Iceland has adopted the regulations stipulated in the European IAS/IFRS for reporting purposes. Iceland is a member of the European Economic Area (EEA). These Internal Audit Services (IAS) and International Financial Reporting Services (IFRS) regulations are meant to streamline the way businesses report their financials. Every organized economy must have these sets of rules and formats in place to ensure that companies, especially the listed and public limited companies operate in a transparent manner. These companies would have received investments from the public and the government has the responsibility to protect their interests. Accounting in Iceland follows these norms.
The Basics of the Accounting Requirements
The common accounting or fiscal year followed in Iceland is from January 1 to December 31, each year. All businesses have to share the details of their finances at the end of the year. The reports presented at that time must have a general annual report along with the company’s balance sheet and the profit and loss account.
The laws on accounting in Iceland lay down different rules for companies according to their constitution. Those in the capital raising business have to send a copy of their annual report to the legal authorities for scrutiny.
There are rules regarding the appointment of auditors by limited companies. If they are public limited companies, an auditor or an inspector from the government will have to audit the financial records of the company. Those companies whose shares are listed in the bourses have to elect two audit teams in their internal board meetings. One of these has to be a public accountant authorized by the Iceland government to conduct thorough investigations.
The purpose behind such regulations is to make certain there are no irregularities like money laundering. These financial regulations have been drawn up by international agencies after a lot of study on financial transactions. A small percentage of businesses may be operating with dark motives. There have been cases of illegal finances being used for terrorist purposes. To prevent any such thing from occurring, the finances of all companies are audited for the sources of their income, and the genuineness of their expenses. Some companies also deliberately declare losses though they may have made profits. This is also illegal since it deprives the government of the taxes due from these companies.
The Icelandic Ministry of Iceland is the nodal authority for monitoring these IAS/IFRS rules and regulations. The professional body The Institute of State Authorized Public Accountants in Iceland takes care of the implementation of the rules of accounting in Iceland.
The major university in Iceland, the Reykjavik University (Haskolinn I Reykjavik, in the local language) offers courses leading to the award of MAcc degree in financial accounting and auditing. A candidate will have to gain some professional experience after completing the degree and then take a public accountant examination to qualify for jobs either with the government or the private firms operating in Iceland.
Investor Knowledge on Practices in Iceland
Businesses planning to make investments in Iceland would do better to understand these regulations before they commit their finances. Many companies from Europe may already be familiar with them as the IFRS rules are common to all EEA countries. If you are from outside of Europe but find the potential for your business in Iceland, you should be familiar with the way the rules of accounting in Iceland are followed. You will find the resources on all aspects of investing and carrying on business in the country from many organizations. The websites of the bodies mentioned above can also be visited to know more about these issues.
If you still require any kind of assistance for doing business or accounting in Iceland, contact Swapp Agency.