Validation v0786_m seems to be incorrect.

The rule compares profit or loss for the year attributable to owners in P&L with the corresponding position in equity: {F 01.03, r250,c010} = {F 02.00, r690,c010}.

Despite the comparable wording and reference the comprehension is different. The P&L contains the profit or loss for the reporting year while the Equity position contains the profit or loss available for distribution.

This could be illustrated by three examples:

1.)

• profit or loss for the year attributable to owners of the parent (template F 02.00, row 690): 500 €
• transfer to legal reserve (according legal standards): – 200 €
• results in profit or loss attributable to owners of the parent (template F 01.03, row 250): 300 €
• results in other reserves - other (template F 01.03, row 230): 200 €

2.)

• profit or loss for the year attributable to owners of the parent (template F 02.00, row690): 500 €
• retained profit from previous periods (no decision of distribution or transfer until now): 200 €
• results in profit or loss attributable to owners of the parent (template F 01.03, row 250): 700 €

3.)

• profit or loss for the year attributable to owners of the parent (template F 02.00, row690): 500 €
• effects from distribution obligation for equity-similar obligations transfer to other liabilities (according legal standards): – 200 €
• results in profit or loss attributable to owners of the parent (template F 01.03, row 250): 300 €
• results in other liabilities (template F 01.02, row 280): 200 €

The effects of the above mentioned examples will be published accordingly in the audited financial statements. Therefore it is not possible to reference these two positions from the validation rule.

It is not clear how to deal with this validation rule respectively with the transactions, especially it is inconsistent with audited financial statements.

In template F 02.00 of Annexes III and IV to Regulation (EU) No 680/2014 (ITS on Supervisory Reporting), the amount of profit or loss for the year (row 670) is equal to the sum of the two following rows:

• row 680 that includes the profit or loss attributable to minority interest (non-controlling interests) and
• row 690 that includes the profit or loss attributable to owners of the parent.

In template F 01.03 of Annexes III and IV, the abovementioned figure is reported as follows:

1. row 250 ‘profit or loss attributable to owners of the parent’, which is equal to the row 690 in template F 02.00;
2. row 270 ‘minority interest (non-controlling interests)’, which includes, among others, the figure reported in row 680 of template F 02.00.

The position to be reported in F 02.00 and F 01.03 has to reflect the profit or loss assigned to owners of the parent. For the purposes of FINREP this is to be interpreted as the profit or loss before any decision about how to allocate the profit or loss. Referring to the examples 1 to 3, always 500 Euro has to be reported in F 02.00, row 690 and F 01.03, row 250 as in the FINREP methodology the amount to be reported is not equal to the profit or loss for distribution.

In this respect, validation rule v0786_m is correct.