The latest changes in accounting standards 9 February 2012 Evaldas Grenda, Audit Director

2 © 2012 Deloitte Lithuania Presentation will focus on: I part: Financial accounting framework in Lithuania Changes in Business Accounting Standards BAS that will be effective in the future II part: Changes in International Financial Reporting Standards IFRS in issue, however, not effective yet Exposure drafts IFRS for SMI The latest changes in accounting standards, 9 February 2012

3 © 2012 Deloitte Lithuania Financial Reporting Framework in Lithuania Business Accounting Standards of Lithuania International Financial Reporting Standards International Financial Reporting Standards, adopted by EU The latest changes in accounting standards, 9 February 2012

Changes in Business Accounting Standards

5 © 2012 Deloitte Lithuania Changes in Business Accounting Standards Name Effective Date (annual period beginning) BAS 1 Financial statements (new version, minor changes in definitions, defined scope of some condensed financial statements (cash flow statement might be included), set additional requirements for brokerage and other specific purpose companies ) 1 January 2011 BAS 5 Statement of Cash flows (new version, minor changes in CF preparation, CF attribution to different categories, extraordinary income and expenses captions deleted, included clarifications regarding realised / unrealised FX change) 1 January 2011 BAS 6 Explanatory notes (new version, changes in requirements for condensed explanatory notes (only info on goodwill needs to be disclosed if its amortisation rate >5y, less info requirements on relations with management 1 January 2011 The table below summarizes new or amendments to Standards The latest changes in accounting standards, 9 February 2012

6 © 2012 Deloitte Lithuania Changes in Business Accounting Standards Name Effective Date (annual period beginning) BAS 27 Concession rights (new version, defined scope of standard, additionally explained when concessor has to record fixed assets in its books, revised accounting rules for payments made to concessor) 1 January 2010 BAS 29 Interim financial statements (new version, revised definitions to be compliant with other standards, changed some definitions) 1 January 2011 BAS 33 Financial statements of brokerage companies and management companies (minor changes in typical forms of consolidated cash flow statements and changes in equity) 1 January 2007 BAS 39 Accounting and financial statements of collective investments subjects and pension funds (new standard) 1 January 2011 The table below summarizes new or amendments to Standards The latest changes in accounting standards, 9 February 2012

7 © 2012 Deloitte Lithuania Changes in Business Accounting Standards Name Effective Date (annual period beginning) BAS 7 Changes in accounting policy, estimates and correction of errors (new version) 1 January 2012 BAS 21 Donations and subsidies (new version)1 January 2012 BAS 23 Impairment of assets (new version, changes related to impairment of goodwill) 1 January 2012 BAS 37 Investments into joint operations (partnerships) (new version)1 January 2013 The table below summarizes issued Standards (not effective yet) The latest changes in accounting standards, 9 February 2012

Changes in IFRS

9 © 2012 Deloitte Lithuania Amendments to existing guidance on Financial Instruments and related issues Name Effective Date (annual period beginning) IFRS 1 Limited Exemptions from Comparative IFRS 7 Disclosures for First Time Adopters 1 January 2011 Improvements to IFRSs ( ): IFRS 7 – Clarification of Disclosures 1 January 2011 IAS 32 Classification of Rights Issues 1 February 2010 IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments 1 July 2010 The table below summarizes new or amendments to Standards/Interpretations relating to Financial Instruments applicable for 31 December 2011 The latest changes in accounting standards, 9 February 2012

10 © 2012 Deloitte Lithuania Amendments to other Standards / Interpretations Name Effective Date (annual period beginning) IAS 24 Related Party Disclosures 1 January 2011 IFRIC 14 Prepayments of a Minimum Funding Requirement 1 January 2011 Improvements to IFRSs ( ) 1 July January 2011 The table below summarizes new or amendments to Standards/Interpretations relating to Financial Instruments applicable for 31 December 2011 The latest changes in accounting standards, 9 February 2012

IFRS in issue (not effective yet)

12 © 2012 Deloitte Lithuania Amendments to existing guidance on Financial Instruments and related issues Name Effective Date (annual period beginning) Amendments to IFRS 7 Financial Instruments: Disclosures - Transfers of Financial Assets 1 July 2011 IFRS 9 Financial Instruments  Financial Assets  Financial Liabilities* 1 January 2013 The table below summarizes new or amendments to Standards / Interpretations relating to Financial Instruments which are available for early adoption NOT YET ENDORSED FOR USE IN EU * IFRS 9 was reissued in October 2010 to incorporate the requirements regarding financial liabilities The latest changes in accounting standards, 9 February 2012

13 © 2012 Deloitte Lithuania Amendments to other Standards / Interpretations Name Effective Date (annual period beginning) IFRS 1 Severe Hyperinflation and Removal of Fixed Dates 1 July 2011 IAS 12 Deferred Tax: Recovery of Underlying Assets 1 January 2012 The table below summarizes amendments to Standards/Interpretations which are available for early adoption – NOT YET ENDORSED FOR USE IN EU The latest changes in accounting standards, 9 February 2012

14 © 2012 Deloitte Lithuania Addendum (May 2011) New IFRSs and Consequential Amendments Name Effective Date (annual period beginning) IFRS 10 Consolidated Financial Statements1 January 2013 IFRS 11 Joint Arrangements1 January 2013 IFRS 12 Disclosure of Interests in Other Entities1 January 2013 IFRS 13 Fair Value Measurement1 January 2013 IAS 27 Separate Financial Statements (consequential amendment in 2011)1 January 2013 IAS 28 Investments in Associates and Joint Ventures (consequential amendment in 2011) 1 January 2013 The table below summarizes amendments to Standards / Interpretations which are available for early adoption – NOT YET ENDORSED FOR USE IN EU The latest changes in accounting standards, 9 February 2012

15 © 2012 Deloitte Lithuania Addendum (June 2011) Amended standards Name Effective Date (annual period beginning) IAS 1 Presentation of Financial Statements Separate OCI for items to be recycled through income statement 1 July 2012 IAS 19 Employee Benefits Corridor approach option removed 1 January 2013 The table below summarizes amendments to Standards which are available for early adoption. NOT YET ENDORSED FOR USE IN EU. The latest changes in accounting standards, 9 February 2012

IASB current projects (what may change)

17 © 2012 Deloitte Lithuania Leases Objective To provide investors with better information and transparency on leasing activity undertaken by an entity Project Insights Lessees Under the proposals, all leasing activity would be reflected on the statement of financial position through recognition of a right-of-use asset and a liability for lease rentals The right-of-use asset would be presented as part of property, plant and equipment and amortised over the life of the lease Scope exemption for very short-term leases for lessors only Lessors Proposals significantly less well-developed than lessee accounting Next Steps Final IFRS was expected in 2011 (Q4). Effective date – TBD. The latest changes in accounting standards, 9 February 2012

18 © 2012 Deloitte Lithuania Revenue Objective To develop a revenue model to apply to all industries and all types of revenue-generating transactions. Would replace both IAS 11 Construction Contracts and IAS 18 Revenue Scope Included: all contracts with customers – including services unbundled from lease and insurance contracts Excluded: lease contracts, insurance contracts, contractual rights or obligations in the scope of IFRS 9/IAS 39 Next StepsFinal IFRS was expected in 2011 (Q4). Effective date TBD. The latest changes in accounting standards, 9 February 2012

IFRS for SMI

20 © 2012 Deloitte Lithuania Drivers for the IFRS for SMEs Full IFRFS Not tailored to specific needs of users of SME financial statements Contains a large amount of detail which is not relevant to SMEs Does not take into account the limited ability of SMEs to bear costs of compliance and of the required expertise National GAAP Not comparable across national boundaries May not be perceived as of high quality Not necessarily based on a similar framework to full IFRSs May be limited training material and similar resources available SME IFRS for SMEs The latest changes in accounting standards, 9 February 2012

21 © 2012 Deloitte Lithuania IFRS for SMEs in practice Internationally recognised and known to be high quality Understandable by overseas parties Internationally comparable Compared to national GAAP Compared to full IFRSs Tailored to SMEs Removal of complex options and non- relevant topics Simplified based on cost/benefit analysis Benefits Challenges Understanding how to apply the IFRS for SMEs Make users of financial statements familiar with new framework The latest changes in accounting standards, 9 February 2012

22 © 2012 Deloitte Lithuania Scope of the Standard An SME (Small or Medium-sized Entity) Does not have public accountability; and Publishes general purpose financial statements for external users Instruments traded in public market, or Holds assets in a fiduciary capacity for a broad group of outsiders as a primary business Public accountability The latest changes in accounting standards, 9 February 2012

23 © 2012 Deloitte Lithuania Omitted topics Earnings per share Interim financial reporting Segment reporting Insurance Special accounting for assets held for sale Earnings per share Interim financial reporting Segment reporting Insurance Special accounting for assets held for sale Accounting policy options disallowed because a simplified treatment is available Revaluation model for PPE and intangible assets Proportionate consolidation for jointly-controlled entities Accounting policy choice for investment property Range of methods to account for government grants Deferral of actuarial gains and losses of defined pension plans NCI measured at fair value Certain options for financial instruments Comparison with full IFRSs The latest changes in accounting standards, 9 February 2012

24 © 2012 Deloitte Lithuania Application of IFRS for SMEs Translations are available or will be available in Czech, Spanish, Italian, Turkish, Romanian, Chinese, Portuguese, Arabic, French, Japanese, Serbian, Armenian, Polish, Russian, Albanian, Ukrainian Nearly 50 jurisdictions have taken action to adopt the IFRS for SMEs or indicated publicly an intention to do so The latest changes in accounting standards, 9 February 2012

THANK YOU FOR YOUR ATTENTION! ANY QUESTIONS?

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. © 2012 Deloitte Lithuania Contacts: Evaldas Grenda Director at Audit Department Deloitte Tel