Regnskabs- og revisionsmæssig behandling af IAS 12 – effekten af ændrede skattesatser

Anders S. Houmann & Trine Bæk Andersen

Student thesis: Diploma thesis


This thesis has been drawn up as the closing element of the HD programme, aiming to outline the accounting and auditing consequences of the amendment of the Danish Corporation Tax Act. On 23 June 2013, the Danish Parliament decided to gradually reduce the corporation tax rate from 25% to 22% over a three-year period. Given such gradual reduction of the corporation tax rate, companies having recognised their tax assets and liabilities need to determine when the timing differences between recognition in the financial statements and recognition in the statement of taxable income will be reversed. Such determination is required since the time of reversion, which is crucial to the time of taxation, determines what tax rate to apply and hence the carrying amount by which the differences are to be recognised in the financial statements. Further, International Accounting Standard (IAS) 12 requires entities to disclose the effect of the amendment in terms of amount on the financial statements and to include in the financial statements an explanation thereof. As regards deferred tax assets, IAS 12.82 stipulates that where a recognised tax asset exceeds the amount of the liability recognised, or where the entity was recently onerous, the entity must disclose the amount of a deferred tax asset and provide information indicating that it should be recognised. An empirical analysis has been made of financial statements published by companies in the OMXC20 Index with a view to examining whether those companies are compliant with applicable disclosure requirements laid down by IAS 12. The findings of the analysis were generally unsatisfactory, showing that only two entities out of those 19 selected for the analysis were consistent with all of the disclosure requirements. The analysis also showed that the revised corporation tax rate has resulted in income of DKK 63m, of which the financial statement user must be aware when evaluating the entities' profit/loss, ratios etc. In order for an entity’s auditors to prevent and check any non-compliance by the entities with the provisions of the Standard, we have reviewed International Standard on Auditing (ISA) 540 on accounting estimates with a view to determining the specific audit procedures to be performed. The auditors must apply various procedures to the entity’s budgets, including underlying budget assumptions, and assess the entity’s historical capacity to budget since this is an issue on which the Danish Securities Council has commented in prior decisions made by it.

EducationsGraduate Diploma in Financial and Management Accounting, (Diploma Programme) Final Thesis
Publication date2014
Number of pages84