Modern economies rely on cross-border transactions and the free flow of international capital. Investors seek diversification and investment opportunities across the world, while companies raise capital, undertake transactions, or have international operations and subsidiaries in multiple countries. As a result, there is a need for high-quality, internationally recognised set of accounting standards that bring transparency, accountability, and efficiency to financial markets around the world.
Accounting rules for consistent financial statements
IFRS® Accounting Standards are a set of accounting rules for public companies with the goal of making company financial statements consistent, transparent, and easily comparable around the world. Furthermore IFRS® are principle-based rather than rule-based regulation resulting in accounting treatment of some transactions being different from its legal form. Implementing or applying IFRS® requires a lot of judgement that gives rise to questions. On this platform, you will find a wealth of insights, expertise, and resources to help you explore the world of IFRS®.
Our insights
We believe that sustainable growth is the only way to build a successful business and have a lasting impact on our environment and society. That is why we have listed the key insights for you below.
IFRS 9 Financial Instruments
Financial instruments accounting continues to respond and adapt to the changing circumstances of the global economy, including the effects of geopolitical events, natural disasters, climate effects and inflationary pressures. IFRS 9 Financial Instruments, issued on 24 July 2014, is considered to be one of the most challenging standards that requires companies to contemplate many complex topics.
IFRS 9 is built on a logical, single classification and measurement approach for financial assets and financial liabilities that reflects the business model in which they are managed as well as their cash flow characteristics. A forward-looking expected credit loss model introduced by the Standard results in timely recognition of loan losses and is a single model that is applicable to all financial instruments subject to impairment accounting.
Comprehensive guidance around hedge accounting principles as well as the derecognition of financial assets are included in the standard.
Please visit Financial instruments by KPMG Global to learn more about the latest news affecting financial instruments in a banking and non-banking environment.
IFRS 15 Revenue from Contracts with Customers
When IFRS 15 Revenue from Contracts with Customers came into effect in 2018, the global economy looked very different. Since then, there has been an extraordinary expansion in digital and intangible goods and services, the rapid growth of subscription services and the creation of new online platforms with innovative incentives. IFRS 15 was designed to deal with a wide range of transactions and to accommodate changes. But changes can bring challenges in interpreting and applying standards.
Read our various publications to gain some further understanding and insight into the practical applications of the standard in a fast-changing world such as. This includes accounting for loss making onerous contracts and issues such as dealing with online platforms and using intermediaries.
IFRS 16 Leases
The objective of IFRS 16 is to report information that faithfully represents lease transactions and provides a basis for users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. To meet that objective, a lessee should recognise assets and liabilities arising from a lease.
IFRS 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months unless the underlying asset is of low value. A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments.
The most significant impact of IFRS 16 is that it will increase the amount of debt that entities report on their Statement of Financial Position. This is because all leases, including operating leases, will now be treated as liabilities. Entities will also have to amortize the cost of their leases over the lease term, rather than expensing them as incurred. This will increase a company's expenses on the Statement of Profit and Loss.
Read our various publications to gain some further understanding and insight into the practical applications of the standard.
IFRS 17 Insurance contracts
Effective 1 January 2023, the new insurance standard, IFRS 17 Insurance Contracts, will apply for all companies - replacing IFRS 4. The scope is wider than merely insurance entities because it applies to contracts, regardless of the issuer, and therefore all companies could be affected.
IFRS 17 contains more detailed, complex, and prescriptive guidance for recognising, measuring, and disclosing insurance contracts. The definition of an insurance contract has changed from that under IFRS 4 Insurance Contracts, meaning that some contracts issued by companies could be an insurance contract, even if they are not called insurance contracts – e.g., product breakdown contracts or warranties.
IFRS 17 brings new levels of transparency, giving users more insight into an insurer’s financial health than ever before. Investors will be able to draw on more information on the profitability of new and in-force business: the separate presentation of underwriting and financial results will provide added transparency about sources of profits and quality of earnings. The new standard will drive greater consistency globally, allowing for increased comparability between insurers.
We hope that our material will help you meet the challenges of implementing this complex standard, and to understand where some potential opportunities might lie to ensure that you are best positioned to assess the impact for your company.
IFRS 18 Presentation and Disclosure in Financial Statements
The way companies communicate their financial performance is set to change. Responding to investor calls for more relevant information, IFRS 18 Presentation and Disclosure in Financial Statements now replaces IAS 1 Presentation of Financial Statements and will enable companies to tell their story better through their financial statements. Investors will also benefit from greater consistency of presentation in the income and cash flow statements and more disaggregated information.
Entities net profit will not change. What will change is how they present their results on the face of the income statement and disclose information in the notes to the financial statements which will include required totals, subtotals, and new categories in the statement of profit or loss. Enhanced disclosure around certain ‘non-GAAP’ measures – management performance measures (MPMs) – which will now form part of the audited financial statements.
IFRS 18 marks a step towards more connected reporting. Financial statements that include relevant and consistent information will afford users better information on companies’ financial performance.
Read our various publications to gain some further understanding and insight into the practical applications of the standard
IFRS 19 Subsidiaries without Public Accountability: Disclosures
IFRS 19 allows eligible subsidiaries to apply IFRS Accounting Standards with the reduced disclosure requirements of IFRS 19.
A subsidiary may choose to apply the new standard in its consolidated, separate, or individual financial statements provided that, at the reporting date, it does not have public accountability and its parent produces consolidated financial statements under IFRS.
A subsidiary applying IFRS 19 is required to clearly state in its explicit and unreserved statement of compliance with IFRS that IFRS 19 has been adopted.
Please refer to the KPMG Global IFRS Institute - KPMG Global webpage to stay up to date on developments.
Featured
How can KPMG help
Our team of dedicated professionals are here to support you on your journey toward success. We are here to help you with your questions about:
- Implementation of new standards
- Accounting for complex transactions
- Adoption of IFRS standards and the Conceptual Framework
Our Capital Markets & Accounting Advisory Services (CMAAS) team is committed to fostering innovation, driving progress, and delivering exceptional value to the clients we serve. We have a dedicated team of professionals that provide both accounting and financial reporting advice on a wide range of transactions and events, including adherence to new or revised accounting standards and assistance during (Capital Market) transactions. Due to our technical knowledge, industry experience and project management skills, we are well equipped to assist you in a variety of projects.
To keep up with developments in IFRS® Accounting Standards please refer to our KPMG Global IFRS Institute webpage KPMG Global IFRS Institute - KPMG Global which delivers the latest news, insights and guidance for boards, audit committee members, investors and all stakeholders about the evolving global financial and sustainability reporting landscape.
KPMG Global IFRS Institute
The latest news, insights and guidance
Discover more Opens in a new window
