Financial statements modernisation: What will change in 2025?

From 1 January 2025, the regulation on the modernisation of financial statements will come into force, leading to a number of changes in the way French companies present their accounts. In particular, this reform aims to increase the transparency and reliability of financial information while simplifying and clarifying accounting standards.

The French Authority of Accounting Standards

The French Authority of Accounting Standards (Autorité des Normes Comptables) is an organisation responsible for developing and adapting the accounting rules applicable to all companies operating in France, whether public or private. Since its creation in 2009, it has supported businesses in applying these standards and contributed to the development of international accounting standards. The ANC ensures that accounting practices evolve to reflect economic and legislative changes. By ensuring that accounting practices evolve in response to economic and legislative changes, the ANC aims to improve the transparency, comparability, and relevance of financial information. This, in turn, facilitates decision-making for investors and regulators.

An example of this approach is Regulation 2022-06, adopted by the ANC on 4 November 2022. Effective from 1 January 2025, this text introduces modernised financial reporting with three main objectives:

• Simplifying accounting models to enhance comparability;
• Promoting the digitalisation of annual accounts;
• Updating financial statement models and the accounting plan.

The elimination of charge transfers

A transfer account, similar to a rebilling, records insurance refunds or indemnities that offset all or part of an expense already recorded. While accountants frequently rely on this practice, it often complicates financial documents for non-specialists, such as bankers or company directors.

Although accountants commonly use this practice, it complicates reading financial documents for non-specialists such as bankers or company directors. As a result, the regulation eliminates expense transfer accounts (791, 796 et 797) to simplify financial reporting.

They will be replaced by revenue accounts classified by type so that a credit entry can adjust the accounts initially debited:

• Account 649: for refunds related to personnel expenses;
• Account 7587 for insurance refunds;
• Account 708: for miscellaneous rebilling.

The reform of extraordinary income

The regulation introduces a complete review of the concept of exceptional items, adopting a stricter definition and promoting more relevant financial information. This change marks France’s alignment with international best practice.

New definition of exceptional items

From now on, for an income or expense to be classified as an „exceptional item“, it must result exclusively from an event that is both significant and unusual. Otherwise, these items will be included in ordinary operating results.

• Restrictive approach: Only truly significant and unusual events are included.
• Retained accounts: Accounts 672/772 (charges and income relating to prior periods) and 678/778 (other exceptional charges and income) will remain the only accounts in this category.

International alignment and practical implications

This reform brings French practices closer to international standards but has significant implications:

• New Professional Practices: Accounting teams will need to incorporate these changes into their working methods.
• Revised Financial Analyses: Comparing income statements will require increased anticipation.
• Explanation of differences: Significant differences must be explained in detail in the annexes to the financial statements.

Changes in fixed asset accounting

One of the major consequences is the overhaul of fixed asset accounting schemes, notably with the elimination of accounts 675 and 775. For example, companies must now use dedicated accounts such as 657 and 757 for intangible and tangible assets.

• 657 and 757: For intangible and tangible assets.
• 667 and 767: For financial assets.
• 747: To replace account 777 in the management of investment grants.

Examples of Updated Entries :

• Previous Method
  • Asset disposal income: 775.
  • Net book value of disposed assets: 675.
• New Method
  • Income from asset disposals: 757.
  • Net book value of disposed assets: 657.

Impact on  X3 :

Changes in accounting schemes for assets must be integrated into new professional routines, particularly with the elimination of accounts 675 and 775.

Asset disposals must now be recorded in the new dedicated accounts: 657 and 757 (intangible and tangible assets) or 667 and 767 (financial assets).

Account 777 is replaced by account 747 („Share of investment grants transferred to the income statement“).

Simplification of financial reporting standards

The reform simplifies and standardises the presentation of financial statements, introducing major changes to their structure. Going forward:

• The ANC is introducing a single tabular format for the balance sheet, presented before profit distribution..
• The income statement will adopt a single linear format.

These new formats provide a more detailed and clear structure, enabling better understanding of financial information.

The annexes to the financial statements have also been reorganised around standardised tables, making it easier to access data and navigate between the accounts and the annexes. These changes are intended to make the financial statements more readable, transparent and understandable. They will also help to improve strategic decision-making and the financial credibility of companies in the eyes of third parties.

Changes to Financial Statements

The diversity of existing frameworks and the gradual introduction of new formats had made their use complex. To simplify, only two models will now be retained:

• Balance Sheet: A tabular model (before profit distribution).
• Income Statement: A linear model.

Key Objectives:

• Facilitate understanding and comparison across companies.
• Simplify the preparation of financial statements.
• Adapt the formats of tax package brochures.
• Update tax packages for the 2026 fiscal year.

Removals:

• Balance sheet models presented in a linear format and after profit distribution.
• Models associated with the developed system.

Amendments to the Annex

The Annex to the financial statements is evolving towards a standardised presentation, adapted to the type of company (size, legal status, etc.). These changes aim to harmonise presentation and information by

• Introducing standardised tables, including the cash flow statement and the financing tables.
• Adding new mandatory disclosures, adapted to the size and status of the company (individual or legal entity).
• Adapting tax package software to meet these new requirements.

Impact on X3:

No major changes are anticipated.

Impact on other products:

• Potential impact on Business Intelligence (BI): Standardised tables and new formats may require adjustments.
• Adaptation of tax package solutions: Software will need to integrate the new structures and requirements.

Accounting plan simplification and harmonisation

The new regulation introduces a significant reduction of almost 20% in the accounts within the accounting plan, thereby simplifying the classification of accounting transactions. At the same time, several rules have been clarified, particularly those concerning the recognition of accrued expenses and inventory accounting.

Distinction between mandatory and indicative tables

The reform creates a clear distinction between two types of financial tables to better structure financial information:

• Mandatory tables: Legally required and presented in standard font.
• Indicative tables: Optional, such as the cash flow statement, presented in italics.

This structure aligns with international standards, facilitating commercial and financial exchanges with foreign partners and reinforcing consistency in accounting practices.

Standardisation of accounting plan

The diversity of accounting frameworks (basic, abridged, advanced) has led to inconsistencies in the preparation of financial statements. The new regulation unifies these frameworks into a single accounting plan, distinguishing between mandatory and optional accounts.

Practical Impacts:

• Creation of new accounts and subcategories based on specific needs.
• Dormancy of obsolete accounts.
• Reposting of entries to the new accounts.
• Changes in professional practices, requiring training and adaptation.
• Updates to tools: financial statement templates, tax packages, balance sheets, income statements, and Business Intelligence (BI) systems.

Elimination of Accounts 400/410

Accounts 400 (generic suppliers) and 410 (generic customers) will be eliminated in order to harmonise the accounting plan with the practices of the abbreviated system.

Required Actions:

• Reclassification of opening balances to standardised accounts 401 (suppliers) and 411 (customers).
• Updating associated collective accounts as per their specific use.

This reform aims to simplify the management of supplier and customer accounts, reducing complexity related to multiple frameworks and standardise their application across all accounting systems.

Examples of eliminated balance sheet accounts

Mandatory and optional balance sheet accounts

The reform introduces a clear distinction between mandatory and optional accounts:

• Mandatory Accounts: These accounts must be used in compliance with applicable regulatory standards.
• Optional Accounts: Companies can refine their accounting plan by creating specific subdivisions tailored to their operational needs, remaining within the general framework of the accounting plan.

This flexibility allows for customisation to meet industry-specific requirements while maintaining a standardised foundation.

Impact on X3

The implementation of these changes in the X3 software requires several adjustments:

• Creation of new accounts: companies will need to create new accounts, integrating mandatory ones and any required subdivisions.
• Dormancy of certain accounts: certain accounts will be discontinued in line with the reform’s requirements.
• Transfer of accounting entries: accounting entries must be reclassified into the newly defined accounts.

These changes will require updates to accounting configurations and support for teams to ensure a smooth and compliant transition.

How will you ensure compliance with the new regulations?

The new accounting standards will fundamentally change business practices. To ensure a smooth transition and optimal compliance, using an integrated accounting management solution such as Sage Fiscalité is a strategic option.

These tools offer functionalities tailored to the current accounting and tax requirements, making it easier to update the accounting plan and produce financial statements.

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Download the recording of our dedicated webinar ! (FR replay) To know more

Summary

In conclusion, the implementation of the regulation on the modernisation of financial statements from 1 January 2025 will be a major milestone for French companies, introducing a simplification and harmonisation of accounting practices. This reform aims to facilitate the comparison of financial statements, promote digitisation and update accounting models, while increasing the transparency and reliability of financial information.

Summary of the main changes of the accounting reform effective from 1 January 2025:

1. Simplification of accounting models:
   The balance sheet and income statement will adopt a single format, in tabular and linear form respectively.
2. Elimination of certain accounts:
   Transfer accounts and master supplier/customer accounts (400/410) will be eliminated and replaced by standardised accounts.
3. Review of exceptional items:
   Only major and unusual events will be classified as exceptional, with a few specific accounts retained.
4. Changes to asset accounts:
   Old asset accounts will be replaced by new accounts specific to these transactions.
5. New standardised annex tables:
   The annex to the accounts will adopt standardised tables with specific requirements based on the size and nature of the company.
6. Simplification of the accounting plan:
   The accounting plan will be reduced by almost 20%, with a clear distinction between mandatory and optional accounts, allowing for greater flexibility.
7. Alignment with international standards:
   The Regulation is aligned with international accounting standards to improve comparability and facilitate financial exchange.

To ensure a successful transition and compliance with these new requirements, businesses can adopt integrated accounting management solutions such as Sage Fiscalité.

Contact us to find out more!