The May 2017 edition provides an update on IFRS issues in the US, including no-GAAP financial measures, Brexit, carve-out financials and IFRS 15 implementation.
Despite increased scrutiny from the SEC and other regulators, the use of non-GAAP financial measures continues to grow. The IASB is looking at options to incorporate alternative performance measures, such as EBIT or EBITDA, into IFRS as part of its project on primary financial statements.1 These activities, as well as IOSCO’s Statement on Non-GAAP Financial Measures issued in 2016, evidence the challenge of enhancing communication around financial performance without misleading the reader or diluting the importance of the GAAP measures.
Among other things, Brexit brings regulatory uncertainty and market volatility, possibly affecting the financial statements of US companies with significant UK operations. Impairment, foreign currency translation, income tax and risk disclosures are a few examples. A robust and continuous monitoring of political and regulatory developments in the UK is essential to getting financial reporting right.
In less than seven months, IFRS 15 will go live. The modified retrospective approach is gaining in popularity, while estimating variable consideration, assessing performance obligations and compiling disclosures are top concerns for preparers. A proactive holistic assessment is key to a successful implementation. Read our five tips and speed up your IFRS 15 project.
Capital market transactions, private placements and M&A deals frequently require the preparation of IFRS combined and/or carve-out financial statements. While IFRS does not contain guidance in this area, the preparation of combined and/or carve-out financial statements in compliance with IFRS is possible when those financial statements are 'fit for purpose'.
There is no concept of 'temporary equity' under IFRS. Many instruments classified as a financial liability under IFRS could be classified as equity or temporary equity under US GAAP; and certain instruments that are equity under IFRS could be classified outside equity under US GAAP.
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