What is Finnish GAAP and how does it differ from IFRS?

When a company operates in more than one market, financial reporting is never just a box-ticking exercise – it’s a matter of clarity, trust, and comparability. Businesses that expand internationally need to understand how different standards work, and what that means for their reporting obligations. One area that often raises questions: Finnish GAAP (also known as FAS, the Finnish Accounting Standards).

So, how does Finnish GAAP compare with IFRS? And when is one more appropriate than the other? Let’s explore the essentials.

What is Finnish GAAP (FAS)?

Finnish GAAP, often referred to as FAS (Finnish Accounting Standards), is the set of national accounting rules established under Finland’s Accounting Act and related decrees. It governs how companies incorporated in Finland must prepare and present their financial statements, unless they fall under EU or listing requirements that mandate IFRS.

Key characteristics of Finnish GAAP include:

• Principle-based approach: Built to comply with EU directives, but with distinctly Finnish interpretations.
• Focus on creditor protection: Traditionally designed to give a conservative view of profitability and distributable reserves.
• Flexibility for SMEs: Smaller companies often prefer FAS due to its less complex disclosure requirements compared with IFRS.

IFRS in the Finnish context

The International Financial Reporting Standards (IFRS) are globally recognised reporting rules, required for listed companies within the EU. In Finland, this means:

• All companies listed on Nasdaq Helsinki are obliged to use IFRS in their consolidated accounts.
• Non-listed companies can choose: prepare accounts under IFRS or stick to Finnish GAAP, depending on their size, structure, and international needs.

Key differences: Finnish GAAP vs IFRS

Here are some common areas where Finnish GAAP and IFRS diverge:

1. Measurement approach
   • Finnish GAAP: Follows historical cost principle more rigorously, with limited use of fair value.
   • IFRS: Widely applies fair value measurement, particularly for financial instruments and investment properties.
2. Goodwill treatment
   • Finnish GAAP: Goodwill is capitalised and amortised over its useful life.
   • IFRS: Goodwill is not amortised but tested annually for impairment.
3. Deferred tax
   • Finnish GAAP: Deferred tax accounting is more limited and can be optional for smaller entities.
   • IFRS: Requires comprehensive recognition of deferred tax on all temporary differences.
4. Consolidation requirements
   • Finnish GAAP: Consolidation exemptions possible for smaller groups.
   • IFRS: Stricter rules, emphasising control rather than just ownership percentage.

When to apply Finnish GAAP and when to choose IFRS

• Finnish GAAP is appropriate if:
  • The company operates mainly in Finland.
  • Stakeholders are domestic (creditors, regulators, tax authorities).
  • Administrative efficiency is a priority, and simplicity outweighs the demand for international comparability.
• IFRS is appropriate if:
  • The company is listed or plans to be.
  • Reporting to international investors or shareholders.
  • Engagement in cross-border mergers, acquisitions, or financing where comparability is essential.

Why this matters for leaders and experts

For executives, finance directors and investors, knowing the framework your business operates in is more than just compliance. It influences how performance is perceived, how valuations are made, and how easily your financials can be compared across borders.

How CtrlPrint can support

Finnish GAAP and IFRS are designed with different objectives in mind: while FAS prioritises prudence and creditor protection, IFRS emphasises transparency and international comparability. For companies active in multiple markets, grasping these differences is vital not only for compliance, but also for building trust with a global audience.

At CtrlPrint, we work with companies navigating complex reporting requirements across jurisdictions. By bridging the gap between local rules and international expectations, we help organisations streamline their reporting processes and ensure high-quality, reliable communications with stakeholders.

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