Assignment

Finland Accouting
Group 19
Le Thu Hai
Tran Phuong Thao
Pham Nguyen Gia Long
Pham Duy Minh
Le Duy Anh
 Important Influences on Finland
Accounting System and its development
Important
Influences

Factors Effect on Accounting system and its Development

Open and public in information sharing Respect transparency in Accounting

Ranked #3 least corrupt country in 2018

Culture
Respect professionalism In annual reports – intangible assets can either be presented in the balance sheet, or as an
expense in the profit and loss account.
How standards are

Early accounting was influenced by German Bookkeeping and calculation were seen as office techniques or procedures and thus were
considered very practical subjects
set?

1950s: underwent enormous changes as it diversified Standard cost accounting, budgeting, investment calculations and break-even analysis were
and became more export oriented. introduced which indicated a more dynamic way of thinking

Henrik Virkkunen had a great influence on Finnish Increasing interaction between business firms and the surrounding society conveyed new
Economics accounting: “accounting was to serve business views on accounting, such as social and environmental accounting.
Development management in planning, control and information to
serve the needs of managers.”

German influence decreased while influence from the

IFRS Adoption

US increased rapidly
Process

During the 1800s The only important outside stakeholder - the lender and only the owner was usually
Sources of Finance
interested in accounting → Accounting report was simple
 Important Influences on Finland
Accounting System and its development
Important
Influences

Factors Effect on Accounting system and its Development

Sources of Finance The Helsinki Stock Exchange was founded in 1912 Demand for accounting regulation

During the 1970s - It is argued that more stakeholders than the management were to be users of the
accounting information.
- Increasing interaction between business firms and the society.
How standards are

→ New view on accounting field: social & environmental accounting.

set?

A large amount of firms are family businesses → Finnish financing system can be defined
as an insider-oriented system.

Legal System Roman law country The financial reports are collected for tax collection purposes.
The effect of Saario's theory → The dominance of tax was over financial reporting
Focus: Expenditures and revenues and determinants of the dividend

Under the EU Directives - More focused on protecting the debtors.

- More conservative with the prudence over accrual
- Focus: Inform all interested parties and to give a correct and sufficient picture
IFRS Adoption
Process

IAS & IFRS adopted - Focus: give information to the owners of the company and the most important financial
statement is the balance sheet.
- Development is in favour of the big companies and corporations.
- Enhance the legal protection of creditors and minority shareholders.
 Important Influences on Finland
Accounting System and its development
Important
Influences

Factors Effect on Accounting system and its Development

Inflation 2.1 percent in April 2021 historical cost depreciation understates the true decline in the value of assets and thereby
overstates reported earnings and income taxes due

1.3 percent in the previous month the cost-flow method adopted for inventory valuation affects the reported net income in
different ways
How standards are

Because of inflation, the historical interest expense is overstated, as the value of debt
set?

decreases due to inflation, which results in reported earnings being understated and
consequently a decrease in taxes owed

Economic ties The Ministry of Employment and Economy is responsible for accounting legislation in
Finland

The Accounting Act (1620/2015) - The Accounting Act (1620/2015) was amended to transpose the content of the
European Commission Accounting Directive (2013/34/EU)
IFRS Adoption

EU IAS Regulation (1606/2002) - requires the application of International Financial Reporting Standards (IFRS) for the
consolidated financial statements of public interest entities
Process
 IFRS standards
Important
Influences
Important
Influences

IFRS standards are used particularly by companies with securities or shares listed on a public stock
exchange and by financial institutions to show how companies must maintain and report their accounts,
identify types of transactions, and other events with financial impact.
How standards are
How standards are

Standard-setting process In Finland

set?
set?

● Public Board meetings ● Already adopted IFRS standards for

consolidated financial statements
● since 2002
Agenda papers
● Improved the Finnish companies’
● Discussion and decision preparation of consolidated financial
IFRS Adoption
IFRS Adoption

summaries statements
Process
Process

● Comment letters
 The process of IFRS Adoption in Finland
Important
Influences

Adoption Advice Submission Submission Complete

How standards are

The IASB adopts a The European If the Commission If the ARC’s opinion If there are no
set?

new standard, an Financial Reporting decides to endorse the is positive, the objections from the
amendment to an Advisory Group new standard, it Commission submits European Parliament
existing standard or (EFRAG) provides its prepares a draft the draft regulation to or the Council of
an interpretation of a advice to the regulation and the European Europe, the
standard Commission on submits it to the Parliament and the Commission adopts
endorsement Accounting Council of Europe for the endorsing
Regulatory a 3-month scrutiny regulation
Committee of period
IFRS Adoption

representatives of EU
Member States (ARC)
Process
 Conclusion

● The early endorsement of IFRS in Finland had drastically improved the finance
scheme of the country.

● Finland has become one of the most developed countries in Europe as well as
the globe.
References
● Finland IFRS Profile. (2018, October 19). Retrieved from https://www.ifrs.org/content/dam/ifrs/around-the-
world/jurisdiction-profiles/finland-ifrs-profile.pdf
● Finland's inflation rate during 2020-2021. (2020, May 14). Retrieved from https://www.stat.fi/
● IFAC: Finland. (n.d.). Retrieved from https://www.ifac.org/about-ifac/membership/country/finland?
fbclid=IwAR1J8eCgh9GtC-Ch6qoa-WyfivT_59w4n0OnyCJJcN1FczKcSc3SxLzvLJ0
● Hassel, L. (2005). Accounting Differences and Its Effects on Accounting in Finland, Linköping, Sweden.
● Karim, M. (2011). Impact of IFRS on accounting quality in Finland: Correlation between Net Income and Operating Cash
Flow after the adoption of IFRS in Finnish companies. Retrieved from https://core.ac.uk/download/pdf/84798838.pdf
● Näsi, S. and Näsi, J. (1997). Accounting and business economics traditions in Finland – from a practical discipline into a
scientific subject and field of research. European Accounting Review, Vol. 6, No. 2, pp.199–229.
● Virtanen, A. (2004). The Finnish Accounting History: The Development from the Early Accounting Practice to the First
Accounting Act.
Thank you for your
attention!