Your essential guides to financial statements 

Our Guides to financial statements help you to prepare financial statements in accordance with IFRS. They have two components:

• Illustrative disclosures, including supplements, that illustrate one possible format for financial statements prepared under IFRS, based on a fictitious multinational corporation; and 
• a companion Disclosure checklist, which identifies the disclosures that may be required based on currently effective standards and also includes disclosures for the forthcoming standards that are available for early adoption.
  

Impact of the new standards

IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers are effective for the first time for companies with an annual reporting period beginning on or after 1 January 2018.

Interim financial statements will be companies’ first opportunity to communicate the effects of transition. Users and regulators have shown a growing interest in the impact of the new major standards, so are likely to look closely at the interims.

In addition to the new disclosures that are explicitly required in condensed interim financial statements, companies will have to apply significant judgement in determining how much additional disclosure is necessary to meet the objectives of IAS 34 – i.e. ensuring that the interim financial statements include all information that is relevant to understanding any significant changes since the last annual reporting date, and a company’s financial position and performance during the interim period.

Our 2018 interim illustrative disclosures (PDF 2 MB) illustrate one possible way of doing this.

Our 2017 annual Illustrative disclosures – including pre-implementation disclosures on the possible impact of these standards and IFRS 16 Leases – are also still available.

Explaining the change

Investors continue to ask for a step-up in the quality of business reporting, so companies should be careful not to become buried in compliance to the exclusion of relevance. In preparing their financial statements, companies need to focus on improving their communication by reporting financial information in a meaningful way.

Even if a company is not significantly impacted by the new accounting standards, new incremental disclosures will be needed (i.e. disaggregation of revenue). The quality and clarity of explanations of changes in accounting policies are key. Also, disclosure of key judgements and estimates will be useful to investors. Companies should embrace the opportunity to better explain the change.

For more information, see our Better business reporting website.

You can also follow 'KPMG IFRS' on LinkedIn and read our IFRS blog for the latest content and topical discussion on IFRS.

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