies the application of certain criteria in IAS 32 relating to the offsetting of financial assets and liabilities. In particular, the amendments introduced specify: (i) that the right to offset must not be contingent on a future event and must be legally enforceable in the normal course of business, in the event of default or in the event of insolvency or bankruptcy of all parties to the agreement; and (ii) the conditions that must be in place for the simultaneous settlement of financial assets and liabilities on a gross basis to be considered equivalent to a settlement on a net basis.
Commission Regulation (EU) No 313/2013 of 4 April 2013 officially endorsed the amendments set out in the document “Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12)", which contains some clarifications and simplifications regarding the transition requirements of IFRS 10, IFRS 11 and IFRS 12.
Commission Regulation (EU) No 1174/2013 of 20 November 2013 officially endorsed the amendments set out in the document “Investment Entities: amendments to IFRS 10, IFRS 12 and IAS 27”, which contains clarifications on the definition of the consolidation scope for companies that qualify as investment entities.
Commission Regulation (EU) No 1374/2013 of 19 December 2013 officially endorsed the amendments set out in the document issued by the IASB on 29 May 2013, “Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36)”. The amendment concerns disclosure of the recoverable value of assets that have been impaired, where the recoverable value is based on the fair value less costs to sell.
Commission Regulation (EU) No 1375/2013 of 19 December 2013 officially endorsed the amendments set forth in the document “Novation of derivatives and continuation of hedge accounting”, on the basis of which the novation of a derivative as a result of laws or regulations requiring the replacement of the original counterparty does not constitute an event necessitating the discontinuation of derivative hedge accounting.
Commission Regulation (EU) No 634/2014 of 13 June 2014 officially endorsed the interpretation IFRIC 21 – Levies, which defines the accounting treatment of payments requested by government authorities, other than income taxes, fines and penalties arising from violation of the law. IFRIC 21 indicates the criteria for recognising a liability, establishing that the obligating event for the recognition of the liability is the activity that triggers the payment of the levy in accordance with the relevant legislation.
The application of these accounting standards and the adoption of the amendments to existing standards had no effect on the condensed interim consolidated financial statements at 30 June 2014. With regard to IFRS 11, in view of the analysis performed on Snam’s joint arrangements, these arrangements are classed as joint ventures. Therefore, Snam’s related investments continue to be measured at equity.