IFRS Update for Financial Services

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Reporting and disclosures are currently high on the agenda of standard setters, regulators, preparers and users of corporate reports. Each company is affected. High attention is prompted by SIX Exchange Regulation’s announcement that one of the core areas of their reviews will be: Relevance, understandability and up-to-dateness of reporting.

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IFRS Update for Financial Services

  1. 1. IFRS Update forFinancial Services4 April 2013KPMG AG, Zurich
  2. 2. Agenda Overview IFRS developments The future of corporate reporting: current initiatives Selected areas of focus Actions – short-term and long-term Discussion© 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 KPMGInternational 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 1International.
  3. 3. Timeline – change ahead Inter- Potential IAS 39/IFRS 9 Standard IFRIC Discount pretation projects Novation and Levies rates  hedging Final published: Status as of March 2013 IFRIC IAS 16 & 38 Extractive Impact for companies with ED/DP expected in 2013: * a calendar year end NCI Depreciation & activities/R&D put options amortization Intangibles IFRIC 20 IFRS 11 IAS 36 Equity Stripping costs  Interest in joint operations Recoverable amount discl. method Amended Amendments IFRS 10/IAS Annual IAS 27  to IFRS 1  28 Asset sale improvements FI - equity Sep. FS (IAS 20) or contribution (2012-2014) * Amended IAS IAS 28 Other IAS 19 Foreign IFRS 7 28 Associates  Offsetting  net assets Employee currency & JV changes contributions translation IFRS 10,11,12 Annual Annual FI IAS 41 Bearer Non-financial Transition  improvements  improvements Impairment Leases biological liabilities guidance (2009-2011) (2010-2012) assets * Revised IAS Annual FI IAS 12 DTA IFRS 10 Revenue Common Consolidation  19 Employee  improvements Hedge accounting recognition recognition for control benefits (2011-2013) unreal. losses * IFRS 11 Consolidation IFRS 9 – FI IAS 27 Sep. IAS 1 FSP Insurance Emission Joint  – Items of OCI  – Investment  C&M contracts * FS: equity trading arrangements entities review method * IFRS 12 IFRS 13 IFRS 9 – FI FI Rate- IAS 32 Conceptual Consolidation  Fair value  Offsetting  C&M assets/ Macro- regulated framework – Disclosures measurement liabilities hedging * activities * 2013 2014 2015 TBD ?© 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 KPMGInternational 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 2International.
  4. 4. Agenda Overview IFRS developments The future of corporate reporting: current initiatives Selected areas of focus Actions – short-term and long-term Discussion© 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 KPMGInternational 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 3International.
  5. 5. ReportingDoes it sometimes feel like this?© 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 KPMGInternational 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 4International.
  6. 6. ReportingIs this better?© 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 KPMGInternational 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 5International.
  7. 7. Isolated cases or a trend in SwitzerlandMoving away from IFRS? „Too many disclosure requirements“ „Requirements do „Accounting rules not reflect are too economic reality“ complicated“ „Too many „IFRS reporting is changes, not too costly“ enough stability in requirements“© 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 KPMGInternational 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 6International.
  8. 8. Some prominent examplesSwatch Group Source: http://www.swatchgroup.com/en/services/archive/2012/swatch_group_changes_from_ifrs_back_to_swiss_gaap_arr© 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 KPMGInternational 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 7International.
  9. 9. Some prominent examplesCommerzbank Annual Report 2011© 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 KPMGInternational 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 8International.
  10. 10. ReportingWhat is the problem? Standard setters Users • A disclosure framework is needed. • Reports are a central means of communication in building investor trust. • All disclosures need to be improved – not just financial information. • Accounts are overburdened by information which is not material, • Materiality and principles based obscuring what is important and disclosure guidance? relevant. Joint effort to • More forward looking information is tackle needed. improvements in reporting and Preparers disclosure Auditors • There is a disclosure overload. „There is a difference between what standard setters want and the real • IFRS do not reflect the business world.“ model. Joachim Schindler, KPMG, Global Head of Audit© 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 KPMGInternational 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 9International.
  11. 11. ReportingHow to fit the pieces together?© 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 KPMGInternational 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 10International.
  12. 12. Selected international initiatives on reporting and disclosures IASB Disclosures Survey and Forum, Memorandum of Understanding with IIRC FASB Discussion Paper: Disclosure Framework ESMA Consultation Paper: Considerations of Materiality in Financial Reporting IIRC Development of an International Integrated Reporting Framework FSB, EDTF Report: Enhancing the Risk Disclosures of Banks EFRAG Discussion Paper: Towards a Disclosure Framework for the Notes Swiss law Disclosure requirements in Management Report© 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 KPMGInternational 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 11International.
  13. 13. Reporting and DisclosuresExample HSBC Annual Report 2012© 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 KPMGInternational 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 12International.
  14. 14. Swiss initiatives - SIX Exchange RegulationAreas of focus for financial statements 2012 and 2013 Review of • Relevance disclosures with respect • Understandability to … • Timeliness Scrutinised • No generic disclosures for… • No facts of lesser importance • Logical structure Challenged to ensure … • Coherent presentation of similar topics© 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 KPMGInternational 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 13International.
  15. 15. SIX Exchange RegulationAreas of focus Relevance of disclosures Presentation of Change of control statement of clauses comprehensive income Content and Impacts of new determination of standards compensation and Transparent shareholding programmes reporting Revenue Impairment tests recognition / disclosure of key assumptions Provisions Loss and carryforwards contingent and disclosures liabilities© 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 KPMGInternational 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 14International.
  16. 16. 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© 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 KPMGInternational 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 15International.
  17. 17. Judgements and estimates© 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 KPMGInternational 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 16International.
  18. 18. Judgements and estimates 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 How to translate - industry and region - economic environment into effective communication? - financial position, profit or loss and cash flow position - management‘s assessment -…© 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 KPMGInternational 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 17International.
  19. 19. Judgements and estimates What do we see in practice? Approach 1 General qualitative description only and mention of areas of judgement (without reference) Approach 2 General description and reference to details in other Notes throughout the financial report Approach 3 General description and details in the same footnote (qualitative and quantitative information)© 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 KPMGInternational 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 18International.
  20. 20. Judgements and estimatesExample Approach 2 Source: Annual report UBS Group 2012© 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 KPMGInternational 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 19International.
  21. 21. Judgements and estimatesDoes it sometimes feel like this? … are charts better?© 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 KPMGInternational 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 20International.
  22. 22. Judgements and estimates How could an integrated approach be applied? Business model Main risks and chances Which items are Impact on affected? accounting ?© 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 KPMGInternational 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 21International.
  23. 23. Judgements and estimatesExample – how could it look like? Source: Annual report HBSC Holding plc 2012© 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 KPMGInternational 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 22International.
  24. 24. 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© 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 KPMGInternational 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 23International.
  25. 25. Risk disclosures© 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 KPMGInternational 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 24International.
  26. 26. Financial risk management Principles for effective risk disclosures The FSB‘s Enhanced Disclosure Task Force has published seven principles on how risk disclosures should be: Clear, balanced, understandable Comprehensive; include all key activities and risks Present relevant information Reflect how risks are managed Consistent over time Comparable among peers Provided on a timely basis© 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 KPMGInternational 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 25International.
  27. 27. „Big“ risk topic: credit risk and bad debts Composition of financial IFRS requirements assets • What are financial assets • Which disclosures does IFRS 7 require? composed of? • How does management analyse the underlying risks and losses? Financial assets Transparency • Link required disclosures to the business model and manage- ment‘s judgement© 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 KPMGInternational 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 26International.
  28. 28. „Big“ risk topic: credit risk and bad debtsIFRS – Required credit risk disclosures Credit risk – disclosures 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© 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 KPMGInternational 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 27International.
  29. 29. „Big“ risk topic: credit risk and bad debts How could an integrated approach be applied? Decription of risk „Tick the box“ management approach approach vs. meaningful communication Consider including information that is Consider knock- given in investor on impacts presentations© 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 KPMGInternational 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 28International.
  30. 30. Risk disclosuresExample HSBC annual report 2012© 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 KPMGInternational 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 29International.
  31. 31. Further risk disclosures to comeOffsetting© 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 KPMGInternational 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 30International.
  32. 32. 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© 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 KPMGInternational 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 31International.
  33. 33. Disclosures on goodwill impairment Gone are the days ...:© 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 KPMGInternational 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 32International.
  34. 34. Disclosures on goodwill impairment Current • Economic situation increases likelihood that carrying amounts of assets might be economic higher than their recoverable amounts situation • Market value of quoted companies has fallen below their book value • Economic slowdown leads to considerable judgement when assessing future cash flows Judgement • Cash flow assessment is subject to higher degree of uncertainty • Assumptions must represent realistic future expectations • CGU determination Understand approach • Quantitative disclosures on key assumptions, growth rates, discount rates, consistency followed by of assumptions manage- • Sensitivity disclosures on changes in key assumptions ment • Risks of material adjustment to carrying amounts within the next financial year© 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 KPMGInternational 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 33International.
  35. 35. Goodwill impairmentPast enforcement decisions Discount rate used in determining value in Reasonable changes in estimates use Disclosures about sensitivity to key assumptions Inputs used to estimate the discount rate • changes in discount rates for different CGUs • foreign currency cash flows • reasonably possible changes in cash flows • market risk premium • combination of reasonable changes might lead to • beta factor impairment loss • cost of debt • debt/equity ratio • discount rate per CGU Cash flow projections, use of reasonable Disclosures and supportable assumptions Disclosure of CGUs • Comparison of actual cash flows vs. forecasted cash • More detailed disclosures when CGUs are smaller than flows and their impact on cash flow forecasts for operating segments impairment testing purposes • Confidentiality is not a valid reason for non-disclosure • Justification for cash flow increases Disclosure for determining fair values • Consideration of capital expenditures • Inputs used in determining fair values • Descriptions of assumptions to which fair value is most sensitive© 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 KPMGInternational 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 34International.
  36. 36. Goodwill disclosuresSensitivity analysis 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 …: (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 (iii) the amount by which the value which the unit‘s (ii) the value assigned to the key assumption recoverable assigned to the must change, … in order for the amount exceeds key assump- recoverable amount to be equal its carrying tion; to its carrying amount.“ amount;© 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 KPMGInternational 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 35International.
  37. 37. Example goodwill disclosuresSensitivity analysis Disclosure on impact of changes in key assumptions, e.g. growth rate and discount rate Source: Annual report UBS Group 2011© 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 KPMGInternational 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 36International.
  38. 38. 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© 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 KPMGInternational 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 37International.
  39. 39. Linking informationOn goodwill impairment How could an integrated approach be applied? Linking disclosure requirements to business rationale is key. What are relevant How does the disclosures? Align business model disclosures to key justify the goodwill business drivers. balance?© 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 KPMGInternational 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 38International.
  40. 40. Example yet to be found…. ?© 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 KPMGInternational 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 39International.
  41. 41. Linking information On bond issuance Business reason, for example acquisition Terms and conditions of bond issuance Risk manage- ment measures, hedging Impact on capital and liquidity management Exposure to interest rate and fx risks© 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 KPMGInternational 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 40International.
  42. 42. Linking information Disclosure of Interests in Other Entities IFRS 12.23 IFRS 12.29c IFRS 12.27b IFRS 12.20 IFRS 12.31© 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 KPMGInternational 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 41International.
  43. 43. Linking informationOn Disclosure of Interests in Other Entities How could an integrated approach be applied? Acquisitions Disposals List of subsidiaries NCI and investments Structured entities© 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 KPMGInternational 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 42International.
  44. 44. Agenda Overview IFRS developments The future of corporate reporting: current initiatives Selected areas of focus Actions – short-term and long-term Discussion© 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 KPMGInternational 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 43International.
  45. 45. ReportingHow to best present key information?© 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 KPMGInternational 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 44International.
  46. 46. ReportingDifferences 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© 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 KPMGInternational 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 45International.
  47. 47. ReportingTo the rescue?© 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 KPMGInternational 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 46International.
  48. 48. Actions Short-term Long-term • Critical review of financial statements and • Comprehensive rethinking of the report‘s management report structure and content − understandability („plain english“) • Develop from report as „compliance − tailor disclosures to entitiy specific document“ to a „real story“ about the circumstances business model − no immaterial clutter − holistic review, coherence of topics • Consider use of XBRL • When adopting new IFRSs • Application of International Integrated Reporting Framework − consider disclosure objectives − no generic disclosures / copy-paste • Stay informed about reporting and disclosure initiatives • Consider independent review of financial report© 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 KPMGInternational 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 47International.
  49. 49. Some considerations… How is the item accounted for? What are the components of line items in the financial statements? What does the user need? Engage with How does the item fit into the stakeholders Aggregation/disaggregation of entity‘s operations and financial the line item; description of its structure? main characteristics and contractual terms Consider linking disclosures, organising and grouping information differently© 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 KPMGInternational 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 48International.
  50. 50. Agenda Overview IFRS developments The future of corporate reporting: current initiatives Selected areas of focus Actions – short-term and long-term Discussion© 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 KPMGInternational 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 49International.
  51. 51. Discussion: What do you think? Moving back to Swiss GAAP FER does not solve the reporting problem Questions ? Feedback? Comments? Individual views?© 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 KPMGInternational 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 50International.
  52. 52. 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.Publications 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. Focus on Transparency In the sixth edition of our annual survey of 15 European banks,Recent KPMG Publications on reporting Focus on Transparency exa- mines if banks can survive the storm.For KPMG’s Publications:http://www.kpmg.com/ch/de/library • Goodwill Impairment Coming up Survey • Financial Statement: Cutting Clutter .
  53. 53. Contact detailsThank you! Patricia Bielmann Ellen Sevray Partner Senior Manager IFRS Financial Services IFRS Financial Services KPMG AG KPMG AG Badenerstrasse 172 Badenerstrasse 172 8026 Zurich 8026 Zurich Phone +41 58 249 41 88 Phone +41 58 249 34 35 Fax +41 58 249 48 64 Fax +41 58 249 48 64 pbielmann@kpmg.com esevray@kpmg.com
  54. 54. Disclaimer:The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual orentity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as ofthe date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriateprofessional advice after a thorough examination of the particular situation.© 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 ofindependent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting throughcomplexity” are registered trademarks or trademarks of KPMG International.

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