LegalizeS.I. No. 262/2015 - European Union (Insurance Undertakings: Financial Statements) Regulations 2015
This is the act as published. Later amendments are not folded into the text below: each one is a separate act in this repository and an entry in this law's history.
1 amending act · 2016-05-03, S.I. No. 213/2016 - European Union (Insurance Undertakings: Financial Statements) (Amendm…
Notice of the making of this Statutory Instrument was published in
“Iris Oifigiúil” of 23rd June, 2015.
I, MICHAEL NOONAN , Minister for Finance, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972) and for the purpose of giving effect to Council Directive 91/674/EEC of 23 December 19911 , hereby make the following regulations:
Citation and commencement
1.
(1) These Regulations may be cited as the European Union (Insurance Undertakings: Financial Statements) Regulations 2015.
- (2) These Regulations come into operation on 17 June 2015.
Interpretation
2.
(1) In these Regulations—
“Bank” means the Central Bank of Ireland;
“insurance undertaking” has the same meaning as it has in section 275 of the Principal Act;
“Principal Act” means the Companies Act 2014 (No.38 of 2014);
“small or medium company” shall be construed in accordance with section 350 of the Principal Act;
“undertaking” means an insurance undertaking.
- (2) A word or expression that is used in these Regulations and is also used in the Principal Act, and, in particular, in Part 6 of that Act, shall have in these Regulations the same meaning as it has in that Act (or Part) unless the contrary intention appears.
Application of Part 6 of Principal Act to insurance undertakings
3.
(1) The provisions of Part 6 of the Principal Act shall apply to an insurance undertaking except to the extent that they are disapplied or modified by these Regulations.
- (2) A reference in the Principal Act to any provision of Part 6 of that Act shall be construed, for the purposes of its application to an insurance undertaking, as a reference to that provision as applied by these Regulations.
- (3) A reference in Part 6 of the Principal Act to Schedule 3 to that Act shall be construed, for the purposes of its application to an insurance undertaking, as a reference to Schedule 1 to these Regulations.
- (4) A reference in Part 6 of the Principal Act to Schedule 4 to that Act shall be construed, for the purposes of its application to an insurance undertaking, as a reference to Schedule 2 to these Regulations.
Application of section 293 (as applied by Regulation 3) of Principal Act to certain undertakings
4.
(1) Section 293, as it applies by virtue of Regulation 3, of the Principal Act (obligation to prepare group financial statements) shall also apply to a holding undertaking:
- (a) which does not itself carry on any material business apart from the acquisition, management and disposal of interests in subsidiaries; and
- (b) whose principal subsidiaries are wholly or mainly insurance undertakings.
- (2) In paragraph (1)—
- (a) the reference to the management of interests in subsidiaries includes a reference to the provision of services to subsidiaries; and
- (b) “principalsubsidiaries”, in relation to a holding undertaking, means those subsidiaries of the undertaking whose results or financial position would principally affect the figures shown in the group financial statements.
Financial statements to be made available to public
5.
(1) An insurance undertaking shall—
- (a) make available its financial statements prepared in accordance with section 290 or 293 of the Principal Act for public inspection at its head office, and
- (b) make available to the public copies of its financial statements on request at a price which does not exceed the cost of making the copy.
- (2) A person who contravenes paragraph (1) shall be guilty of an offence and shall be liable on summary conviction to a class A fine or imprisonment for a term not exceeding 6 months or both.
Non-application of certain provisions of Principal Act to insurance undertakings
6.
(1) An insurance undertaking shall not qualify as a small or medium company for the purposes of Chapter 14 of Part 6 of the Principal Act and any reference in that Part to a small or medium company shall be read as excluding a reference to an insurance undertaking.
- (2) In addition to what is provided by paragraph (1), each provision of the Principal Act specified in the Table to this Regulation, in so far as it is not already disapplied by that Act to such an undertaking, shall not apply to an insurance undertaking.
- (3) Section 357 of the Principal Act shall not apply to an insurance undertaking.
Table
| Sections 297 and 298 (Exemption from consolidation: size of group) |
| Sections 358 to 364 (Audit exemption) |
| Section 365 (Dormant company audit exemption) |
| Section 377 (Small and medium sized companies) |
| Section 378 (Application of this Chapter in cases where audit exemption available, etc.) |
Amendment of Central Bank Act 1942
7.
Part 2 of Schedule 2 (as last amended by Regulation 4 (2) of the European Union (European Social Entrepreneurship Funds) Regulations 2015 ( S.I. No.166 of 2015 )) to the Central Bank Act 1942 (No.22 of 1942) is amended by inserting after the last item the following:
“
57 S.I. No. 262 of 2015 European Union (Insurance Undertakings: Financial Statements) Regulations 2015 The whole instrument .”.
Revocation of European Communities (Insurance Undertakings:Accounts) Regulations 1996
8.
The European Communities (Insurance Undertakings: Accounts) Regulations 1996 ( S.I. No. 23 of 1996 ) are revoked.
SCHEDULE 1 ACCOUNTING PRINCIPLES, FORM AND CONTENT OF ENTITY FINANCIAL STATEMENTS
PART I CONSTRUCTION OF REFERENCES TO PROVISIONS OF THIS SCHEDULE
(1) Without prejudice to the generality of section 9 of the Interpretation Act 2005 and its application to the body of these Regulations—
- (a) a reference in this Schedule to a paragraph or Part is a reference to a paragraph or Part of this Schedule, unless it is indicated that a reference to some other enactment is intended;
- (b) a reference in this Schedule to a section is a reference to the section of the Part in which the reference occurs, unless it is indicated that a reference to some other enactment is intended; and
- (c) a reference in this Schedule to a subparagraph or clause is a reference to the subparagraph or clause of the provision in which the reference occurs, unless it is indicated that a reference to some other enactment is intended.
- (2) Provisions providing for the interpretation of certain expressions appearing in this Schedule are contained in Part VII.
PART II GENERAL RULES AND FORMATS
SECTION A
GENERAL RULES
(1) Subject to the provisions of this Schedule—
- (a) every balance sheet of an undertaking shall show the items listed in the balance sheet format set out in Section B; and
- (b) every profit and loss account of an undertaking shall show the items listed in the profit and loss account format so set out, in either case in the order and under the headings and sub-headings given in the format adopted.
(2)Subparagraph (1) shall not be read as requiring the heading or sub-heading for any item in the balance sheet, or profit and loss account, of an undertaking to be distinguished by any letter or number assigned to that item in the formats set out in Section B.
(1) Where, in accordance with paragraph 2(1), an undertaking’s balance sheet or profit and loss account for any financial year has been prepared by reference to one of the formats set out in Section B, the directors of the undertaking shall adopt the same format in preparing the financial statements for subsequent financial years unless, in their opinion, there are special reasons for a change.
- (2) Where any change is made in the format adopted in preparing a balance sheet or profit and loss account of an undertaking, the reasons for the change, together with full particulars of the change, shall be given in a note to the financial statements in which the new format is first adopted.
(1) Any item required in accordance with paragraph 2 to be shown in the balance sheet or profit and loss account of an undertaking may be shown in greater detail than that required by the format adopted.
- (2) The balance sheet, or profit and loss account, of an undertaking may include an item representing or covering the amount of any asset or liability or income or expenditure not otherwise covered by any of the items listed in the format adopted but the following shall not be treated as assets in the balance sheet of an undertaking—
- (a) preliminary expenses;
- (b) expenses of and commission on any issue of shares or debentures;
- (c) costs of research; and
- (d) own shares or treasury shares.
- (3) Items to which Arabic numbers are assigned in the balance sheet format set out in Part B (except for items concerning technical provisions and the reinsurers share of technical provisions), and items to which lower case letters are assigned in the profit and loss account format so set out (except for items I.1, I.4, II.1, II.5 and II.6) may be combined in an undertaking’s financial statements for any financial year in any case where—
- (a) the individual amounts of such items are not material to assessing the financial position or profit or loss of the undertaking for the financial year concerned, or
- (b) the combination of such items facilitates that assessment.
- (4) Where items are combined in an undertaking’s financial statements pursuant to subparagraph (3)(b), the individual amounts of any items so combined shall be disclosed in a note to the financial statements.
In respect of every item shown in the balance sheet, or profit and loss account, or notes thereto, of an undertaking, the corresponding amount for the financial year immediately preceding that to which the balance sheet or profit and loss account relates shall also be shown and, if that corresponding amount is not comparable with the amount to be shown for the item in question in respect of the financial year to which the balance sheet or profit and loss account relates, the former amount may be adjusted, and particulars of the adjustment and the reasons therefor shall be given in a note to the financial statements.
(1) Subject to subparagraph (2), a heading or sub-heading corresponding to an item listed in the format adopted in preparing the balance sheet or profit and loss account of an undertaking shall not be included in the balance sheet or profit and loss account, as the case may be, if there is no amount to be shown for that item in respect of the financial year to which the balance sheet or profit and loss account relates.
(2)Subparagraph (1) shall not apply in any case where an amount can be shown for the item in question in respect of the financial year immediately preceding that to which the balance sheet or profit and loss account relates, and that amount shall be shown under the heading or sub-heading required by the format adopted as aforesaid.
Amounts in respect of items representing assets or income may not be set off in the financial statements of an undertaking against amounts in respect of items representing liabilities or expenditure, as the case may be, or vice versa.
(1) Funds of a group pension fund, within the meaning of points (iii) and (iv) of paragraph (3)(b) of Article 2 of the Insurance and Reinsurance Directive, which an insurance undertaking administers in its own name but on behalf of third parties shall be shown in the balance sheet if the undertaking acquires legal title to the assets concerned and the total amount of such assets and liabilities shall be shown separately or in the notes to the financial statements, broken down according to the various assets and liabilities items.
- (2) Assets acquired in the name of and on behalf of third parties shall not be shown in the balance sheet.
The provisions of this Schedule which relate to life assurance shall apply to health insurance written by undertakings which write only health insurance and which is transacted exclusively or principally according to the technical principles of life assurance.
(1) In the profit and loss account format set out below in Section B—
- (a) the heading "Technical account — non-life business" is for those classes of direct insurance which are within the scope of the European Communities (Non-Life Insurance) Regulations, 1976 ( S.I. No. 115 of 1976 ), the European Communities (Non-Life Insurance) Framework Regulations, 1994 ( S.I. No. 359 of 1994 ) and for the corresponding classes of reinsurance business, and
- (b) the heading "Technical account — life assurance business" is for those classes of direct insurance which are within the scope of the European Communities (Life Assurance) Regulations, 1984 ( S.I. No. 57 of 1984 ), the European Communities (Life Assurance) Framework Regulations 1994 ( S.I. No. 360 of 1994 ) and for the corresponding classes of reinsurance business.
- (2) Undertakings whose activities consist wholly of reinsurance or whose activities consist of direct non-life insurance and reinsurance may use the format "Technical account — non-life business" for all of their business.
SECTION B
THE REQUIRED FORMATS FOR FINANCIAL STATEMENTS
Preliminary
References in this Part to the items listed in any of the formats set out in this Part are references to those items read together with any notes following the formats which apply to any of those items.
A number in brackets following any item in, or any heading to, any of the formats set out in this Part is a reference to the note of that number in the notes following the formats.
In the notes following the formats the heading of each note gives the required heading or sub-heading for the item to which it applies and a reference to any letters and numbers assigned to that item in the formats set out in this Part.
BALANCE SHEET FORMAT
Assets
| A. Called up share capital not paid | |||
| B. Intangible assets | |||
| 1. Development costs. | |||
| 2. Concessions, patents, licences, trademarks and similar rights and assets (1). | |||
| 3. Goodwill (2). | |||
| 4. Payments on account. | |||
| C. Investments | |||
| I. Land and buildings (3) | |||
| II. Investments in group undertakings and participating interests: | |||
| 1. Shares in group undertakings | |||
| 2. Debt securities issued by, and loans to, group undertakings | |||
| 3. Participating interests | |||
| 4. Debt securities issued by, and loans to, undertakings in which the undertaking has a participating interest | |||
| III. Other financial investments: | |||
| 1. Shares and other variable-yield securities and units in unit trusts | |||
| 2. Debt securities and other fixed income securities (4) | |||
| 3. Participation in investment pools (5) | |||
| 4. Loans secured by mortgages (6) | |||
| 5. Other loans (6) | |||
| 6. Deposits with credit institutions (7) | |||
| 7. Other (8) | |||
| IV. Deposits with ceding undertakings (9) | |||
| D. Investments for the benefit of life assurance policyholders who bear the investment risk (10) | |||
| Da. Reinsurers’ share of technical provisions (11) | |||
| 1. Provision for unearned premiums | |||
| 2. Life assurance provision | |||
| 3. Claims outstanding | |||
| 4. Provision for bonuses and rebates (unless shown under sub-item 2) | |||
| 5. Other technical provisions | |||
| 6. Technical provisions for life-assurance policies where the investment risk is borne by the policyholders | |||
| E. Debtors (12) | |||
| I. Debtors arising out of direct insurance operations | |||
| 1. Policyholders | |||
| 2. Intermediaries | |||
| II. Debtors arising out of reinsurance operations | |||
| III. Other debtors | |||
| F. Other assets | |||
| I. Tangible assets and stocks | |||
| 1. Plant and machinery | |||
| 2. Fixtures, fittings, tools and equipment | |||
| 3. Payments on account (other than deposits paid on land and buildings) and assets (other than buildings) in course of construction. | |||
| 4. Raw materials and consumables | |||
| 5. Work in progress | |||
| 6. Finished goods and goods for resale | |||
| II. Cash at bank and in hand | |||
| III. Other (13) | |||
| G. Prepayments and accrued income | |||
| I. Accrued interest and rent (14) | |||
| II. Deferred acquisition costs (15) | |||
| III. Other prepayments and accrued income |
Liabilities
| A. Capital and reserves | |||
| I. Subscribed or called up share capital or equivalent funds (16) | |||
| II. Share premium account | |||
| III. Revaluation reserve | |||
| IV. Reserves (17) | |||
| (a) Other undenominated capital | |||
| (b) Reserve for own shares held (18) | |||
| (c) Reserves provided for by the articles of association | |||
| (d) Other reserves (Specify as necessary) | |||
| V. Profit or loss brought forward | |||
| VI. Profit or loss for the financial year | |||
| B. Subordinated liabilities (19) | |||
| Ba. Fund for future appropriations (20) | |||
| C. Technical provisions (21) | |||
| 1. Provision for unearned premiums (22) | |||
| (a) gross amount | ............. | ||
| (b) reinsurance amount(-)(11) | ............. | ............. | |
| 2. Life assurance provision: (22) (24) (28) | |||
| (a) gross amount | ............. | ||
| (b) reinsurance amount(-)(11) | ............. | ............. | |
| 3. Claims outstanding: (25) | |||
| (a) gross amount | ............. | ||
| (b) reinsurance amount(-)(11) | ............. | ............. | |
| 4. Provision for bonuses and rebates (unless shown under 2): (26) | |||
| (a) gross amount | ............. | ||
| (b) reinsurance amount(-)(11) | ............. | ............. | |
| 5. Equalization provision (27) | |||
| 6. Other technical provisions: (23) | |||
| (a) gross amount | ............. | ||
| (b) reinsurance amount(-)(11) | ............. | ............. | |
| D. Technical provisions for life assurance policies where the investment risk is borne by the policyholders (28) | |||
| (a) gross amount | ............. | ||
| (b) reinsurance amount(-)(11) | ............. | ............. | |
| E. Other provisions | |||
| 1. Provisions for pensions and similar obligations | |||
| 2. Provisions for taxation | |||
| 3. Other provisions | |||
| F. Deposits received from reinsurers (29) | |||
| G. Creditors | |||
| I. Creditors arising out of direct insurance operations | |||
| II. Creditors arising out of reinsurance operations | |||
| III. Debenture loans (30) | |||
| IV. Amounts owed to credit institutions | |||
| V. Other creditors including tax and social welfare | |||
| H. Accruals and deferred income |
NOTES ON THE BALANCE SHEET FORMAT
- (1) Concessions, patents, licences, trademarks and similar rights and assets
(Assets item B.2)
Amounts in respect of assets shall only be included in an undertaking’s balance sheet under this item if either—
- (a) the assets were acquired for valuable consideration and are not required to be shown under goodwill, or
- (b) the assets in question were created by the undertaking itself.
- (2) Goodwill
(Assets item B.1)
Amounts representing goodwill shall only be included to the extent that the goodwill was acquired for valuable consideration.
- (3) Land and buildings
(Assets item C.I)
The amount of any land and buildings occupied by the undertaking for its own activities shall be shown separately.
- (4) Debt securities and other fixed income securities
(Assets item C.III.2)
This item shall comprise negotiable debt securities and other fixed income securities issued by credit institutions, other undertakings or public bodies in so far as they are not covered by Assets item C.II.2 or C.II.4.
Securities bearing interest rates that vary in accordance with specific factors, for example the interest rate on the inter-bank market or on the Euro market, shall also be regarded as debt securities and other fixed income securities and so be included under this item.
- (5) Participation in investment pools
(Assets item C.III.3)
This item shall comprise shares held by the undertaking in joint investments constituted by several undertakings or pension funds, the management of which has been entrusted to one of those undertakings or to one of those pension funds.
- (6) Loans secured by mortgages and other loans
(Assets items C.III.4 and C.III.5)
Loans to policy holders for which the policy is the main security shall be included under "Other loans" and their amount shall be disclosed in the notes to the financial statements. Loans guaranteed by mortgages shall be shown as such even where they are also secured by insurance policies. Where the amount of "Other loans" not secured by policies is material, an appropriate breakdown shall be given in the notes to the financial statements.
- (7) Deposits with credit institutions
(Assets item C.III.6)
This item shall comprise sums the withdrawal of which is subject to a time restriction. Sums deposited with no such restriction shall be shown under Assets item F.II even if they bear interest.
- (8) Other
(Assets item C.III.7)
This item shall comprise those investments which are not covered by Assets items C.III.1 to 6. Where the amount of such investments is significant, they shall be disclosed in the notes to the financial statements.
- (9) Deposits with ceding undertakings
(Assets item C.IV)
Where the undertaking accepts reinsurance this item shall comprise amounts, owed by the ceding undertakings and corresponding to guarantees, which are deposited with those ceding undertakings or with third parties or which are retained by those undertakings.
These amounts may not be combined with other amounts owed by the ceding insurer to the reinsurer or set off against amounts owed by the reinsurer to the ceding insurer.
Securities deposited with ceding undertakings or third parties which remain the property of the undertaking accepting reinsurance shall be entered in the undertaking’s financial statements as an investment, under the appropriate item.
- (10) Investments for the benefit of life assurance policyholders who bear the investment risk.
(Assets item D)
In respect of life assurance this item shall comprise, on the one hand, investments the value of which is used to determine the value of or the return on policies relating to an investment fund, and on the other hand, investments serving as cover for liabilities which are determined by reference to an index. This item shall also comprise investments which are held on behalf of the members of a tontine and are intended for distribution among them.
- (11) Reinsurance amounts
(Assets item Da)
(Liabilities items C.1(b), 2(b), 3(b), 4(b) and 6(b) and D(b))
The reinsurance amounts may be shown either under Assets item Da or under Liabilities items C.1(b), 2(b), 3(b), 4(b) and 6(b) and D(b).
The reinsurance amounts shall comprise the actual or estimated amounts which, under contractual reinsurance arrangements, are deducted from the gross amounts of technical provisions. Where reinsurance amounts are shown as assets under item Da, they shall be subdivided as shown. Notwithstanding paragraph 4(3) of this Schedule, these items shall not be combined. The disclosure of reinsurance amounts shall be in the same form from one accounting year to the next. If the directors decide that a change is necessary, the reason for that change should be disclosed in the notes together with a statement of what the position would have been had the original treatment been retained.
As regards the provision for unearned premiums, the reinsurance amounts shall be calculated according to the methods referred to in paragraph 55 or in accordance with the terms of the reinsurance policy.
- (12) Debtors
(Assets item E)
Amounts owed by group undertakings and undertakings in which the undertaking has a participating interest shall be shown separately as sub-items of Assets items E.I, E.II and E.III.
- (13) Other
(Assets item F.III)
This item shall comprise those assets which are not covered by Assets items F.I and F.II. Where such assets are material they shall be disclosed in the notes to the financial statements.
- (14) Accrued interest and rent
(Assets item G.I)
This item shall comprise those items that represent interest and rent that have been earned up to the balance-sheet date but have not yet become receivable.
- (15) Deferred acquisition costs
(Assets item G.II)
The costs of acquiring insurance policies which are incurred during the financial year but which relate to a subsequent financial year (referred to as "deferred acquisition costs") shall be treated as follows:
- (a) Costs incurred in respect of non-life business shall be disclosed under this item and shall be calculated on a basis compatible with that used for unearned premiums.
(b)(i) Costs incurred in respect of life assurance business shall be deferred. Such deferral should be over such a period as is recognised to be prudent.
- (ii) Costs incurred in respect of life assurance may be either disclosed under this item on the balance sheet or may be deducted by a recognised actuarial method from the mathematical reserves: where the latter method is used. The amounts deducted from the provisions shall be disclosed in the notes to the financial statements.
- (iii) The method of treatment of deferred acquisition costs in the financial statements of a life assurance undertaking should be the same from one financial year to the next. If, in the opinion of the directors of the undertaking, a change is necessary, the reasons for that change should be disclosed in the notes together with a statement of what the position would have been had the original method been retained.
- (16) Subscribed or called up capital or equivalent funds
(Liabilities item A.I)
The amount of subscribed share capital and the amount of called up share capital which has been paid up shall be shown separately.
Subscribed capital shall comprise all amounts which, in accordance with the legal structure of an insurance undertaking, are regarded in accordance with the Principal Act as equity share capital subscribed by the shareholders or other persons.
Called up capital shall comprise all amounts which, in accordance with the legal structure of an insurance undertaking, are regarded in accordance with the Principal Act as equity share capital subscribed and fully paid up or subscribed and partly paid up, to the extent paid up.
- (17) Reserves
(Liabilities item A.IV)
Reserves shall be shown separately, as sub items of Liabilities item A.IV in the balance sheet except for the revaluation reserve, which shall be shown as a liability under A.IIII.
- (18) Reserves for own Shares
(Liabilities item A.IV.2)
The nominal value of the shares shall be shown separately under this item.
- (19) Subordinated liabilities
(Liabilities item B)
This item shall comprise all liabilities, whether or not represented by certificates, in respect of which there is a contractual obligation that, in the event of winding up or of bankruptcy, they are to be repaid only after the claims of all other creditors have been met.
- (20) Fund for future appropriations
(Liabilities item Ba)
This item shall comprise all funds the allocation of which either to policy holders or to shareholders has not been determined by the end of the financial year.
Transfers to and from this item shall be shown in item II.12a (Transfers to or from the fund for future appropriation) in the profit and loss account.
- (21) Technical provisions
(Liabilities item C)
Paragraph 17(b) shall apply to the technical provisions, subject to note (11) and Notes (22) to (27).
- (22) Provision for unearned premiums
(Liabilities items C.1 and C.2)
In the case of life assurance the provision for unearned premiums may be included in Liabilities item C.2 rather than in this item.
The provision for unearned premiums shall comprise the amount representing that part of gross premiums written which is estimated to be earned in the following financial year or to subsequent financial years.
Where, in accordance with note (23) this item also includes the amount of the provision for unexpired risks, the description of the item shall be "Provision for unearned premiums and unexpired risks".
- (23) Other technical provisions
(Liabilities item C.6).
This item shall include the provision for unexpired risks, being the amount set aside in addition to unearned premiums in respect of risks to be borne by the insurance undertaking after the end of the financial year, in order to provide for all claims and expenses in connection with insurance contracts in force in excess of the related unearned premiums and any premiums receivable on those contracts. However, the provision for unexpired risks may be added to the provision for unearned premiums under item C.1. Where the amount of unexpired risks is material, it shall be disclosed separately in the notes to the financial statements.
Ageing reserves should be disclosed under this item.
- (24) Life assurance provision
(Liabilities item C.2)
This item shall comprise the actuarially estimated value of the undertaking’s liabilities including bonuses already declared and after deducting the actuarial value of future premiums, excluding amounts covered by note (28).
- (25) Claims outstanding
(Liabilities item C.3)
This item shall comprise the total estimated ultimate cost to the undertaking of settling all claims arising from events which have occurred up to the end of the financial year, whether reported or not, less amounts already paid in respect of such claims.
- (26) Provision for bonuses and rebates
(Liabilities item C.4)
This item shall comprise amounts intended for policy holders or contract beneficiaries by way of bonuses and rebates as defined in note (4) to the profit and loss account format to the extent that such amounts have not been credited to policy holders or contract beneficiaries or included in Liabilities item Ba or in Liabilities item C.2.
- (27) Equalisation provision
(Liabilities item C.5)
This item shall comprise any amounts required by law to be set aside by an undertaking to equalise fluctuations in loss ratios in future years or to provide for special risks.
An undertaking which otherwise constitutes reserves, falling to be included under Liabilities item A.IV to equalise fluctuations in loss ratios in future years or to provide for special risks shall disclose that fact in the notes to the financial statements.
- (28) Technical provisions for life assurance policies where the investment risk is borne by the policyholders
(Liabilities items D and C.2)
This item shall comprise technical provisions constituted to cover liabilities relating to investment in the context of the assurance policies for which the policy holder bears the risk, the value of or the return on which is determined by reference to investments or by reference to an index.
Any additional technical provisions constituted to cover death risks, operating expenses or other risks (such as benefits payable at the maturity date or guaranteed surrender values) shall be included under Liabilities item C.2.
This item shall also comprise technical provisions representing the obligations of a tontine’s organiser in relation to its members.
- (29) Deposits received from reinsurers
(Liabilities item F)
Where the undertaking cedes reinsurance this item shall comprise amounts deposited by or withheld from other insurance undertakings under reinsurance contracts. These amounts may not be merged with other amounts owed to or by those other undertakings.
Where the undertaking cedes reinsurance and has received as a deposit securities which have been transferred to its ownership, this item shall comprise the amount owed by the undertaking by virtue of the deposit.
- (30) Debenture loans
(Liabilities item G.III)
The amount of any convertible loans must be shown separately.
PROFIT AND LOSS ACCOUNT FORMATS
| I. Technical account — Non-life insurance1. Earned premiums, net of reinsurance: | |||
| (a) gross premiums written (1) | ............. | ||
| (b) outward reinsurance premiums(-)(2) | ............. | ............. | |
| (c) change in the gross provision for unearned premiums and in the gross provision for unexpired risks (+/-)(3) | ............. | ||
| (d) change in the provision for unearned premiums, reinsurers share(+/-)(3) | ............. | ............. | ............. |
| 2. Allocated investment return transferred from the non-technical account (item III.6)(8)(9)) | |||
| (a) allocated by class of business accident and health | ............. | ||
| motor vehicle | ............. | ||
| marine, aviation and transit | ............. | ||
| fire and other damage to property | ............. | ||
| liability business | ............. | ||
| credit and suretyship | ............. | ||
| other classes | ............. | ||
| (b) total: | ............. | ||
| 3. Other technical income, net of reinsurance | ............. | ||
| 4. Claims incurred, net of reinsurance: (4) | |||
| (a) claims paid | |||
| (aa) gross amount | ............. | ||
| (bb) reinsurers’ share(-) | ............. | ............. | |
| (b) change in the provision for claims | |||
| (aa) gross amount | ............. | ||
| (bb) reinsurers’ share(-) | ............. | ............. | ............. |
| 5. Changes in other technical provisions, net of reinsurance, not shown under other headings (+/-) | ............. | ||
| 6. Bonuses and rebates, net of reinsurance (5) | ............. | ||
| 7. Net operating expenses: | |||
| (a) acquisition costs (6) | ............. | ||
| (b) change in deferred acquisition costs(+/-) | ............. | ||
| (c) administrative expenses (7) | ............. | ||
| (d) reinsurance commissions and profit participation(+/-) | ............. | ............. | |
| 7a. Investment charges. (8) | |||
| (a) By class of business: | |||
| accident and health | ............. | ||
| motor vehicle | ............. | ||
| marine, aviation and transit | ............. | ||
| fire and other damage to property | ............. | ||
| liability business | ............. | ||
| credit and suretyship | ............. | ||
| other classes | ............. | ||
| (aa) investment management expenses, including interest | ............. | ||
| (bb) value adjustments on investments | ............. | ||
| (cc) losses on the realisation of investments | ............. | ||
| (b) total: | ............. | ||
| 8. Other technical charges, net of reinsurance | ............. | ||
| 9. Change in the equalisation provision(+/-) | ............. | ||
| 10. Sub-total (balance on the technical account for non-life insurance business) (item III.1) | ............. | ||
| II. Technical account — Life assurance business | |||
| 1. Earned premiums, net of reinsurance: | |||
| (a) gross premiums written (1) | ............. | ||
| (b) outward reinsurance premiums(-)(2) | ............. | ||
| (c) change in the provision for unearned premiums, net of reinsurance(+/-)(3) | ............. | ............. | |
| 2. Investment income: (8) (9) | |||
| (a) income from participating interests, with a separate indication of that derived from group undertakings | ............. | ||
| (b) income from other investments, with a separate indication of that derived from group undertakings | ............. | ||
| (aa) income from land and buildings | ............. | ............. | |
| (bb) income from other investments | ............. | ............. | |
| (c) value readjustments on investments | ............. | ||
| (d) gains on the realisation of investments | ............. | ............. | |
| 3. Unrealised gains on investments (10) | ............. | ||
| 4. Other technical income, net of reinsurance | ............. | ||
| 5. Claims incurred, net of reinsurance: (4) | |||
| (a) claims paid | |||
| (aa) gross amount | ............. | ||
| (bb) reinsurers’ share(-) | ............. | ............. | |
| (b) change in the provision for claims | |||
| (aa) gross amount | ............. | ||
| (bb) reinsurers’ share(-) | ............. | ............. | |
| 6. Changes in other technical provisions, net of reinsurance, not shown under other headings(+/-): | |||
| (a) Life assurance provision, net of reinsurance (3) | |||
| (aa) gross amount | ............. | ||
| (bb) reinsurers’ share(-) | ............. | ............. | |
| (b) Other technical provisions, net of reinsurance | ............. | ............. | |
| 7. Bonuses and rebates, net of reinsurance (5) | ............. | ||
| 8. Net operating expenses: | |||
| (a) acquisition costs (6) | ............. | ||
| (b) change in deferred acquisition costs | ............. | ||
| (c) administrative expenses (7) | ............. | ||
| (d) reinsurance commissions and profit participation | ............. | ............. | |
| 9. Investment expenses and charges: (8) | |||
| (a) investment management expenses, including interest | ............. | ||
| (b) value adjustments on investments | ............. | ||
| (c) losses on the realisation of investments | ............. | ............. | |
| 10. Unrealised losses on investments (10) | ............. | ||
| 11. Other technical charges, net of reinsurance | ............. | ||
| 11a. Tax attributable to the life assurance business | ............. | ||
| 12. Allocated investment return transferred to the non-technical account (-) (item III.4) (9) | ............. | ||
| 12a. Transfers to or from the fund for future appropriations | ............. | ||
| 13. Subtotal (balance on the technical account life assurance business) (item III.2) | ............. | ||
| III. Non-technical account | |||
| 1. Balance on the technical account — non-life insurance business (item I.10) | ............. | ||
| 2. Balance on the technical account — life assurance business (item II.13) | ............. | ||
| 3. Investment income (8) | |||
| (a) income from participating interests, with a separate indication of that derived from group undertakings | ............. | ............. | |
| (b) income from other investments, with a separate indication of that derived from group undertakings | ............. | ||
| (aa) income from land and buildings | ............. | ||
| (bb) income from other investments | ............. | ............. | |
| (c) value readjustments on investments | ............. | ||
| (d) gains on the realisation of investments | ............. | ............. | |
| 3a. Unrealised gains on investments (10) | ............. | ||
| 4. Allocated investment return transferred from the life assurance technical account (item II.12) (9) | ............. | ||
| 5. Investment charges: (8) | |||
| (a) investment management expenses, including interest | ............. | ||
| (b) value adjustments on investments | ............. | ||
| (c) losses on the realisation of investments | ............. | ............. | |
| 5a. Unrealised losses on investments (10) | ............. | ||
| 6. Allocated investment return transferred to the non-life insurance technical account (item I.2) (9) | ............. | ||
| 7. Other income | ............. | ||
| 8. Other charges including value adjustments | ............. | ||
| 9. Tax on profit or loss on ordinary activities | ............. | ||
| 10. Profit or loss on ordinary activities after tax | ............. | ||
| 11. Extraordinary income | ............. | ||
| 12. Extraordinary charges | ............. | ||
| 13. Extraordinary profit or loss | ............. | ||
| 14. Tax on extraordinary profit or loss | ............. | ||
| 15. Other taxes not shown under the preceding items | ............. | ||
| 16. Profit or loss for the financial year | ............. |
NOTES ON THE PROFIT AND LOSS ACCOUNT FORMATS
- (1) Gross premiums written
(Non-life insurance technical account: item I.1. (a))
(Life assurance technical account: item II.1. (a))
This item shall comprise all amounts due during the financial year in respect of insurance contracts entered into regardless of the fact that such amounts may relate in whole or in part to a later financial year, and shall include inter alia:
- (a) premiums yet to be written, where the premium calculation can be done only at the end of the year;
- (b) single premiums including annuity premiums and, in life assurance business, single premiums resulting from bonus and rebate provisions in so far as they shall be considered as premiums under the terms of the contract;
- (c) additional premiums in the case of half-yearly, quarterly or monthly payments and additional payments from policyholders for expenses borne by the undertaking;
- (d) in the case of co-insurance, the undertaking’s portion of total premiums;
- (e) reinsurance premiums due from ceding and retroceding insurance undertakings, including portfolio entries, after deduction of—
- (i) portfolio withdrawals credited to ceding and retroceding insurance undertakings, and
- (ii) cancellations.
The amounts to which this note relates shall not include the amounts of taxes or duties levied with premiums.
- (2) Outward reinsurance premiums
(Non-life insurance technical account: item I.1. (b))
(Life assurance technical account: item II.1. (b))
This item shall comprise all premiums paid or payable in respect of outward reinsurance contracts entered into by the undertaking. Portfolio entries payable on the conclusion or amendment of outward reinsurance contracts shall be added; portfolio withdrawals receivable shall be deducted.
- (3) Change in the provision for unearned premiums, net of reinsurance
(Non-life insurance technical account: items I.1. (c) and I.1. (d))
(Life assurance technical account: items II.1. (c) and II.6. (a))
In the case of life assurance, the change in unearned premiums may be included either in item II.1 (c) or in item II.6. (a) of the life assurance technical account.
- (4) Claims incurred, net of reinsurance
(Non-life insurance technical account: item I.4)
(Life assurance technical account: item II.5)
This item shall comprise all payments made in respect of the financial year including the provision for claims but excluding the provision for claims for the preceding financial year.
These amounts shall include annuities, surrenders, entries and withdrawals of loss provisions to and from ceding insurance undertakings and reinsurers, external and internal claims management costs and charges for claims incurred but not reported such as are referred to in paragraphs 58(3) and 60 (Valuation Rules) of this Schedule.
Sums recoverable on the basis of subrogation and salvage within the meaning of sub-paragraph (7) of the said paragraph 58 shall be deducted.
Where the difference between:
- (a) the loss provision made at the beginning of the year for outstanding claims incurred in previous years, and
- (b) the payments made during the year on account of claims incurred in previous years and the loss provision shown at the end of the year for such outstanding claims,
is material it shall be shown in the notes to the financial statements, broken down by category and amount.
- (5) Bonuses and rebates, net of reinsurance
(Non-life insurance technical account: item I.6)
(Life assurance technical account: item II.7)
Bonuses shall comprise all amounts chargeable for the financial year which are paid or payable to policyholders and other insured parties or provided for their benefit, including amounts used to increase technical provisions or applied to the reduction of future premiums, to the extent that such amounts represent an allocation of surplus or profit arising on business as a whole or a section of business, after deduction of amounts provided in previous years which are no longer required.
Rebates shall comprise such amounts to the extent that they represent a partial refund of premiums resulting from the experience of individual contracts.
Where material, the amount charged for bonuses and that charged for rebates shall be disclosed separately in the notes to the financial statements.
- (6) Acquisition costs
(Non-life insurance technical account: item I.7. (a))
(Life assurance technical account: item II.8. (a))
This item shall comprise the costs arising from the conclusion of insurance contracts. They shall cover both direct costs, such as acquisition commissions or the cost of drawing up the insurance document or including the insurance contract in the portfolio, and indirect costs, such as advertising costs or the administrative expenses connected with the processing of proposals and the issuing of policies.
In the case of life assurance, policy renewal commissions shall be included under item II.8. (c) in the life assurance technical account.
- (7) Administrative expenses
(Non-life insurance technical account; item I.7. (c))
(Life assurance technical account: item II.8. (c))
This item shall include the costs arising from premium collection, portfolio administration, handling of bonuses and rebates, and inward and outward reinsurance. They shall, in particular, include staff costs and depreciation provisions in respect of office furniture and equipment in so far as these need not be shown under acquisition costs, claims incurred or investment charges.
Item II.8. (c) shall also include policy renewal commissions in respect of life assurance.
- (8) Investment income and charges
(Non-life insurance technical account: items I.2 and I.7a.)
(Life assurance technical account: items II.2 and II.9)
(Non-technical account: items III.3 and III.5)
- (a) Investment income and charges relating to non-life insurance shall be disclosed in the non-technical account. Investment income and those charges attributable to the non-life technical account shall be allocated to that account by class of business, grouped as in the Revenue Account of the annual returns submitted in accordance with the European Communities (Non-life Insurance Accounts) Regulations 1995 ( S.I. No. 202 of 1995 ). The proportion of this and the basis on which they have been allocated as between the various classes shall be disclosed in the notes to the financial statements.
- (b) Investment income and charges relating to life assurance shall be disclosed in the life assurance technical account.
- (c) In the case of an undertaking carrying on both life assurance and non-life insurance business, investment income and charges shall, to the extent that they are directly connected with the carrying on of the life-assurance business be disclosed in the life assurance technical account.
- (9) Allocated investment return
(Non-life insurance technical account: item I.2)
(Life assurance technical account: item II.12)
(Non-technical account: items III.4 and III.6)
Where part of the investment return is transferred to the non-life insurance technical account, the transfer from the non-technical account shall be deducted from item III.6 and added to item I.2.
Part of the investment return disclosed in the life assurance technical account may (to the extent that it is not attributable in the life assurance fund) be transferred to the non-technical account. The amount transferred shall be deducted from item III.12 and added to item III.4.
In the case of non-life insurance, allocated return may be transferred from one part of the profit and loss account to another in accordance with best accounting practices. The amount and reasons for such transfers and the bases on which they are made shall be disclosed in the notes to the financial statements.
- (10) Unrealised gains and losses on investments
(Life assurance technical account: items II.3 and III.10.)
(Non-technical account: items III.3a and III.5a.)
Variations between the valuation of investments at their current value or by means of one of the methods referred to in paragraph 34 of Schedule 3 to the Principal Act and their valuation at purchase price shall be treated as follows:
- (a) where they relate to investments shown as assets under D of the balance sheet format they shall be fully disclosed in items II.3 and II.10 in the profit and loss account.
- (b) in a life assurance business those which do not fall under paragraph (a) of this note may be disclosed in full or in part in items II.3 and II.10 in the profit and loss account.
- (c) in non-life insurance business they may be disclosed in full or in part in items III.3a and III.5a in the profit and loss account.
In the case of both paragraphs (b) and (c) of this note, where a partial disclosure is made, that shall be disclosed in the notes to the financial statements, together with the full amount of the unrealised gains or losses, as the case may be, and the reasons for which the partial disclosure was made.
PART III ACCOUNTING PRINCIPLES AND VALUATION RULES
SECTION A
ACCOUNTING PRINCIPLES
Preliminary
Subject to paragraph 21, the amounts to be included in the financial statements of an undertaking in respect of the items shown shall be determined in accordance with the principles set out in paragraphs 15 to 20.
Accounting principles
The undertaking shall be presumed to be carrying on business as a going concern.
Accounting policies shall be applied consistently from one financial year to the next.
The amount of any item in the financial statements shall be determined on a prudent basis and in particular—
- (a) only profits realised at the financial year end date shall be included in the profit and loss account; and
- (b) all liabilities which have arisen in the course of the financial year to which the financial statements relate or of a previous financial year shall be taken into account, even if such liabilities only become apparent between the financial year end date and the date on which the financial statements are signed under section 324 of the Principal Act.
All income and charges relating to the financial year to which the financial statements relate shall be taken into account without regard to the date of receipt or payment.
In determining the aggregate amount of any item the amount of each individual asset or liability that falls to be taken into account shall be determined separately.
The presentation of amounts within items in the profit and loss account and balance sheet shall have regard to the substance of the reported transaction or arrangement in accordance with applicable accounting standards.
Departure from the accounting principles
If it appears to the directors of an undertaking that there are special reasons for departing from any of the principles stated above in preparing the undertaking’s financial statements in any particular year, they may so depart, but particulars of the departure, the reasons for it and its effect on the balance sheet and profit and loss account of the undertaking shall be stated in a note to the financial statements.
SECTION B
HISTORICAL COST ACCOUNTING RULES
Preliminary
Subject to Sections C and D, the amounts to be included in respect of all items shown in an undertaking’s financial statements shall be determined in accordance with the rules set out in paragraphs 23 to 35.
FIXED ASSETS
General rules
(1) Subject to any provision for depreciation or diminution in value made in accordance with paragraph 24 or 25 the amount to be included in respect of any fixed asset shall be its cost.
- (2) Where investments are shown as provided in subparagraph (1), their current value shall be disclosed on the balance sheet or in the notes to the financial statements.
Rules for depreciation and diminution in value
In the case of any asset included under Assets item B (intangible assets), C.I (investments: land and buildings) or F.I (tangible assets and stocks) in the balance sheet format (set out in Section B of Part II of this Schedule) which has a limited useful economic life, the amount of—
- (a) its cost; or
- (b) where it is estimated that any such asset will have a residual value at the end of the period of its useful economic life, its cost less that estimated residual value,
shall be reduced by provisions for depreciation calculated to write off that amount systematically over the period of the asset’s useful economic life.
(1) Where an asset falling to be included under Assets item C.II, C.III, C.IV or F.III in the balance sheet format (set out in Section B of Part II of this Schedule) has diminished in value, provisions for diminution in value may be made in respect of it and the amount to be included in respect of it may be reduced accordingly; and any such provisions which are not shown separately in the profit and loss account shall be disclosed (either separately or in aggregate) in a note to the financial statements.
- (2) Provisions for diminution in value shall be made in respect of any fixed asset which has diminished in value if the reduction of its value is expected to be permanent (whether its useful economic life is limited or not), and the amount to be included in respect of it shall be reduced accordingly; and any such provisions which are not shown separately in the profit and loss account shall be disclosed (either separately or in aggregate) in a note to the financial statements.
- (3) Where the reasons for which any provision was made in accordance with subparagraph (1) or (2) have ceased to apply to any extent, that provision shall be written back to the extent that it is no longer necessary; and any amounts written back in accordance with this subparagraph which are not shown separately in the profit and loss account shall be disclosed (either separately or in aggregate) in a note to the financial statements.
Development costs
(1) Notwithstanding that an item in respect of “development costs” is included under Assets item B.1 in the balance sheet format set out in Part II, an amount may only be included in an undertaking’s balance sheet in respect of that item in special circumstances.
- (2) If an amount is included in an undertaking’s balance sheet in respect of development costs, the following information shall be given in a note to the financial statements—
- (a) the period over which the amount of those costs originally capitalised is being or is to be written off, and
- (b) the reasons for capitalising the costs in question.
Goodwill
(1) The application of paragraphs 23 to 25 in relation to goodwill (in any case where goodwill is treated as an asset) is subject to the following provisions of this paragraph.
- (2) Subject to subparagraph (3), the amount of the consideration for any goodwill acquired by an undertaking shall be reduced by provisions for depreciation calculated to write off that amount systematically over a period chosen by the directors of the undertaking.
- (3) The period chosen shall not exceed the useful economic life of the goodwill in question.
- (4) In any case where any goodwill acquired by an undertaking is shown or included as an asset in the undertaking’s balance sheet, the period chosen for writing off the consideration for that goodwill and the reasons for choosing that period shall be disclosed in a note to the financial statements.
Paragraphs 29 and 30 apply to assets included under Assets items E.I, E.II and E.III (debtors) and F.II (cash at bank and in hand) in the balance sheet.
Subject to paragraph 30, the amount to be included in respect of any asset referred to in paragraph 28 shall be its cost.
(1) If the net realisable value of any asset referred to in paragraph 28 is lower than its cost, the amount to be included in respect of that asset shall be the net realisable value.
- (2) Where the reasons for which any provision for diminution in value was made under subparagraph (1) have ceased to apply to any extent, that provision shall be written back to the extent that it is no longer necessary.
MISCELLANEOUS
Excess of money owed over value received as an asset item
(1) Where the amount repayable on any debt owed by an undertaking is greater than the value of the consideration received in the transaction giving rise to the debt, the amount of the difference may be treated as an asset.
- (2) Where any such amount exists—
- (a) it shall be written off by reasonable amounts each year and shall be completely written off before repayment of the debt; and
- (b) if the amount not written off is not shown as a separate item in the undertaking’s balance sheet, it shall be disclosed in a note to the financial statements.
DETERMINATION OF COST
(1) The cost of an asset that has been acquired by an insurance undertaking shall be determined by adding to the actual price paid any expenses incidental to its acquisition.
- (2) The cost of an asset constructed by an insurance undertaking shall be determined by adding to the purchase price of the raw materials and consumables used the amount of the costs incurred by the undertaking which are directly attributable to the construction of that asset.
- (3) In addition there may be included in the construction cost of an asset constructed by an insurance undertaking—
- (a) a reasonable proportion of the costs incurred by the insurance undertaking which are only indirectly attributable to the construction of that asset, but only to the extent that they relate to the period of construction, and
- (b) interest on capital borrowed to finance the construction of that asset, to the extent that it accrues in respect of the period of construction,
provided, however, in a case within clause (b), that the inclusion of the interest in determining the cost of that asset and the amount of the interest so included is disclosed in a note to the financial statements.
(1) Subject to the qualification mentioned subsequently in this subparagraph, the cost of any assets which are fungible assets as defined in subparagraph (6) may be determined by the application of any of the methods mentioned in subparagraph (2) in relation to any such assets of the same class and the method chosen shall be one which appears to the directors to be appropriate in the circumstances of the undertaking.
- (2) Those methods are—
- (a) the method known as “first in, first out” (FIFO);
- (b) a weighted average price; and
- (c) any other method similar to any of the methods mentioned above.
- (3) Where, in the case of any undertaking—
- (a) the cost of assets falling to be included under any item shown in the undertaking’s balance sheet has been determined by the application of any method permitted by this paragraph; and
- (b) the amount shown in respect of that item differs materially from the relevant alternative amount given below in this paragraph,
the amount of that difference shall be disclosed in a note to the financial statements.
- (4) Subject to subparagraph (5), for the purposes of subparagraph (3)(b), the relevant alternative amount, in relation to any item shown in an undertaking’s balance sheet, is the amount which would have been shown in respect of that item if assets of any class included under that item at an amount determined by any method permitted by this paragraph had instead been included at their replacement cost as at the financial year end date.
- (5) The relevant alternative amount may be determined by reference to the most recent actual purchase price before the financial year end date of assets of any class included under the item in question instead of by reference to their replacement cost as at that date, but only if the former appears to the directors of the undertaking to constitute the more appropriate approach in the case of assets of that class.
- (6) For the purpose of this paragraph, assets of any description shall be regarded as fungible if assets of that description are substantially indistinguishable from one another.
ASSETS INCLUDED AT A FIXED AMOUNT
(1) Subject to subparagraph (2), assets which fall to be included under Assets item F.I (tangible assets and stocks) in the balance sheet format (set out in Section B of Part II of this Schedule) may be included at a fixed quantity and value.
(2)Subparagraph (1) applies to assets of a kind which are constantly being replaced, where—
- (a) their overall value is not material to assessing the undertaking’s state of affairs; and
- (b) their quantity, value and composition are not subject to material variation.
SUBSTITUTION OF ORIGINAL STATED AMOUNT WHERE PRICE OR COST UNKNOWN
Where there is no record of the purchase price of any asset of an undertaking or of any price, expense or costs relevant for determining its cost in accordance with paragraph 32 or any such record cannot be obtained without unreasonable expense or delay, its cost shall be taken for the purposes of paragraphs 23 to 30 to be the value ascribed to it in the earliest available record of its value made on or after its acquisition or construction by the undertaking.
SECTION C
ALTERNATIVE ACCOUNTING RULES
Preliminary
(1) The rules set out in Section B are referred to subsequently in this Schedule as the historical cost accounting rules.
- (2) Those rules, with the omission of paragraphs 22, 27 and 32 to 35, are referred to subsequently in this Part as the depreciation rules; and references subsequently in this Schedule to the historical cost accounting rules do not include the depreciation rules as they apply by virtue of paragraph 43.
Subject to paragraphs 43 to 45, the amounts to be included in respect of assets of any description mentioned in paragraph 38 may be determined on any basis so mentioned.
Alternative accounting rules
(1) Investments falling to be included under Assets item C (investments) may be included at their current value calculated in accordance with paragraphs 41 and 42.
- (2) Investments falling to be included under Assets item D (unit-linked investments) shall be shown at their current value.
(1) Intangible assets, other than goodwill, and assets falling to be included under Assets item F.II (cash at bank and in hand) and F.III (other) may be included at their current cost.
- (2) Assets falling to be included under Assets item F.I (tangible assets and stocks) in the balance sheet format (set out in Section B of Part II of this Schedule) may be included at a market value determined as at the date of their last valuation or at their current cost.
The same valuation method shall be applied to all investments included in any item denoted by an Arabic number or shown as assets under Assets item C.I.
Valuation of investments
(1) Subject to subparagraph (5) in the case of investments other than land and buildings, current value shall mean market value determined in accordance with this paragraph.
- (2) Where investments are officially listed on an official stock exchange, market value shall mean the value on the balance sheet date or, when the balance sheet date is not a stock exchange trading day, on the last stock exchange trading day before that date.
- (3) Where a market exists for unlisted investments, market value shall mean the average price at which such investments were traded on the balance sheet date or, when the balance sheet date is not a trading day, on the last trading day before that date.
- (4) Where on the date on which the financial statements are drawn up listed or unlisted investments have been sold or are to be sold within the short term, the market value shall be reduced by the actual or estimated realisation costs.
- (5) Except where the equity method is applied all investments other than those referred to in subparagraphs (2) and (3) shall be valued on a basis which has prudent regard to the likely realisable value.
- (6) In all cases the method of valuation shall be precisely described and the reason for adopting it disclosed in the notes to the financial statements.
(1) In the case of land and buildings, current value shall mean the market value on the date of valuation, where relevant, reduced as provided in subparagraphs (4) and (5).
- (2) Market value shall mean the price at which land and buildings could be sold under private contract between a willing seller and an arm’s length buyer on the date of valuation, it being assumed that the property is publicly exposed to the market, that market conditions permit orderly disposal and that a normal period, having regard to the nature of the property, is available for the negotiation of the sale.
- (3) The market value shall be determined through the separate valuation of each land and buildings item, carried out at least every five years in accordance with generally accepted methods of valuation.
- (4) Where the value of any land and buildings item has diminished since the preceding valuation under subparagraph (3), an appropriate value adjustment shall be made and the lower value arrived at shall not be increased in subsequent balance sheets unless such increase results from a new determination of market value arrived at in accordance with subparagraphs (2) and (3).
- (5) Where on the date on which the financial statements are drawn up and buildings have been sold or are to be sold within the short term, the value arrived at in accordance with subparagraphs (2) and (4) shall be reduced by the actual or estimated realisation costs.
- (6) Where it is impossible to determine the market value of a land and buildings item, the value arrived at on the basis of the principle of purchase price or production cost shall be deemed to be its current value.
- (7) The method by which the current value of land and buildings has been arrived at and their breakdown by financial year of valuation shall be disclosed in the notes to the financial statements.
Application of depreciation rules
(1) Where the value of any asset of an undertaking is determined on any basis mentioned in paragraph 38 (in the case of assets falling to be included under assets item C.1) or paragraph 39, that value shall be, or (as the case may require) be the starting point for determining, the amount to be included in respect of that asset in the undertaking’s financial statements, instead of its cost or any value previously so determined for that asset; and the depreciation rules shall apply accordingly in relation to any such asset with the substitution for any reference to its cost of a reference to the value most recently determined for that asset on any basis mentioned in paragraphs 38 or 39 (as the case may be).
- (2) The amount of any provision for depreciation required in the case of any fixed asset by paragraph 24 or 25 as it applies by virtue of subparagraph (1) is referred to subsequently in this paragraph as the “adjusted amount”; and the amount of any provision which would be required by that paragraph in the case of that asset according to the historical cost accounting rules is referred to as the “historical cost amount”.
- (3) Where subparagraph (1) applies in the case of any fixed asset, the amount of any provision for depreciation in respect of that asset included in any item shown in the profit and loss account in respect of amounts written off assets of the description in question may be the historical cost amount instead of the adjusted amount, provided that, if the amount of the provision for depreciation is the historical cost amount, the amount of any difference between the two shall be shown separately in the profit and loss account or in a note to the financial statements.
Additional information in case of departure from historical cost accounting rules
(1) This paragraph applies where the amounts to be included in respect of assets covered by any items shown in an undertaking’s financial statements have been determined on any basis mentioned in paragraphs 38 or 39.
- (2) The items affected and the basis of valuation adopted in determining the amounts of the assets in question in the case of each such item shall be disclosed in a note to the financial statements.
- (3) The purchase price of investments valued in accordance with paragraph 38 shall be disclosed in the notes to the financial statements.
- (4) In the case of each balance sheet item valued in accordance with paragraph 39 either—
- (a) the comparable amounts determined according to the historical cost accounting rules; or
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Irish Statute Book
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Contains Irish Public Sector Information licensed under the Oireachtas (Houses of the Oireachtas) Open Data PSI Licence / Creative Commons Attribution 4.0 International, sourced from https://www.irishstatutebook.ie.