Tomas Hjelström

Different factors have contributed to the development of financial accounting in Sweden over time. The decades around the mid-1900s were characterized by creditor protection and accounting prudence, low transparency, and political influence through tax and corporate governance systems. This phase culminated in the 1970s, as illustrated by the Nobes (1983, p. 7) classification where Sweden was assigned to a class of its own at one of the extreme positions (characterized by prudence, tax and government influence, flexibility in use of provisions, etc.). A differentiation gradually took place from the 1980s and onward, where different accounting systems emerged for different entities. Swedish multinationals began to cross-list in the United States, and US GAAP reconciliations pointed at the need for consolidated financial statements prepared in accordance with high-quality standards. Accordingly, the International Accounting Standards (IASs) were gradually translated in 1990–2002 and adopted into Swedish GAAP for listed groups, followed by mandatory IFRS adoption in 2005 as Sweden had become a member of the European Union in 1995. However, legal-entity accounting developed differently; major efforts were made to develop a Swedish version of IFRS for SMEs, and the resulting standard (K3) has been in force since 2014. In addition to requiring IFRS to be applied by listed companies, Sweden today (2022) has one accounting system for consolidated financial statements in privately held groups (K3-consolidated), one system for large limited-liability legal entities (K3-legal entity), one system for small limited-liability legal entities (K2), and one system for sole proprietorships (K1). There are links between financial accounting and tax in the legal entities, where smaller firms are expected to benefit from more tax-aligned financial accounting systems (K1 and K2).

This chapter presents the basics of the financial accounting system in sports organisations. It is based on an introduction to accounting terminology. The contents of financial reports and important interrelationships are then explained. This is done using the example of the “Dreaming Sports Club” in order to illustrate the basic contents and relationships in the accounting of sports organisations in a clear and easily comprehensible way. Based on this, the annual accounts of FC Barcelona are examined. Finally, some special features of sports organisations with regard to their effects on the financial reports are discussed.