actualia ifrs 2020 - assets.kpmg...amendments to ifrs 9, ias 39 and ifrs 17 – ... subsidies;...
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WebinarActualiaIFRS 2020
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Agenda
IFRS updateIFRS
for 2020and beyond
Covid-19Potential impact on 2020 IFRS
financial statements
© 2020 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
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IFRS updateIFRS for 2020 and beyond
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4© 2020 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved
2020 IFRSs endorsed in the EU
Narrow-scopeamendments
Amendments to References to the Conceptual Framework in IFRS StandardsAmendments to IFRS 3: Definition of a Business
Amendments to IAS 1 and IAS 8: Definition of Material
Amendments to IFRS 9, IAS 39 and IFRS 17: Interest Rate Benchmark Reform (phase 1)
Narrow-scopeamendment
Amendment to IFRS 16: Rent Concessions(NB 2020 response to COVID-19)
2 0 2 0
Covid-19
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5© 2020 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved
IASBeffective date2022 2023
Narrow-scopeamendments
Amendments to IAS 37 Provisions: Onerous Contracts
Amendments to IAS 16 Property, Plant & Equipment: Proceeds before Intended Use
Amendments to IFRS 3: Business Combinations
Annual Improvements 2018-2020
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current
New standard IFRS 17 Insurance Contracts
2022-2023 IFRSs not yet endorsed by EU
ED 2019/7 General Presentation and Disclosures (amendments to IAS 1)
2 0 2 2 - 2 0 2 3
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6© 2020 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved
Amendments to IFRS 9, IAS 39 and IFRS 17 –Interbank Offered Rate (IBOR) reform
Reform of IBOR, may impact financial instruments practice & accounting
!IFRS
2 0 2 0( p h a s e 1 )
EU
Reliefs i.e. in respect of hedge accountingIFRS
2 0 2 1( p h a s e 2 )
PHASE 2PHASE 1
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7© 2020 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved
Amendments to IAS 37 - Onerous Contracts2 0 2 2
unavoidable costs(= cost to fulfil a contract)
incremental costs + allocated other direct costs
full direct costs
Unavoidable costsEconomic
benefitsUnavoidable
costs
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8© 2020 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved
Amendments to IAS 16 - Proceeds before PPE’s intended use
2 0 2 2
Start activities (pre-production)
Start intended use PPE
Sale proceeds and related production
costs in profit & loss
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9© 2020 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved
Amendments to IAS 1 - Classification of liabilities as current or non-current
exist at balance sheet date
‘substance’(before: ‘unconditionally’)
Amendments could have a significant impact on classification of liabilities
For convertible debt only ignore
conversion options classified as equity
2 0 2 3
Right to defer settlement
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10© 2020 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved
Brexit
Article 403 and possible impact of Brexit
Article 403
2 0 2 0
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11© 2020 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved
Regulators enforcement priorities 2020
IFRS 16
Non-Financial Information (NFI) disclosures
Application of the ESMA Guidelines in relation to APMs
IAS 36
IFRS 9
IAS 1
2 0 2 0
IFRS 7
Covid-19
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IFRS Update General presentationand disclosures
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13© 2020 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved
ED IAS 1: Future re-shaping of financial statement presentation
P r o p o s a l s E D I A S 1
E X A M P L E O N T H E
N E X T S L I D E
Income statement
key changes
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Proposed income statement3
new
sub
tota
lsP r o p o s a l s
E D I A S 1
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Cash flow statement
key changes
Noteskey changes
Balance sheet
key changes
— New disclosure requirements
— Starting point— Elimination of options— New line items
— New line items
P r o p o s a l s E D I A S 1
https://home.kpmg/xx/en/home/insights/2020/01/presentation-disclosures-primary-financial-statements-exposure-draft.html
ED IAS 1: Future re-shaping of financial statement presentation
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Covid-19 Potential impact on2020 IFRS financial statements
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17© 2020 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved
Covid-19: various accounting issuesAccounting issues
Potential issues to be addressed for 2020 IFRS financial statements
‒ Rent concessions (i.e. reductions, deferrals)
‒ Deferral of loan payments
‒ Current/non-current classification of debts
‒ Accounting for government grants (wage costs subsidies; compensation for non-performed services)
‒ Impairment of non-current assets (i.e. goodwill)
‒ Presentation of expenses related to Covid-19
I m p a c t C o v i d - 1 9
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Rent concessions related to Covid-19
Lessor Lessee
Covid-19 related Rent Concession:waiver / reduction / deferral of
lease payments
2020 Amendment to IFRS 16
I m p a c t C o v i d - 1 9
Negative variable lease paymentsLease modification
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19© 2020 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved
Presentation of expenses related to Covid-19Covid-19 expenses
Companies may incur costs (directly) related to Covid-19
I m p a c t C o v i d - 1 9
IAS 1 Presentation in the income statement: Only expenses that are incremental and directly attributable to Covid-19
Limited presentation possibilities ‒ Definition of ‘exceptional’? ‒ Presentation should fit in current structure of income
statement
E X A M P L E O N T H E
N E X T S L I D E
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20© 2020 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved
Presentation of expenses related to Covid-19 – example
I m p a c t C o v i d - 1 9
Example income statement (expenses by nature)
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21© 2020 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved
Covid-19: impact on impairment assessmentImpairments‒ Covid-19 may give rise to indicators of impairment of fixed assets at year end‒ Even if no indicators, Covid-19 may impact impairment testing of goodwill‒ Recoverable amount of a CGU or asset likely be impacted
All other assets within the
scope of IAS 36
Test if indicators exist at the reporting date
Goodwill Indefinite useful life intangible assets
Annual impairment test
I m p a c t C o v i d - 1 9
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22© 2020 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved
Traditional approach vs. ECF approach
Under ECF approach the discount rate excludes
risks that are reflected in the cash flows to avoid
double counting.Reflected in the
discount rate
ECF approachTraditional approach
Component 1: rf
Component 2: Risk-premium
Component 3: Uncertainty
about the future CFs
Reflected in the discount rate
Reflected in the cash flows
I m p a c t C o v i d - 1 9
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Impact on projecting cash flows - exampleI m p a c t
C o v i d - 1 9
Cash flows projections
90% 50%
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WACC may increase due to higher uncertainty
Impact on discount rate (WACC)
WACC is based on debt and equity
I m p a c t C o v i d - 1 9
RISK FREE RATE
COST OF DEBT SECTOR RISK
RISK NOT IN BETA
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Covid-19: available information
https://home.kpmg/xx/en/home/insights/2020/03/covid-19-financial-reporting-resource-centre.html
…and many more
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Thank you
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WebinarActualia IFRS 2020
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