Guide to annual financial statements – Illustrative disclosures for investment funds

Investment fund IFRS guidance

IFRS guidance for financial statements of a tax-exempt open-ended single investment fund.

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Guidance based on IFRS

The financial statements will provide guidance for an open-ended single-fund.

The guide for annual financial statements with illustrative disclosures for investment funds provides guidance on preparing financial statements in accordance with international financial reporting standards (IFRS). The guide shows the financial statement for a fictitious tax-exempt open-ended single-fund company. It is assumed the fictional investment fund has been applying IFRS for some time. The guide focuses on compliance with IFRS and the disclosures for the fictitious fund company are presented without regard to materiality.  

The preparation of your fund’s financial statements will require judgment, based on accounting policies, how the disclosures should be tailored for your funds specific circumstances and the materiality of disclosure in the context of your organization. 

Investment fund just adopting IFRS for the first time, should review Chapter 9.1 in the Insights into IFRS

Standards covered

The guide is based on IASB standards and interpretations.

The guide is based on the International Accounting Standards Board (IASB) standards and interpretations issued on 15 December 2015. For annual reporting periods, beginning 1 January 2015, these standards are to be applied. The focus is on investment fund-specific issues. For guidance on general nature or disclosures relevant to activities uses such as, impairment, hedge accounting, employee benefits, please see the Guide to annual financial statements – Illustrative disclosures publication. And for a summary of the newly effective and forthcoming standards, please review IFRS: New standards – Are you ready?

The guide provides an example of the following segments which would comprise the IFRS compliant financial statements of an investment fund:

  • introduction
  • auditors report
  • primary statements
  • notes
  • appendices.

Also covered are examples disclosures of:

  • an investment fund that is an investment entity and measures its subsidiaries at their fair value for profit and loss
  • segment reporting for a multiple segment fund
  • an open-ended fund with puttable instruments classified as equity
  • schedule of unaudited investments
  • and an exposure to market risk – value-at-risk analysis.  

The concept of materiality

Materiality is to be applied on a disclosure-by-disclosure basis.

A standard may provide specific disclosures for a material item in the financial statements, but even if the item is material, this does not mean that all of the disclosures specified in that standard will be material for that item. An entity applies the materiality concept on a disclosure-by-disclosure basis.  

Increased quality

Investors looking for meaningful information in reports.

Investors are demanding higher quality business reporting. Funds should be careful not to become buried in compliance to the exclusion of relevance. Funds should keep in mind their responsibility to report the information in their financial statements in the most meaningful way.

© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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