IFRS

What it means

IFRS are the international financial reporting standards used by listed companies and by other entities named in the law, typically banks and insurers. Their purpose is comparability across countries.

They differ from Slovak practice in putting economic substance ahead of legal form. That shows up in leases, revenue from contracts with customers, fair value measurement and impairment testing.

IFRS prescribe neither a chart of accounts nor specific bookkeeping entries. They set out what the statements must show and the principles for recognising and measuring items, and leave the route to the company. That is why they lean more than Slovak rules on judgement and on estimates justified in writing, which have to stand up in front of the auditor.

How it works in practice

An ordinary Slovak s. r. o. meets IFRS indirectly - when it belongs to a group whose parent reports under IFRS and requires a consolidation package. The company then keeps local books and builds a bridge.

The differences between local and group accounts are tracked continuously, not once a year. They usually concern deferred tax, provisions, accruals and deferrals and the capitalisation threshold.

A parent company usually wants reporting on a fixed calendar, often within the first working days after month-end, well ahead of what Slovak deadlines would require. For such a client we map the Slovak chart of accounts to the group chart and set a monthly close timetable, so the package goes out on time and the figures do not change afterwards.

What to watch out for

Moving to IFRS is not recalculating the accounts in a spreadsheet. It needs documented accounting policy decisions and generally an audit; an unprepared transition shows in the annual report and in conversations with the bank.

Adjustments made only for the group package belong neither in the local books nor in the tax base. If the company keeps its books under Slovak rules, tax is calculated from them. Once group adjustments leak into the local ledger, the accounts drift away from the tax return and tracing the differences takes longer than the adjustment itself.