IFRS Update for Financial Services
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Transcript of IFRS Update for Financial Services
IFRS Update for Financial Services
4 April 2013
KPMG AG, Zurich
1 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Agenda
Overview IFRS developments
The future of corporate reporting: current initiatives
Selected areas of focus
Actions – short-term and long-term
Discussion
2 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Timeline – change ahead
Consolidation – Investment
entities
FI Impairment
FI Hedge
accounting
Foreign currency
translation
Equity method
Non-financial liabilities
Common control
Conceptual framework
FI - equity
Emission trading
Extractive activities/R&D
Intangibles
IFRS 12 Consolidation – Disclosures
Amended IAS 28 Associates
& JV
Amended IAS 27
Sep. FS
IFRIC 20 Stripping
costs
Final published:
ED/DP expected in 2013: *
IFRS 9 – FI C&M assets/
liabilities
Revenue
recognition
IFRS 10 Consolidation
FI Macro-
hedging *
Insurance contracts *
Annual improvements (2009-2011)
IFRS 13 Fair value
measurement
IFRS 11 Joint
arrangements
Revised IAS 19 Employee
benefits
IAS 1 FSP – Items of OCI
Leases
IFRS 7 Offsetting
TBD 2013
2014
IAS 32 Offsetting
Amendments to IFRS 1 (IAS 20)
2015
IFRS 9 – FI C&M
review
Annual improvements (2011-2013)
Annual improvements (2010-2012)
IFRS 10,11,12 Transition guidance
?
Discount rates
Standard Inter-
pretation Potential projects
IFRIC Levies
IFRIC NCI
put options IAS 36
Recoverable amount discl.
IAS 39/IFRS 9 Novation and
hedging IAS 16 & 38
Depreciation & amortization
IAS 19 Employee
contributions
IFRS 10/IAS 28 Asset sale or contribution IAS 28 Other
net assets changes
IAS 27 Sep. FS: equity method *
Rate-regulated activities *
IAS 12 DTA recognition for unreal. losses *
IAS 41 Bearer biological assets *
Annual improvements (2012-2014) *
IFRS 11 Interest in joint
operations
Status as of March 2013 Impact for companies with
a calendar year end
3 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Agenda
Overview IFRS developments
The future of corporate reporting: current initiatives
Selected areas of focus
Actions – short-term and long-term
Discussion
4 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Reporting Does it sometimes feel like this?
5 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Reporting Is this better?
6 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
„Accounting rules are too
complicated“
„IFRS reporting is too costly“
„Too many disclosure
requirements“
„Too many changes, not
enough stability in requirements“
„Requirements do not reflect
economic reality“
Isolated cases or a trend in Switzerland Moving away from IFRS?
7 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Some prominent examples Swatch Group
Source: http://www.swatchgroup.com/en/services/archive/2012/swatch_group_changes_from_ifrs_back_to_swiss_gaap_arr
8 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Some prominent examples Commerzbank Annual Report 2011
9 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Reporting What is the problem?
Joint effort to tackle
improvements in reporting
and disclosure
• A disclosure framework is needed.
• All disclosures need to be improved – not just financial information.
• Materiality and principles based disclosure guidance?
• There is a disclosure overload.
• IFRS do not reflect the business model.
• Reports are a central means of communication in building investor trust.
• Accounts are overburdened by information which is not material, obscuring what is important and relevant.
• More forward looking information is needed.
„There is a difference between what standard setters want and the real world.“ Joachim Schindler, KPMG, Global Head of Audit
Standard setters Users
Preparers Auditors
10 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Reporting How to fit the pieces together?
11 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Disclosures Survey and Forum, Memorandum of Understanding with IIRC IASB
Consultation Paper: Considerations of Materiality in Financial Reporting ESMA
Development of an International Integrated Reporting Framework IIRC
Report: Enhancing the Risk Disclosures of Banks FSB, EDTF
Discussion Paper: Disclosure Framework FASB
Discussion Paper: Towards a Disclosure Framework for the Notes EFRAG
Disclosure requirements in Management Report Swiss law
Selected international initiatives on reporting and disclosures
12 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Reporting and Disclosures Example HSBC Annual Report 2012
13 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Swiss initiatives - SIX Exchange Regulation Areas of focus for financial statements 2012 and 2013
Challenged to ensure …
• Logical structure • Coherent presentation of similar
topics
Scrutinised for…
• No generic disclosures • No facts of lesser importance
Review of disclosures with respect to …
• Relevance • Understandability • Timeliness
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SIX Exchange Regulation Areas of focus
Transparent reporting
Provisions and
contingent liabilities
Revenue recognition
Content and determination of compensation
and shareholding programmes
Relevance of disclosures Presentation of
statement of comprehensive
income
Impacts of new standards
Loss carryforwards
and disclosures
Impairment tests / disclosure of
key assumptions
Change of control clauses
15 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Agenda
Overview IFRS developments
The future of corporate reporting: current initiatives
Selected areas of focus • Judgements and estimates • „Big“ risk topics in recent financial reporting • Disclosures on goodwill impairment • Linking information
Actions – short-term and long-term
Discussion
16 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Judgements and estimates
17 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Judgements
Description of significant judgements made by management
Estimates
Disclosures related to estimates and uncertainties that might result in material changes to assets or liabilities in future periods
Entity specific, depending on - industry and region - economic environment - financial position, profit or loss and cash flow position - management‘s assessment - …
How to translate into effective communication?
Judgements and estimates
18 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Approach 2 General description and reference to details in other Notes throughout the financial report
Approach 1 General qualitative description only and mention of areas of judgement (without reference)
Approach 3 General description and details in the same footnote (qualitative and quantitative information)
What do we see in practice?
Judgements and estimates
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Source: Annual report UBS Group 2012
Judgements and estimates Example Approach 2
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Judgements and estimates Does it sometimes feel like this?
… are charts better?
21 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Which items are affected?
Impact on accounting ?
Business model Main risks and
chances
How could an integrated approach be applied?
Judgements and estimates
22 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Judgements and estimates Example – how could it look like?
Source: Annual report HBSC Holding plc 2012
23 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Agenda
Overview IFRS developments
The future of corporate reporting: current initiatives
Selected areas of focus • Judgements and estimates • „Big“ risk topics in recent financial reporting • Disclosures on goodwill impairment • Linking information
Actions – short-term and long-term
Discussion
24 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Risk disclosures
25 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Financial risk management Principles for effective risk disclosures
Clear, balanced, understandable
Present relevant information
Reflect how risks are managed
Consistent over time
Comprehensive; include all key activities and risks
Comparable among peers
Provided on a timely basis
The FSB‘s Enhanced Disclosure Task Force has published seven principles on how risk disclosures should be:
26 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
„Big“ risk topic: credit risk and bad debts
IFRS requirements
• Which disclosures does IFRS 7 require?
Composition of financial assets
• What are financial assets composed of?
• How does management analyse the underlying risks and losses?
Transparency
• Link required disclosures to the business model and manage-
ment‘s judgement
Financial assets
27 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Information on credit risk included in the risk management section (IFRS 7.36 - 7.38)
• Maximum exposure to credit risk, description and financial effect of collateral and credit enhancements and information about the credit quality of financial assets
• An analysis of the age of financial assets past due and an analysis of financial assets impaired
• Information about assets obtained by taking possession of collateral
Credit risk – disclosures
„Big“ risk topic: credit risk and bad debts IFRS – Required credit risk disclosures
28 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Consider knock-on impacts
„Tick the box“ approach vs. meaningful
communication
Consider including information that is given in investor
presentations
Decription of risk management approach
How could an integrated approach be applied?
„Big“ risk topic: credit risk and bad debts
29 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Risk disclosures Example HSBC annual report 2012
30 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Further risk disclosures to come Offsetting
31 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Agenda
Overview IFRS developments
The future of corporate reporting: current initiatives
Selected areas of focus • Judgements and estimates • „Big“ risk topics in recent financial reporting • Disclosures on goodwill impairment • Linking information
Actions – short-term and long-term
Discussion
32 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Disclosures on goodwill impairment
Gone are the days ...:
33 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Disclosures on goodwill impairment
Current economic situation
• Economic situation increases likelihood that carrying amounts of assets might be higher than their recoverable amounts
• Market value of quoted companies has fallen below their book value
Judgement
• Economic slowdown leads to considerable judgement when assessing future cash flows
• Cash flow assessment is subject to higher degree of uncertainty
• Assumptions must represent realistic future expectations
Understand approach followed by manage-ment
• CGU determination
• Quantitative disclosures on key assumptions, growth rates, discount rates, consistency of assumptions
• Sensitivity disclosures on changes in key assumptions
• Risks of material adjustment to carrying amounts within the next financial year
34 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Goodwill impairment Past enforcement decisions
Discount rate used in determining value in use Inputs used to estimate the discount rate
• foreign currency cash flows
• market risk premium
• beta factor
• cost of debt
• debt/equity ratio
• discount rate per CGU
Reasonable changes in estimates Disclosures about sensitivity to key assumptions
• changes in discount rates for different CGUs
• reasonably possible changes in cash flows
• combination of reasonable changes might lead to impairment loss
Cash flow projections, use of reasonable and supportable assumptions
• Comparison of actual cash flows vs. forecasted cash flows and their impact on cash flow forecasts for impairment testing purposes
• Justification for cash flow increases
• Consideration of capital expenditures
Disclosures Disclosure of CGUs
• More detailed disclosures when CGUs are smaller than operating segments
• Confidentiality is not a valid reason for non-disclosure
Disclosure for determining fair values • Inputs used in determining fair values
• Descriptions of assumptions to which fair value is most sensitive
35 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Goodwill disclosures Sensitivity analysis
(f) if a reasonably possible change in a key assumption … would cause the unit‘s … carrying amount to exceed its recoverable amount:
(i) the amount by which the unit‘s recoverable amount exceeds its carrying amount;
(ii) the value assigned to the key assump- tion;
(iii) the amount by which the value assigned to the key assumption must change, … in order for the recoverable amount to be equal to its carrying amount.“
IAS 36.134: „An entity shall disclose the information required … for each cash-generating unit for which the carrying amount of goodwill or intangible assets with indefinite useful lives … is significant …:
36 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Disclosure on impact of changes in key assumptions, e.g. growth rate and discount rate
Source: Annual report UBS Group 2011
Example goodwill disclosures Sensitivity analysis
37 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Agenda
Overview IFRS developments
The future of corporate reporting: current initiatives
Selected areas of focus • Judgements and estimates • „Big“ risk topics in recent financial reporting • Disclosures on goodwill impairment • Linking information
Actions – short-term and long-term
Discussion
38 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
What are relevant disclosures? Align disclosures to key business drivers.
How does the business model
justify the goodwill balance?
Linking disclosure requirements to
business rationale is key.
How could an integrated approach be applied?
Linking information On goodwill impairment
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Example yet to be found…. ?
40 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Linking information On bond issuance
Business reason, for example acquisition
Exposure to interest rate and
fx risks
Impact on capital and liquidity management
Risk manage- ment measures, hedging
Terms and conditions of bond issuance
41 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Linking information Disclosure of Interests in Other Entities
IFRS 12.20
IFRS 12.23
IFRS 12.27b
IFRS 12.29c
IFRS 12.31
42 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
List of subsidiaries and investments
NCI Structured entities
Acquisitions Disposals
How could an integrated approach be applied?
Linking information On Disclosure of Interests in Other Entities
43 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Agenda
Overview IFRS developments
The future of corporate reporting: current initiatives
Selected areas of focus
Actions – short-term and long-term
Discussion
44 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Reporting How to best present key information?
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Reporting Differences between current and Integrated Reporting
Feature Current Reporting Integrated Reporting Trust Narrow disclosures Greater transparency Stewardship Financial All forms of capital Thinking Isolated Integrated Focus Past, financial Past and future;
connected; strategic Time frame Short term Short, medium and long
term Adaptive Rule bound Responsive to individual
circumstances Concise Long and complex Concise and material Technology enabled Paper based Technology enabled
46 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Reporting To the rescue?
47 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Actions
• Critical review of financial statements and management report − understandability („plain english“) − tailor disclosures to entitiy specific
circumstances − no immaterial clutter − holistic review, coherence of topics
• When adopting new IFRSs − consider disclosure objectives − no generic disclosures / copy-paste
• Stay informed about reporting and disclosure initiatives
• Consider independent review of financial report
• Comprehensive rethinking of the report‘s structure and content
• Develop from report as „compliance document“ to a „real story“ about the business model
• Consider use of XBRL
• Application of International Integrated Reporting Framework
Short-term Long-term
48 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Some considerations…
What are the components of line items in the financial statements?
Aggregation/disaggregation of the line item; description of its
main characteristics and contractual terms
Consider linking disclosures, organising and grouping information differently
How is the item accounted for?
How does the item fit into the entity‘s operations and financial structure?
What does the user need? Engage with stakeholders
49 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Agenda
Overview IFRS developments
The future of corporate reporting: current initiatives
Selected areas of focus
Actions – short-term and long-term
Discussion
50 © 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Discussion: What do you think?
Moving back to Swiss GAAP FER does not solve the reporting problem
Questions ? Feedback? Comments?
Individual views?
Publications
Recent KPMG Publications on reporting
Focus on Transparency In the sixth edition of our annual
survey of 15 European banks, Focus on Transparency exa-
mines if banks can survive the storm.
The future of corporate reporting: towards a
common vision Driving the debate - The future of
corporate reporting: towards a common vision offers insights from 10 key opinion leaders and makes
the case for systemic change.
Integrated Reporting Issue 2
In this second edition of Integrated Reporting, we start by explaining
how Integrated Reporting can help organizations better explain their
value creation story.
• Goodwill Impairment Survey • Financial Statement: Cutting Clutter
.
For KPMG’s Publications: http://www.kpmg.com/ch/de/library Coming up
Thank you!
Contact details
Patricia Bielmann Partner
IFRS Financial Services
KPMG AG Badenerstrasse 172
8026 Zurich
Phone +41 58 249 41 88 Fax +41 58 249 48 64
Ellen Sevray Senior Manager
IFRS Financial Services
KPMG AG Badenerstrasse 172
8026 Zurich
Phone +41 58 249 34 35 Fax +41 58 249 48 64
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© 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.