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Insights Financial statements 2021: disclosures in the Notes to the Financial Statements

Financial statements 2021: disclosures in the Notes to the Financial Statements

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published on 5 May 2022 | reading time approx. 2 minutes


The events that are taking place require a careful analysis of all the aspects to be considered in order to provide full disclosure in the 2021 financial statements of Italian companies.


The activation of the exemptions provided for by the rules to support businesses, the possible effects on business continuity related to the health emergency and the Ukraine war, the news of the 2019-2020 European Law and the information on public grants are aspects that must necessarily be considered in order to provide full disclosure in the Notes to the 2021 Financial Statements.

Firstly, the Italian Law provided for the following rules, to support companies in order to limit the impacts of the still ongoing epidemic, that must be disclosed in the 2021 Financial Statements:
  • suspension of amortization and depreciation of intangible and tangible assets. In the case of suspension of amortization or depreciation, Article 60 paragraph 7-quater of DL 104/2020 established that the 2021 Financial Statements must report:
    • the reasons for the suspension;
    • the amount of the corresponding unavailable reserve recognized in equity;
    • indication of the suspension effects on the representation of the company's financial position as well as on the economic result for the year;
  • suspension of recapitalization obligations. The Notes to the Financial Statements must separately disclose the 2021 losses and, if applicable, the losses carried forward for the FY2020. The source and changes of the losses during the year must be specified in appropriate schedules.

In addition, the Notes to the 2021 Financial Statements must also provide a proper disclosure of the business support rules that affected the FY 2020 such as:
  • revaluation of business assets pursuant to Article 110 paragraph 4-bis of DL 104/2020. It is necessary to report:
    • the valuation criteria adopted;
    • changes in fixed assets;
    • the nature and uses of equity items;
  • the option to not write down securities recorded as current assets;
  • waiver of the going concern provisions. The directors, upon the drafting of the financial statements for the year ending 31 December 2021, must make an assessment of the company's ability to meet its obligations within a minimum period of 12 months from the date of the financial statements.

Secondly, the provisions of the 2019-2020 European law also impact the disclosures to be made in the 2021 Financial Statements. Indeed:
  • in cases where netting of items is allowed by law, the company must disclose in the Notes the gross amounts subject to netting;
  • investment entities and financial holding companies are never exempt from drafting of Notes to Financial Statements;
  • in the case of acquisition of shareholdings in other companies, involving unlimited liability, the directors must indicate in the notes to the financial statements the name, registered office and legal form of each entity in which they have an interest.

With reference to information on public disbursements, the deadline for approval of the 2021 Financial Statements is the same as that for publication of information on public disbursements received pursuant to Article 1, paragraphs 125-129 of Law 124/2017, by companies obliged to include this information in the Notes to the Financial Statements. 

In detail, from an objective point of view, the disclosure obligations concern subsidies, grants, benefits, contributions or aid, in cash or in kind, not of a general nature and without consideration, remuneration or compensation paid to the company during FY2021. 

However, according to the latest interpretations, the aforementioned grants, to be reported in the Notes to the Financial Statements, should not include economic support measures granted in consideration of the epidemiological emergency.

Finally, for the Financial Statements as at 31 December 2021, the Ukraine war and the international sanctions adopted against Russia are included among the events occurring after the end of the financial year not involving a change in financial statement amounts but requiring disclosure in the notes to the Financial Statements. 

In fact, according to OIC 29, it is necessary to disclose in the Financial Statements the significant events that occurred after the end of the financial year that may affect the recipients of the corporate information to make proper evaluations and decisions. 

Anyway, the conflict, starting on 20 February 2022, is an event that could not have been foreseen by 31 December 2021. 

Therefore, in accordance with OIC 29, the beginning of the Ukraine war should be considered as a subsequent event not involving a change in the values of the Financial Statements, but only the need to provide an appropriate disclosure of the impact on the company's financial position, balance sheet and income statement, including a comment on the company's performance in the first months of FY 2022.

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