Accounting and financial reporting in Morocco
In Morocco, accounting law 9-88 imposes a principle of transparency on all traders. Indeed, commercial companies must:
- First, develop accounting information in the form of summary statements in compliance with CGNC standards ;
- Second, file your summary statements with the court registry each year.
The financial statements required by accounting law can be either according to the normal model or according to the simplified model. The normal model is obligatory for companies with a turnover of more than 10 million dirhams.
Definition of financial reporting in Morocco
Financial reporting is an obligation imposed on all companies in Morocco. Indeed, this accounting information consists of collecting financial data (purchases, sales, cash flows, etc.) and recording them in compliance with accounting principles .
Companies must make their accounts public by annual filing with the court registry. Each interested party can recover their accounts (employees, suppliers, customers, banks, etc.).
When companies are in the form of a limited company , or when their turnover exceeds 50 million dirhams, they must submit certified accounts. The certification is made by an auditor . The auditor’s report is also filed with the court registry at the same time as the accounts.
The obligation to publish accounting information should not be confused with the obligation to prepare tax accounts.
Also read: Tax accounting
The accounts that companies must make public correspond to what is called: The accounting package. This bundle includes:
- First, the balance sheet
- Second, the income statement
- Third, the state of management balances
- Fourth, the financing table
- Finally, the ETIC (Statement of Additional Information)
Why the financial reporting obligation?
In the course of their life, companies establish relationships with several stakeholders. These stakeholders are, for example: The tax authorities, suppliers, customers, banks, investors, etc.
All these stakeholders are interested in having information on the financial health of the company.
Accounting information is particularly useful for its partners to make decisions (grant credit, collect taxes, etc.).
We call its partners: the users of accounting information.
So for investors, accounting information allows them to make decisions: increase capital, distribute dividends. For suppliers: grant supplier credit, request guarantees, etc.
The law, therefore, sanctions any irregularity in the keeping of accounting information which must scrupulously respect accounting principles. Read also: The criminal liability of leaders in Morocco
Managers are liable for the accounts they file with the court registry. They have the obligation to ensure that these accounts are regular, sincere and reflect in all their significant aspects a faithful image of the company’s activity. One of the best practices is to hire professionals to carry out independent audits even in the absence of a legal obligation. Read also: Financial audit: How is the mission going?
This responsibility is increased in the case of companies making public offerings. Indeed, as they benefit from public funds, they are subject to stricter control (two auditors, control by the AMMC, etc.).
In the complex and regulated field of accounting, financial reporting in Morocco presents its own specificities, governed by rigorous standards and laws. This article aims to shed light on key aspects of this regulation, with a focus on IFRS and Moroccan accounting standards, which form the basis of accounting in the country. These standards, essential for public companies and financial institutions, define the rules of transparency and presentation of financial statements. Understanding these standards is crucial for any business operating in Morocco, highlighting the importance of accountants in the country’s economic ecosystem.
Financial reporting in Morocco – Regulations
The Financial reporting landscape in Morocco is governed by specific standards and regulations aimed at ensuring the transparency and reliability of company financial information. These standards are mainly defined by the General Code of Accounting Standardization (CGNC) and apply to all economic actors in the country, including traders, liberal professions, craftsmen, associations, and various forms of companies.
The CGNC establishes seven fundamental accounting principles:
- Principle of continuity of operation : The accounts must be established with the perspective of a continuation of the company’s activity.
- Principle of consistency of methods : The same rules of evaluation and presentation must be applied from one exercise to another.
- Historical cost principle : The initial value of an accounting element remains unchanged despite market fluctuations.
- Principle of specialization of financial years : Expenses and income must be allocated to the accounting year to which they relate.
- Principle of prudence : In the event of uncertainties affecting costs or income, these must be taken into account in the financial year concerned.
- Principle of clarity in accounting : Information must be clearly categorized, correctly named and without compensation between them.
- Materiality : All items of material importance must be disclosed in the financial statements.
Companies in Morocco are required to keep mandatory accounting books, such as the accounting procedure manual, the journal book , the general ledger and the trial balance, in addition to producing various financial statements such as the balance sheet, the income statement, and the cash flow statement.
Accounting , beyond its basic function of recording transactions, plays a crucial role in the management of a business and provides essential financial information to various stakeholders, such as banks, shareholders, employees and tax bodies. It thus provides a clear vision of the company’s financial situation, facilitating decision-making and risk management.
Read also: Accounting procedures manual