AC News Issue 59 / Q4 2017 | KPMG | CH

AC News Issue 59 / Q4 2017

AC News Issue 59 / Q4 2017

The Audit Committee News is a quarterly publication, exclusively in electronic format since 2013, which informs you about all of the latest trends in its core focus areas of corporate governance, risk management & compliance and corporate reporting. The AC News features articles penned by experts from Switzerland and many other countries around the world.

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Editorial

Esteemed Board members,

This year, tax issues are dominating the political agenda. After the Swiss electorate voted against the Corporate Tax Reform III, the Swiss Federal Council reacted and published its Tax Proposal 17 (TP17) on 6 September 2017.

Stefan Kuhn and Olivier Eichenberger provide us with an overview of this latest proposal, which addresses the points that were criticized in the CTR III and which builds up on the aspects which were not contested. The Swiss Tax Administrative Assistance Act has been in force since the beginning of the year. It provides for the spontaneous exchange of certain tax rulings. Sébastien Maury has an overview of the already known aspects of a US tax reform and the potential consequences for foreign companies.

In the last contribution to our focus topic taxes, Stefan Sieber will inform you on the latest IFRS developments regarding the treatment of income tax risks in the annual financial statements.

Companies active in the EU see themselves confronted with the far-reaching EU General Data Protection Regulation, for which the transition period ends on 25 May 2018. Jörg Kilchmann presents to what degree this will affect Swiss companies and their subsidiaries.

In the past, Swiss companies have struggled to present their pension fund liabilities in their consolidated financial statements in accordance with IAS 19. Thomas Wicki explains under which circumstances the burden-sharing between employees and employers foreseen in the Swiss law may be taken into consideration when determining pension fund obligations.

Meanwhile, the IASB has concluded its last mammoth project for the moment. After nearly two decades, it published IFRS 17 “Insurance Contracts” on 18 May 2017. It fundamentally updates the accounting for insurance companies. For instance, IFRS 17 introduces a new valuation method for insurance contracts and a completely new structure for the income statement. Patricia Bielmann and Frank Ellenbürger/Joachim Kölschbach explain how the standard is to be applied as of the 2021 financial year.

Silvan Loser explains the review procedure initiated for the consolidation standard Swiss GAAP FER 30 by the FER Commission. In a first phase, the FER Commission identifies aspects which are unclear or not yet addressed in relation to consolidated financial statements under Swiss GAAP FER. Based on this, it will be decided whether a formal revision will be started as Phase 2.

And last but far from least, we close the publication with an interview with Dennis Whalen on the new role corporations are taking on in society, taking into consideration American circumstances.

 

As always, we wish you an invigorating read!

Hélène Béguin and Philipp Hallauer

Risk Management & Compliance

Tax Proposal 17 – Relaunch of the Corporate Tax Reform

After the Swiss people rejected the Corporate Tax Reform III on 12 February 2017, the Swiss government quickly prepared a new proposal: On 9 June 2017, the Swiss Federal Council approved the latest proposal, the Tax Proposal 17 (TP17), which is heavily based on the CTR III, and released the consultation draft at its session on 6 September 2017.

Read more: Article by Stefan Kuhn and Olivier Eichenberger (PDF, in German)
 

Ad-hoc exchange of information on tax rulings in Switzerland

The amended Swiss Tax Administrative Assistance Act and its Ordinance entered into force this year. It foresees ad-hoc exchanges of information on certain tax rulings. This article shows which rulings will be affected by this obligation and what courses of action exist.

Read more: Article by Stefan Kuhn and Olivier Eichenberger (PDF, in German)

US Tax Reform

Since President Trump took office in January 2017, there has been a lot of discussion around reforming the US tax code. In the beginning, it was expected that the reform would be swift and fundamental. However, developments in the past have shown that negotiations still have far to go. Nonetheless, US corporations and foreign groups present in the USA are already anticipating major changes.

Read more: Article by Sébastien Maury (PDF)

The new EU General Data Protection Regulation

The transition period for the new EU General Data Protection Regulation (GDPR) will end on 25 May 2018. Under certain circumstances, the provisions will also apply to companies located in Switzerland. The European Union’s intention with the GDPR is to strengthen data protection and expand the supervisory authorities’ powers.

Read more: Article by Jörg Kilchmann and Daniel Seiler (PDF, in German)

Corporate Reporting

Recognizing Tax Risks in the Balance Sheet

For internationally active corporations, the current environment causes much uncertainty as far as tax assessments are concerned. IFRIC 23 clarifies how such income tax risks are to be captured and mapped in the annual financial statements under IFRS.

Read more: Article by Stefan Sieber (PDF, in German)

Taking into Consideration Risk Sharing when Recognizing Pension Fund Obligations in the Balance Sheet

Employers that prepare their annual financial statements under IFRS are obliged to determine and disclose their net pension fund obligations for their Swiss pension funds taking into consideration actuarial aspects. For Swiss balance sheets under IFRS, this has been an encumbrance for years. The question is now to what extent risk-sharing aspects could bring about a more adequate disclosure of pension fund obligations.

Read more: Article by Thomas Wicki (PDF, in German)

The New World of IFRS 17 “Insurance Contracts”

After a good 20 years of controversial debate, the IASB finally issued the long-awaited IFRS 17 Insurance Contracts in May 2017. IFRS 17 replaces IFRS 4, which currently allows many options. IFRS 17 not only introduces a new measurement model for insurance contracts but will also give users of financial information a whole new perspective on insurance companies’ financial statements.

Read more: Article by Patricia Bielmann (PDF)

IFRS 17 Brings Another Gigantic Project for Insurers

The discussions around IFRS 17 lasted as long as they did because the recognition of insurance products in the balance sheet varies widely depending on national rules. Now, a complex standard was presented that contains much scope for assessment and interpretation. The search for the “right” insurance balance sheet would be over once IFRS financial statements are declared acceptable also for Solvency II purposes.

Read more: Article by Frank Ellenbürger and Joachim Kölschbach (PDF, in German)

Swiss GAAP FER Standards on Consolidated Financial Statements Under Scrutiny

At the same time, the Foundation for the Commission for Financial Reporting Standards reworked its internal processes and governance, it also restructured the project processes. Relating to this, it announced that the standard Swiss GAAP FER 30 on the Consolidated financial statements will be reviewed for any needs for adaption in 2017.

Read more: Article by Silvan Loser (PDF, in German)

Corporate Governance

Corporations at a turning point

Dennis Whalen talks to Tim Nixon of Thomson Reuters about the changing role of the corporation in society.

Read more: Article by the ACI USA (PDF)

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