Q4 2025 new IFRS® Accounting Standards and amendments: Are you ready?

From the IFRS Institute – December 5, 2025

Authors: Valerie Boissou, Paulina Kumah

In the second half of 2025, the International Accounting Standards Board (IASB) amended IFRS 19 to provide additional disclosure relief for subsidiaries without public accountability. Amendments to IAS 21 were also issued to address certain foreign exchange translations in hyperinflationary environments.

As the calendar year 2025 ends, IFRS Accounting Standards preparers transacting in foreign currencies that lack exchangeability need to implement other IAS 21 amendments relevant to this situation. All companies should also prepare for IFRS 18 on presentation and disclosure, effective in 2027, requiring comparative figures.

Our semi-annual outlook is a quick aid to help preparers in the US keep track of coming changes to IFRS Accounting Standards and assess their relevance to their financial statements.

The following summaries highlight new authoritative guidance issued by the IASB, provide a high-level comparison to US GAAP, and identify resources for further reading. The content is organized by effective dates¹ :

Effective January 1, 2025

Effective January 1, 2026

Effective January 1, 2027

As a reminder, to be in compliance with IFRS Accounting Standards, companies also need to timely implement all IFRS Interpretations Committee Agenda Decisions. Read the KPMG IFRS Perspectives article for a summary of 2025 Agenda Decisions.

Finally, in the "On the Radar" section, we discuss several IASB projects that are nearing completion: the forthcoming standard on rate-regulated activities, amendments regarding financial instruments with characteristics of equity, and illustrative examples aimed at enhancing the reporting of uncertainties within financial statements. See also the IFRS Foundation work plan for other IASB^®projects that are currently in progress.

Effective January 1, 2025¹

Amendments to existing standards
New IFRS Accounting Standards requirements	Comparison to US GAAP
Lack of Exchangeability (Amendment to IAS 21, The Effects of Changes in Foreign Exchange Rates) applies when one currency cannot be exchanged into another. This may occur, for example, because of government-imposed controls on capital imports and exports, or a limitation on the volume of foreign currency transactions undertaken at an official exchange rate. The amendments clarify when a currency is considered exchangeable into another currency, and how an entity estimates a spot rate for currencies that lack exchangeability. The amendments introduce new disclosures to help financial statement users assess the effect of using an estimated exchange rate.	When a lack of exchangeability is not temporary, Topic 830 (foreign currency matters) explicitly requires an entity to consider the propriety of consolidation, combination, or equity method of accounting for foreign operations with significant non-exchangeable currencies, unlike IFRS Accounting Standards. Further, there is no concept of estimating exchange rates under US GAAP; however, the lack of exchangeability must be disclosed.
KPMG resources: Article: Lack of exchangeability

Effective January 1, 2026¹

Amendments to existing standards
New IFRS Accounting Standards requirements	Comparison to US GAAP
Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9, Financial Instruments and IFRS 7, Financial Instruments: Disclosures) clarify financial assets and financial liabilities are derecognized at settlement date except for regular way purchases or sales of financial assets, and financial liabilities meeting conditions for a new exception. The new exception permits companies to elect to derecognize certain financial liabilities settled via electronic payment systems earlier than the settlement date. The amendments also provide guidelines to assess the contractual cash flow characteristics of financial assets, which apply to all contingent cash flows, including those arising from environmental, social, and governance (ESG)-linked features. Further, the amendments introduce new disclosure requirements and update others.	Under Topic 405, financial liabilities are considered extinguished once the debtor has settled the debt or is legally released from being the primary obligor. There are no specific considerations to assess the timing of debt extinguishment when payments are made via electronic payment systems. US GAAP also does not address the timing of the recognition of financial asset settlements. Further, the classification of financial assets under US GAAP is primarily based on management’s intent for holding the assets. Any contingent cash flows, including those arising from ESG-linked features, are evaluated for potential bifurcation as embedded derivatives.
Nature-dependent Electricity Contracts (Amendments to IFRS 9 and IFRS 7) addresses the application of ‘own use’ and hedge accounting requirements for agreements that meet specified criteria. If a nature-dependent electricity contract (also known as a Power Purchase Agreement or PPA) qualifies for the ‘own use’ exemption, it is accounted for as an executory contract rather than as a derivative. In contrast, if a PPA does not qualify for the ‘own use’ exemption, it is accounted for as a derivative to which hedge accounting considerations may apply. The amendments permit a variable nominal amount of forecast electricity transaction to be designated as the hedged item. The amendments apply to contracts that reference electricity generated from nature-dependent sources and for which cash flows vary based on the amount of electricity generated by a reference production facility. New disclosures have also been introduced.	Like IFRS Accounting Standards, under US GAAP, PPAs that meet the definition of a derivative are eligible for the normal purchase normal sale (NPNS) scope exception from being accounted for as a derivative under Topic 815. Like IFRS Accounting Standards, if the NPNS scope exception is elected for an eligible PPA, it is accounted for as an executory contract. To the extent a PPA is accounted for as a derivative, the requirements and the mechanics of applying hedge accounting differ from IFRS Accounting Standards.
KPMG resources: Article: Settlement by electronic payments Article: Classification of financial assets Article: Own use scope exemption under IFRS^® Accounting Standards Article: Nature-dependent electricity contracts

Also effective January 1, 2026¹, are the latest cycle of annual improvements to IFRS Accounting Standards. These amendments make narrow changes to the following standards: IFRS 1 (First-time adoption of IFRS), IFRS 7, IFRS 9 and IFRS 10 (consolidated financial statements), IAS 7 (statement of cash flows).

Effective January 1, 2026¹

Amendments to existing standards
New IFRS Accounting Standards requirements	Comparison to US GAAP
Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9, Financial Instruments and IFRS 7, Financial Instruments: Disclosures) clarify financial assets and financial liabilities are derecognized at settlement date except for regular way purchases or sales of financial assets, and financial liabilities meeting conditions for a new exception. The new exception permits companies to elect to derecognize certain financial liabilities settled via electronic payment systems earlier than the settlement date. The amendments also provide guidelines to assess the contractual cash flow characteristics of financial assets, which apply to all contingent cash flows, including those arising from environmental, social, and governance (ESG)-linked features. Further, the amendments introduce new disclosure requirements and update others.	Under Topic 405, financial liabilities are considered extinguished once the debtor has settled the debt or is legally released from being the primary obligor. There are no specific considerations to assess the timing of debt extinguishment when payments are made via electronic payment systems. US GAAP also does not address the timing of the recognition of financial asset settlements. Further, the classification of financial assets under US GAAP is primarily based on management’s intent for holding the assets. Any contingent cash flows, including those arising from ESG-linked features, are evaluated for potential bifurcation as embedded derivatives.
Nature-dependent Electricity Contracts (Amendments to IFRS 9 and IFRS 7) addresses the application of ‘own use’ and hedge accounting requirements for agreements that meet specified criteria. If a nature-dependent electricity contract (also known as a Power Purchase Agreement or PPA) qualifies for the ‘own use’ exemption, it is accounted for as an executory contract rather than as a derivative. In contrast, if a PPA does not qualify for the ‘own use’ exemption, it is accounted for as a derivative to which hedge accounting considerations may apply. The amendments permit a variable nominal amount of forecast electricity transaction to be designated as the hedged item. The amendments apply to contracts that reference electricity generated from nature-dependent sources and for which cash flows vary based on the amount of electricity generated by a reference production facility. New disclosures have also been introduced.	Like IFRS Accounting Standards, under US GAAP, PPAs that meet the definition of a derivative are eligible for the normal purchase normal sale (NPNS) scope exception from being accounted for as a derivative under Topic 815. Like IFRS Accounting Standards, if the NPNS scope exception is elected for an eligible PPA, it is accounted for as an executory contract. To the extent a PPA is accounted for as a derivative, the requirements and the mechanics of applying hedge accounting differ from IFRS Accounting Standards.
KPMG resources: Article: Settlement by electronic payments Article: Classification of financial assets Article: Own use scope exemption under IFRS^® Accounting Standards Article: Nature-dependent electricity contracts

Effective January 1, 2027¹

IFRS 18, Presentation and Disclosure in Financial Statements
New IFRS Accounting Standards requirements	Comparison to US GAAP
IFRS 18 replaces IAS 1, which sets out presentation and base disclosure requirements for financial statements. The changes, which mostly affect the income statement, include the requirement to classify income and expenses into three new categories – operating, investing and financing – and present subtotals for operating profit or loss and profit or loss before financing and income taxes. Further, operating expenses are presented directly on the face of the income statement – classified either by nature (e.g. employee compensation) or function (e.g. cost of sales) or by using a mixed presentation. Expenses presented by function require more detailed disclosures about their nature. IFRS 18 also provides enhanced guidance for aggregation and disaggregation of information in the financial statements, introduces new disclosure requirements for management-defined performance measures (MPMs)* and eliminates classification options for interest and dividends in the statement of cash flows. *Non-GAAP measures that meet the definition of MPMs will be subject to the disclosure requirements.	US GAAP generally has no requirements to classify income and expenses by specific category, or present subtotals for profit or loss. SEC regulations prescribe expense classification requirements for certain specialized industries. Non-GAAP measures are generally prohibited from inclusion in financial statements. Therefore, presentation and disclosure differences are expected to continue to arise in practice when IFRS 18 comes into effect. Starting 2027, the FASB will require² income statement expenses be disaggregated into certain natural expense categories in the financial statement notes. The new US GAAP disclosures are similar in spirit to certain IFRS 18 disaggregation requirements but may be more cumbersome and will apply only to public business entities.
KPMG resources: Article: How companies communicate financial performance is changing Defining Issues: Rolling the DISE: FASB issues final ASU

Effective January 1, 2027¹

IFRS 18, Presentation and Disclosure in Financial Statements
New IFRS Accounting Standards requirements	Comparison to US GAAP
IFRS 18 replaces IAS 1, which sets out presentation and base disclosure requirements for financial statements. The changes, which mostly affect the income statement, include the requirement to classify income and expenses into three new categories – operating, investing and financing – and present subtotals for operating profit or loss and profit or loss before financing and income taxes. Further, operating expenses are presented directly on the face of the income statement – classified either by nature (e.g. employee compensation) or function (e.g. cost of sales) or by using a mixed presentation. Expenses presented by function require more detailed disclosures about their nature. IFRS 18 also provides enhanced guidance for aggregation and disaggregation of information in the financial statements, introduces new disclosure requirements for management-defined performance measures (MPMs)* and eliminates classification options for interest and dividends in the statement of cash flows. *Non-GAAP measures that meet the definition of MPMs will be subject to the disclosure requirements.	US GAAP generally has no requirements to classify income and expenses by specific category, or present subtotals for profit or loss. SEC regulations prescribe expense classification requirements for certain specialized industries. Non-GAAP measures are generally prohibited from inclusion in financial statements. Therefore, presentation and disclosure differences are expected to continue to arise in practice when IFRS 18 comes into effect. Starting 2027, the FASB will require² income statement expenses be disaggregated into certain natural expense categories in the financial statement notes. The new US GAAP disclosures are similar in spirit to certain IFRS 18 disaggregation requirements but may be more cumbersome and will apply only to public business entities.
KPMG resources: Article: How companies communicate financial performance is changing Defining Issues: Rolling the DISE: FASB issues final ASU

IFRS 19, Subsidiaries without Public Accountability: Disclosures
New IFRS Accounting Standards requirements	Comparison to US GAAP
IFRS 19 is a voluntary standard that applies to entities without public accountability, but whose parents prepare consolidated financial statements under IFRS Accounting Standards. For in-scope companies, IFRS 19 simplifies disclosures on various topics, including leases, exchange rates, income taxes, and statement of cash flows. In recent amendments to IFRS 19, other disclosure requirements have also been reduced, including those around supplier finance arrangements, lack of exchangeability and financial instruments. If elected, IFRS 19 is expected to reduce the cost of preparing in-scope financial statements while maintaining the usefulness of those financial statements for stakeholders.	Under US GAAP, private companies can elect to apply Private Company Alternatives, aimed at reducing complexity and costs in financial reporting for in-scope companies. This includes the option to amortize goodwill over a set period, the ability to combine similar intangible assets, a simplified approach to evaluating variable interest entities, a simplified approach to lease accounting, and alternative methods for estimating fair value in certain cases. There is no specific alternative focused solely on reducing disclosures; however, certain US GAAP disclosure requirements only apply to public entities. The entities eligible to elect Private Company Alternatives under US GAAP compared to IFRS 19, as well as the results of applying each, may differ. .
KPMG resources: Article: Reducing disclosures for subsidiaries

Amendments to existing standards
New IFRS Accounting Standards requirements	Comparison to US GAAP
Translation to a Hyperinflationary Presentation Currency (Amendments to IAS 21): The amendments apply to companies with a non-hyperinflationary functional currency using a hyperinflationary presentation currency and requires that all amounts, including comparatives, are translated at the closing rate at the latest reporting date. The amendments also apply to companies with hyperinflationary functional and presentation currencies that translate the results and financial position of foreign operations whose functional currency is non-hyperinflationary. In this case, a company uses the closing rate at the latest reporting date when translating all amounts (except comparatives). It applies the change in general price index to restate the comparatives. The amendments apply retrospectively, and prevents foreign currency translation reserves from growing disproportionately, as compared to other components of equity.	Unlike IFRS, there is no specific guidance to address translation from a non-hyperinflationary functional currency to a hyperinflationary reporting currency. The standard translation guidance applies, whereby assets and liabilities are translated at the current exchange rate; income and expenses are translated at actual rates or appropriate averages; equity components (excluding current-year movements, which are translated at the actual rates) are not retranslated.
KPMG resources: Article: Hyperinflationary presentation currency

On the Radar

Rate-regulated activities

The IASB is expected to issue its new accounting standard for rate-regulated activities in the second quarter of 2026. The standard aims to improve the reporting of financial performance for entities – such as utilities – subject to rate regulation. The model will address the accounting for regulatory assets and regulatory liabilities that arise when part of the total allowed compensation for goods or services supplied in a period is included in determining the regulated rates for goods or services supplied in a different period.

The IASB anticipates that the changes will provide users with clearer information about the financial effects of rate regulation and the entity’s expected future cash flows. The standard is also expected to include detailed disclosure requirements to better understand the nature and financial effect of these regulatory arrangements. The standard will replace IFRS 14 and is expected to be effective for annual reporting periods beginning on or after January 1, 2029, with earlier application permitted.

Financial instruments with characteristics of equity

The IASB is finalizing amendments to improve how companies present and disclose financial instruments with both debt and equity features. Key changes center on enhancing presentation by requiring profit or loss to be separately attributed to ordinary shareholders, participating rights holders, nonparticipating rights holders and noncontrolling interest holders in the statement of comprehensive income. The proposals also introduce extensive new disclosures in IFRS 7, detailing the terms and conditions of these complex instruments, the nature of their claims on the company’s assets, and their potential to dilute ordinary shares. These changes aim to provide investors with greater transparency on the nature and priority of claims and how these instruments affect a company's financial position. The IASB is also separately expected to address common practice issues relating to classification of financial instruments as financial liabilities or equity. The amendments are expected to be finalized in 2026.

Illustrative examples on the effect of uncertainties

The IASB has introduced six new illustrative examples to address investor and regulator concerns about uncertainty in financial reporting. They focus on climate-related scenarios – including key assumptions about emissions costs in impairment testing, obligations that may be qualitatively material, and the effect of climate risks on credit exposures. However, these examples aim to clarify uncertainty across financial reporting more broadly. The illustrative examples do not have an effective date because they illustrate the existing disclosure requirements in IFRS Accounting Standards. They are available for IFRS Accounting Standard preparers to assess potential effects and identify disclosure gaps.

Footnotes

¹ Effective dates are for annual periods beginning on or after the stated date. Early adoption is permitted unless otherwise stated.

² ASU 2024-03, Disaggregation of Income Statement Expenses, is effective prospectively for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption and retrospective application are permitted.

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Valerie Boissou

Partner, Dept. of Professional Practice, and US-France Corridor Leader, KPMG US

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Paulina Kumah

Director, Advisory - Accounting Advisory Services, KPMG US

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Valerie Boissou

Partner, Dept. of Professional Practice, and US-France Corridor Leader, KPMG US

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Paulina Kumah

Director, Advisory - Accounting Advisory Services, KPMG US

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