Banking Supervision

Accountancy in credit institutions and external audit

Credit institutions and their consolidable groups, together with the branches of foreign credit institutions operating in Spain, are currently governed by two sets of regulations:

  • On the one hand, the Ministry of Economic Affairs and Finance, which has delegated this function to the Banco de España pursuant Orden de 31 de marzo de 1989Opens in a new window, has the authority to set the criteria, accounting standards and the formats for individual financial statements, consolidated statements of institutions that have issued securities not accepted for official listing and of consolidated statements for capital requirement purposes, as established by Law 10/2014, de 26 de junioOpens in a new window,
  • However, there are also criteria, accounting standards and formats for consolidated financial statements of credit institutions and consolidable groups that have issued securities accepted for official listing on a European market, which are established under European Union Regulations.

Circular 4/2004Opens in a new window of the Banco de España on public and confidential financial information standards and financial statement formats was approved in order to modify the accounting system of Spanish credit institutions, adapting them to new accounting requirements caused by the EU adopting the International Financial Reporting Standards (IFRS-EU).

Currently, Circular 4/2004 has been replaced by Circular 4/2017Opens in a new window giving continuity to the Banco de España's strategy to maintain the Spanish credit institutions’ accounting regime compatible with the principles and criteria established by IFRS-EU.

Therefore, while Circular 4/2017Opens in a new window aligns the Spanish accounting framework with the International Financial Reporting Standards, it needs to be kept up to date as this global framework evolves.

Lastly, in keeping with Additional Provision One of Law 22/2015Opens in a new window, the accounts of Spanish credit institutions must be external audited. The branches of foreign credit institutions in Spain, when they do not have to file annual accounts of their activities in Spain, must subject the accounting information that they must publish annually and the confidential information submitted to the Banco de España, to an external audit. According to the Additional Provision Three, it is mandatory for banks to have an audit committee.