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Q2 2026 new IFRS® Accounting Standards and amendments: Are you ready?

Our semi-annual outlook helps preparers in the US keep track of changes in IFRS Accounting Standards and assess their relevance.

Cash Flow

From the IFRS Institute – June 1, 2026

Authors: Valerie Boissou; Paulina Kumah

The issuance of IFRS 20 marks a significant milestone for entities subject to rate regulation. This landmark standard replaces the temporary guidance in IFRS 14 and is set to improve the quality and comparability of financial reporting for these entities.

Amendments to IFRS 7 and IFRS 9 are effective this year. They clarify settlement-date derecognition rules, introduce an exception for electronic payments, provide guidance for assessing ESG-linked and contingent cash flows, and update disclosure requirements. They also provide guidance for power purchase agreements.

Companies should also continue to 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 International Accounting Standards Board (IASB), provide a high-level comparison to US GAAP, and identify resources for further reading. The content is organized by effective dates.1

Effective January 1, 2026

Effective January 1, 2027

Effective January 1, 2029


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 proposed amendments regarding financial instruments with characteristics of equity and the narrow scope amendments to IAS 28. See also the IFRS Foundation work plan for other IASB® projects that are currently in progress.

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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:

Also effective January 1, 20261 is 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, 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 to 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:

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:

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 prevent 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:

Effective January 1, 20291

IFRS 20, Rate-regulated Activities

New IFRS Accounting Standards requirements

Comparison to US GAAP

IFRS 20 aims to improve financial performance reporting for entities subject to rate regulation, such as utilities and transport. It introduces a new accounting model under which a company, subject to rate regulation that meets the scope criteria, recognizes regulatory assets and regulatory liabilities. The new model aligns the total income recognized in a period under IFRS Accounting Standards with the total allowed compensation the company is permitted to earn for regulatory goods or services supplied in the period.

This standard replaces IFRS 14, Regulatory Deferral Accounts, which acted as a temporary measure and allowed entities transitioning to IFRS Accounting Standards to continue using their former accounting policies for rate-regulated activities, resulting in a diversity of practices.

The new standard includes detailed disclosure requirements and is designed to give users clearer information about the financial effects of rate regulation and expected future cash flows. The standard will be mandatory for all entities with rate-regulated activities, not just for first time IFRS Accounting Standards adopters.

Topic 980, Regulated Operations, provides a framework for entities subject to rate-regulated activities, allowing for the recognition of regulatory assets and liabilities that would not be recognized under other US GAAP Topics, based on the actions and intent of the regulator.

Unlike under IFRS 20, there are no specific disclosure requirements under Topic 980. 

Although conceptually aligned, Topic 980 and IFRS 20 differ in structure and specific requirements, which may result in varied reporting outcomes.

KPMG resources:

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On the Radar

Financial instruments with characteristics of equity

The IASB is still 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 this year.

Narrow scope amendments to IAS 28

The IASB has started a project to explore narrow-scope amendments to clarify which entities are eligible to measure investments in associates and joint ventures using the fair value option in IAS 28, Investments in Associates and Joint Ventures. Per the proposals in the issued exposure draft, the fair value option would be available to entities that have a main business activity of investing in certain types of assets (consistent with the concept of specified main business activities in IFRS 18). A company would apply the proposed amendments when it applies IFRS 18, which is effective for annual periods beginning on or after January 1, 2027. The IASB plans to finalize any amendments by mid-2026.

Footnotes

1 Effective dates are for annual periods beginning on or after the stated date. Early adoption is permitted unless otherwise stated. Adoption may also be subject to local endorsement requirements.

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, Audit, DPP - Accounting, KPMG US
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Paulina Kumah
Director, Advisory - Accounting Advisory Services, KPMG US
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Valerie Boissou
Partner, Audit, DPP - Accounting, KPMG US
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Paulina Kumah
Director, Advisory - Accounting Advisory Services, KPMG US
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