Adoption of IFRS in Hungary

First steps
Changes in the law

First steps

As an initial step in preparing for the adoption of IFRS in Hungary, the major international professional services companies (Big4) engaged in a joint project during 2014 and compiled a survey of 20 relevant countries, focusing on different aspects of the adoption of IFRS (such as success factors for the implementation of IFRS, advantages and disadvantages, IFRS and taxation, related training, etc.)

Survey respondents indicated that one of the major advantages of the implementation of IFRS was that the countries who had adopted IFRS had become more competitive (e.g. had an easier access to international capital markets). The most significant challenge identified from the countries adopting IFRS was the lack of appropriate IFRS knowledge and shortage of professional training. Based on this feedback, PwC’s Academy has considerably expanded its range of IFRS trainings. Information on the currently available trainings can be found by clicking on the following link:
http://www.pwc.com/hu/en/academy/penzugy-es-szamvitel.html

Following the Hungarian government’s resolution that was passed on 7 November 2014, the government ministries had until 31 March 2015 to examine the effects of adopting IFRS and by 31 May 2015 submit a proposal to the government. The Hungarian governments’ resolution clearly opened up the possibility to adopt IFRS in Hungary, and representatives of the accounting profession (professional organisations, chamber of auditors, representatives of advisory companies, etc.) started their collaboration process. Through the resulting professional discussions held over several months, the accounting experts clarified all issues and identified all regulations to be amended in order to implement IFRS in Hungary.

Following this process, Decree No. 1387/2015 of the Government of Hungary on the implementation in Hungary of International Financial Reporting Standards for the purposes of separate financial reporting was passed on 12 June 2015. Since the issue of the decree, accountants from many of the organisations impacted have shown an increased interest in trainings, demonstrated by nearly 400 participants that enrolled in PwC’s Academy’s first webinar in Hungary.

Changes in the law

The first draft of the proposed legislation was published on 24 September 2015 on the website www.kormany.hu, and the bill became accessible on 13 October 2015 through www.parlament.hu. The bill is available at the following link: http://www.parlament.hu/irom40/06638/06638.pdf

The publication of the draft legislation and bill provided the related legal background and also raised several questions regarding the application of IFRS. Our experts held a webinar in September 2015 in English, in which they shared all currently available information and the advantages, difficulties and opportunities in connection with adopting IFRS through practical examples. The webinar is available at the following link:
https://www.youtube.com/watch?v=Rx_0vFLoN0Q&feature=youtube

Act CLXXVIII of 2015, which sets the legal background to the adoption of IFRS in Hungary, was published in the Hungarian Gazette on 26 November 2015. The Act is available at the following link:

On 15 June 2016, Act LXVI of 2016 Law was published in the „Magyar Közlöny”, which has impact on the Hungarian Accounting Law (Act C of 2000) and on certain requirements of other related laws. The full wording of the law is available at this link.

In this summary the amendments directly affecting the IFRS transition in Hungary are briefly presented.

It is important to emphasize that the transition to IFRS is an extremely complex task. Take a look at the IFRS workflow prepared by our experts, which provides a transparent overview of the steps of transition:

In the first step of a transition, companies intending to adopt IFRS should consider (regarding taxation, accounting and administration, among others) when and how transition should be implemented.

Following an assessment of the transition’s impacts on accounting, taxation and other areas, companies should also take into account the administrative deadlines stipulated by the bill. According to the Act on accounting, companies adopting IFRS are required to notify the tax authority no later than 30 days before the date of transition. Companies supervised by the Hungarian National Bank must notify the HNB. The auditor’s report specified in the bill must be attached to the notification.