are you ready for 30 april 2017 reporting? - kpmg | us accounting standards (aasb 1057) aasb 2014-9:...
TRANSCRIPT
Are you ready for June 2017 reporting?27 April 2017
2
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Your facilitators are...Kim Heng
Ben Seumahu
Carolyn Ralph
Julie Locke
3
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
What is our reporting context?
• Tax legislation impacting financial reporting
• New audit reports
• Enhanced audit reports for listed entities
• Surveillance program
• Impairment
• Remaking of class orders
• Time to consider transition for
• AASB 9 Financial instruments
• AASB 15 Revenue
• Not-for-profit sector reporting
AASB ASIC
ATOAUASB
Agenda
• What’s new for 30 June 2017?
• Regulatory update
• What’s next?
• Wrap up
Agenda
• What’s new for 30 June 2017?
‒ Standards effective for the first time
‒ Enhanced auditor reporting
Standards effective for the first time
7
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
What standards are mandatory for the 1st time for June 2017 reporting ?
Year ends
AASB 2014-3:
Accounting for
Acquisitions of
Interests in Joint
Operations
AASB 14 Regulatory
Deferral Accounts &
AASB 2014-1 (Part D):
Amendment to
AASB 14
AASB 2015-5:
Investment entities:
Applying the
Consolidation
Exception
AASB 2014-4:
Clarification of
Acceptable Methods of
Depreciation and
Amortisation
Application of
Australian Accounting
Standards
(AASB 1057)
AASB 2014-9: Equity
method in Separate
Financial Statements
AASB 2014-6:
Agriculture: Bearer
Plants (AASB 116 &
AASB 141)
Annual Improvements
(2012 – 2014)
AASB 2015-2:
Disclosure Initiative
(AASB 101)
AASB 2015-6:
Extending Related
Party Disclosures to
Not-for-Profit Public
Sector Entities
Superannuation
Entities (AASB 1056)
AASB 2015-7: Fair
Value Disclosures of
Not-for-Profit Public
Sector Entities
AASB 2016 – 4:
Removal of DRC as a
value in use measure
AASB 112: Income
Taxes: Recognition of
Deferred Tax Assets
for Unrealised Losses
AASB 107: Statement
of Cashflows:
Disclosure Initiative
Year ends and
Half-YearsHalf-Years
Amendments to
Australian Accounting
Standards – Further
Annual Improvements
2014-2016 Cycle
8
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
AASB Disclosure Initiative: Amendments to AASB 101‒ Applies to reporting periods beginning on
or after 1 January 2016. Earlier
application is permitted
‒ Removed reference to a ‘summary of
significant accounting polices’
‒ Removes minimum disclosure
requirements such as line items to be
presented in statement of financial
position
‒ Encourages companies to no longer
disclose information that is not material
‒ Provides alternative examples of how
notes to financial statements should be
grouped - giving prominence to areas
most relevant to understanding the
organisation
…With the issue of these
amendments and given the
supportive statements from the
corporate regulator, the Australian
Securities and Investment
Commission, this is an opportune
time for directors and CFOs to take
action to address disclosure
overload in their financial
statements…
Kris Peach
AASB Chair
AASB Media Release – 2 Feb 2015
“
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Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Annual Improvements amendments: 2012-14Do any of the forthcoming annual improvements impact you?
Hold non-current assets held for sale or distribution? (AASB 5)
Service a debtor that has been derecognised from your balance
sheet? (AASB 7)
Have employees in different countries in Europe? (AASB 119)
Have financial assets and liabilities subject to offsetting
arrangements? (AASB 132)
Refer to information outside the financial statements in your interim
accounts? (AASB 134)
10
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Consolidation suite of amendmentsWho do the consolidated suite amendments impact?
AASB 10, 12, 128 – Investment
entities applying the consolidation
exceptions
AASB 127 – Equity method in
separate financial statements
Managed funds
AASB 11 – Accounting for
acquisitions of interest in a joint
operation that constitutes a
business
Countries that do not permit
investments in associates to be
carried at cost
Entities where operations are
undertaken through unincorporated
joint arrangements
11
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Other standards effective for June 2017 Y/Es
AASB 2014-4: Clarification
of Acceptable Methods of
Depreciation and
Amortisation
Rebuttable presumption that use of revenue-based amortisation
methods for intangible assets is inappropriate.
Clarifies revenue-based depreciation for property, plant and
equipment cannot be used.
AASB 2014-6: Agriculture:
Bearer Plants (AASB 116 &
AASB 141)
Bearer plants now in scope of AASB 116 Property, Plant &
Equipment for measurement and disclosure purposes.
Produce growing on bearer plants will continue to be measured
at fair value less costs to sell under AASB 141 Agriculture.
12
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Australian specific standards effective for June 2017 Y/E and H/Ys
Superannuation Entities
(AASB 1056)
Replaces AAS 25 Financial Reporting by Superannuation Plans
and applies to large superannuation entities regulated by the
Australian Prudential Regulation Authority (APRA) and to public
sector superannuation entities.
AASB 2015-6: Extending
Related Party Disclosures
to Not-for-Profit Public
Sector Entities
Extends the scope of AASB 124 Related Party Disclosures to
include not-for-profit public sector entities.
AASB 2015-7: Fair Value
Disclosures of Not-for-
Profit Public Sector
Entities
Provides relief to not-for-profit public sector entities from certain
disclosures about fair value measurement of property, plant and
equipment held for current service potential rather than to
generate net cash inflows.
13
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Standards effective for June 2017 HYs only
Annual reporting periods beginning on or after 1 January 2017
AASB 112: Income
Taxes: Recognition of
unrealised losses
Clarifies that existence of a deductible temporary differences
is not affected by possible future changes in the carrying
amount or expected manner of recovery of the asset and
provides guidance on determine future taxable profit.
AASB 107: Statement of
Cashflows: Disclosure
Initiative
Additional disclosures required to evaluate changes in
liabilities arising from financing activities.
AASB 2016 – 4: Removal
of DRC as a value in use
measure
Removes the exemption that existed for to apply depreciated
replacement costs as measure of value in use.
Further Annual
Improvements 2014-2016
Cycle
Clarifies scope of AASB 12 by specifying requirements apply
to any interests in other entities that are classified as held for
sale and discontinued operations.
Enhanced audit reporting
15
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Modernising audit reports
• Opinion
• Going concern
Prominence
• Link to AUASB for homogenous wording
Innovation• Key Audit
Matters
• Other Information
Value
NO CHANGE: Forming a view on truth and fairness of financial report
All audit reports are changing
16
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Value: adding confidenceKey Audit
Matters… have the
capacity to add real
insights for
shareholders in
understanding the
audit, audit quality,
and the confidence
they have in the
market
Key audit matters:
those matters that in
the auditor’s
professional
judgement were of
most significance in
the audit of the
financial report…
those matters that
required significant
auditor attention in
performing the audit
Making the previously
unobservable
……observable
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Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
KAMs: impact for preparersAlignment between preparers and auditors on what is important
when addressing the truth and fairness of the financial report
Pre
pare
rsA
udito
rsCritical
judgements
Skill &
competence
Trading &
performance
impact KAMs
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Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Increased audit attention due to...
Systems &
processes
Risk of error
This is a key audit matter due to…
• the importance of the (sales)
activity to the financial position
and performance
• the multiple systems, each with
specific platforms and interfaces
to the accounting reporting
systems, recording the (sales)
activity. The Company apply
different controls and manual
overlays to each of these systems
when preparing the financials.
• Historical issues with accurate
recording and reporting from
these systems
These conditions are prone to error,
increase auditor effort applied,
including involving an IT Specialist.
Distance
Complexity
Controls
Manual
Time
Specialist
Making the previously
unobservable
……observable
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Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Increased audit attention due to...
This is a key audit matter due to the
significant judgement applied by the
Company to $X valuation, which is
modelled using future oriented data for
Y. This impacts the audit due to:
• the potential for bias and inconsistent
application to $X versus other
financial amounts
• the nature of judgements used can
have a wide range of outcomes
• history being an inaccurate predictor
of the future for Y, particularly given
the [acquisition of Z/volatile recent
market conditions which are
expected to continue into the future]
These conditions necessitate additional
scrutiny by us to assess the objectivity of
sources used for judgements and their
consistent and reasonable application.
Complexity
History
Authoritative
sources
Scrutiny
ConsistencyOutcome
range
Bias
Making the previously
unobservable
……observable
Judgement
20
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Value: sharing the bigger picture
Annual
Report
Financial
Report
Auditor’s
Report
Directors
Report
Chairman’s
Address
List of
share
holders
Review of
Operations
Sustainability
Report
Corporate
Governance
Statement
Health &
Safety
Report
Etc. etc.
etc.
Other
Information…
ASA 720
Auditor’s
responsibilities in
relating to Other
Information in
documents
containing an
audited financial
report
Other
Information:
To identify material
inconsistencies
with financial
report, other
information, and
auditors
understanding…
the auditor reads,
responds, reports
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Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
What do we ‘report’?
All Other Info
received
Making the previously
unobservable
……observable
Some Other
Info received
22
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Audit report – Other Information section
Making the previously unobservable ……observable
Agenda
• Regulatory update
‒ ASIC focus areas
‒ Class orders changes
‒ Tax transparency & tax rate changes
ASIC focus areas
25
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
ASIC focus areasEstimates
‒ Impairment testing
‒ Valuation of and disclosure of financial
instruments
Accounting policies
‒ Assessment of off balance sheet treatments
(joint arrangements, structured entities)
‒ Revenue recognition and expense deferral
‒ Tax-effect accounting
Key disclosures
‒ Accounting policy choice selection
‒ Sources of estimation and judgement
‒ Impact of new financial instruments, revenue
and leases standards
26
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
ASIC financial statement surveillance
Reasonableness of cashflows and assumptions
Cashflows matched to carrying values of all assets that
generate cashflows
Cash Generating Units (CGUs) are not identified at too
high level
Corporate costs and assets are allocated to CGUs on an
appropriate basis
Impairment/
Asset values
Class order changes
28
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Commonly used remade class orders
Class Order Replacement instrument
ASIC CO 98/100 Rounding in financial
and directors’ reports
Rounding in Directors’/ financial
reports Instrument 2016/191
ASIC CO 98/1418 Wholly-owned
entities (Deed of Cross Guarantee)
Directors’ report relief Instrument
2016/188
ASIC CO 98/2395 Transfer of
information from the directors’ report
Audit relief Instrument 2016/284
Wholly owned companies
Instrument 2016/285
ASIC CO 98/1417 Audit relief for
proprietary companies
Entities to ensure references to the relevant instrument are updated as appropriate in any
financial reports or directors’ resolutions
KPMG guidance
16RU-002
16RU-005
16RU-008
16RU-008
Tax transparency & tax rate changes
30
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Tax transparency- General purpose financial statements
Further clarification from ATO on implementation expected
Decem
ber
201
5 The Tax Laws Amendment (Combating Multinational Tax Avoidance) Act 2015 enacted A
ugust
2016 ATO released a
consultation paper seeking to provide more guidance on the new requirement M
arc
h 2
01
7 Treasury Laws Amendment (Combating Multinational Tax Avoidance) Bill passed that GPFS are to be lodged in ‘the approved form’ with the ATO
April/M
ay 2
017 ATO expected
to provide final guidance and clarification as a result of submissions on consultation paper
31
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Tax transparency: GPFS – what we can confirm
Tax Law Amendments –
General purpose financial
statements (GPFS)
Tier 1 or Tier 2 depending on
whether publicly accountable
Need to comply where meet the
criteria even if don’t currently lodge with
ASIC
Single entity or consolidated financial statements (needs to
include taxpayer)
Not required to be AASBs
‘Commercially accepted principles
relating to accounting’ e.g. USGAAP or IFRS
as adopted by EU
32
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Tax transparency: GPFS – practical example
Augmented Reality Inc
(Registered foreign company)
Augmented Reality Pty Ltd
(Large proprietary company)
Australia
US GAAP
Lodges with SEC
Lodges special purpose financial
statements
Is Augmented Reality Pty
Ltd required to lodge
GPFS with ATO?
a corporate tax entity
a significant global
entity
an Australian resident
does not lodge GPFS
with ASIC
and is required to
lodge a tax return
33
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Tax transparency: GPFS – practical example
Single entity financial
statements
Prepared using AASBs
Additional cost to prepare as
only prepare special purpose
financial statements for
Corporations Act purposes
Consolidated financial
statements (consisting of tax
payer and some/all members of
group)
Prepared using ‘commercially
accepted principles relating to
accounting’ such as USGAAP
Already prepared for lodgement
with SEC (and possibly already
lodged with ASIC by
Augmented Reality Inc) – no
additional cost to prepare
Augmented Reality Pty Ltd
individual general purpose
financial statements
Augmented Reality Inc’s
consolidated US GAAP financial
statementsOR
Under clarification expected to be confirmed by the ATO, Augmented
Reality Pty Ltd can lodge:
Single entity or consolidated financial statements (needs to
include taxpayer)
Not required to be AASBs
‘Commercially accepted principles
relating to accounting’ e.g. USGAAP or IFRS
as adopted by EU
34
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Tax rate changes
2016-17
• Aggregated turnover < $10m
2017-18
• Aggregated turnover < $25m
2018-19
• Aggregated turnover < $50m
Financial
statements
impacts
Current
year tax
rate
Deferred
tax
balances
Franking
credits
Reduction in tax rate to 27.5% for small business entities
Agenda
• What’s coming up?
‒ Standards available for early adoption
‒ Looking ahead
Standards available for early adoption
37
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Standards available for early adoption for June 2017 Y/Es
AASB 9
Financial Instruments
AASB 15*
Revenue from
Contracts with
Customers
AASB 2014-10: Sale or
Contribution of Assets
between an Investor
and its Associate or
Joint Venture
Beginning on or after 1 January 2018
AASB 2016 – 4:
Removal of DRC as a
value in use measure
Beginning on or after 1 January 2019
AASB 16
Leases
Beginning on or after 1 January 2017
AASB 112: Income
Taxes: Recognition of
Deferred Tax Assets
for Unrealised Losses
AASB 107: Statement
of Cashflows:
Disclosure Initiative
Classification and
Measurement of
Share-based Payment
Transactions:
Amendments to
AASB 2
AASB 1058
Income of NFPs
IFRIC 22
Foreign Currency Transactions and
Advance Consideration
Transfers of Investment Property, Annual
Improvements 2014-2016 Cycle and Other
Amendments*
* For NFPs, AASB 15 & Transfer of investment
property/improvements is deferred to years beginning
1 January 2019
38
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Revenue recognition – Is the top-line changing under AASB 15?
Key publications:
‒ Issues In-Depth
‒ Revenue for sectors – construction,
consumer goods, housebuilders, insurance,
oil and gas, power and utilities,
telecommunications, transport
‒ First Impressions
‒ Revenue Transition Options
‒ IFRS 15 Illustrative Disclosures
Resources available at:
‒ KPMG’s Global IFRS Institute
Webinar recording available at:
‒ KPMG’s Australia website
Any specific question or other assistance:
‒ Reach out to your KPMG contact
Headline changesControl replaces risks
and rewards
New guidance on identifying
performance obligations
New over time
criteria
39
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Financial instruments – more or less volatility in the P&L?
Key publications:
‒ First Impressions
‒ IFRS 9 for corporations – what’s the impact
on your business
‒ IFRS 9 for banks – what’s the impact on your
business
‒ Guide to annual financial statements – IFRS
9 – Illustrative disclosures for banks
Resources available at:
‒ KPMG’s Global IFRS Institute
Webinar recording available at:
‒ KPMG’s Australia website
Any specific question or other assistance:
‒ Reach out to your KPMG contact
Headline changesMove to an “expected
loss” impairment model
More financial assets
measured at FVTP&L
Greater flexibility in
hedge accounting
40
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Leases – A more transparent balance sheet under AASB 16
Key publications:
‒ SlideShare presentation
‒ KPMG Webinar
‒ Web article
‒ First Impressions
‒ Transition options
Resources available at:
‒ KPMG’s Global IFRS Institute
Webinar recording available at:
‒ KPMG’s Australia website
Any specific question or other assistance:
‒ Reach out to your KPMG contact
Headline changesAll leases on balance
sheet
Front loading of lease
expense
Focus on definition of
lease
41
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Disclosures in comparative periodsTime is of the essence
41
“It is reasonable for the market to expect that
quantitative information will be available and
disclosed for the reporting date that coincides with
the start of the first comparative period that will be
affected in a future financial report. Information that
there will be no material impact may also be important
information for the market”
ASIC Media Release (16-442MR)
42
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Disclosures in comparative periodsConsider…
Description and explanation of the key concepts in the relevant standard
Timeline for implementation
What is the impact going to be on key performance metrics?
Quantitative information about possible impacts (if available)
Additional qualitative information (if quantitative information is not available)
May be relevant to disclose that impact is not expected to be material
Looking ahead
44
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Looking ahead – IASB & IFRIC projects
‒ Narrow changes to AASB 112,123 and AASB 9Annual
Improvements
cycle 2015-2017
‒ Board completed deliberations in February 2016
‒ Standard expected early 2017
Insurance
Contracts
‒ Fatal flaw issued in February 2017
‒ Standard expected to be issued May 2017
Service
concessions:
grantor
accounting
45
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Looking ahead – IASB & IFRIC projects
‒ ED issued in May 2015
‒ Comment period ended 25 November 2015
‒ Revised framework expected in 2017
Conceptual
Framework
‒ Provides guidance when there is uncertainty over income
tax treatments
‒ Interpretation expected in 2017
Uncertainty over Income Tax Treatments
(Interpretation )
‒ Board completed deliberations in February 2016
‒ Standard expected in 2017
Classification of
(Amendments to
IAS 1)
Agenda
• Wrap up
47
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Take-aways
Prepare for changes that impact you at June 2017
Be aware of ASIC focus areas and watch out for ATO clarified
guidance on lodgement of GPFS with the ATO
Engage early with your auditors about the enhanced audit report
Consider how you will transition to new financial instruments,
revenue standards and leases standards, including what your
disclosures in the lead up to the effective date will say
Questions
Appendix
• Standards effective for June 2017
• Key Audit Matters – Trends & issues
• Standards available for early adoption
50
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Standards effective – June 2017 June Y/Es
Year end and half-years
AASB 2015-2:
Disclosure Initiative
(Amendments to
AASB 101)
The amendments do not require any significant change to current practice, but
should facilitate improved reporting, including and emphasis on only including
material disclosures, clarity on the aggregation and disaggregation of line items,
the presentation of subtotals, the ordering of notes and the identification of
significant accounting policies.
AASB 2015-5:
Investment entities:
Applying the
Consolidation
Exception
Under the amendments:
‒ An investment entity parent is required to fair value a subsidiary providing
investment-related services that is itself and investment entity;
‒ An immediate parent owned by an investment entity group is exempt from
preparing consolidated financial statements; and
‒ When a non-investment entity investor applies the equity method, it is permitted
to retain the fair value accounting applied by its investment entity associate or
joint venture.
AASB 2014-1 (Part D):
Amendment to
Regulatory Deferral
Accounts (AASB 14)
Interim guidance permitting first-time adopters of IFRS to continue using previous
GAAP to account for regulatory deferral account balances while the IASB
completes its comprehensive project in this area.
51
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Standards effective – June 2017 June Y/Es
Year end and half-years
AASB 2014-4: Clarification
of Acceptable Methods of
Depreciation and
Amortisation
Introduces a rebuttable presumption that the use of revenue-based amortisation
methods for intangible assets is inappropriate. Limited opportunity for
presumption to be overcome.
Clarifies that revenue-based depreciation for property, plant and equipment
cannot be used.
AASB 2014-6: Agriculture:
Bearer Plants (AASB 116 &
AASB 141)
Bearer plants are now in scope of AASB 116 Property, Plant & Equipment for
measurement and disclosure purposes. Therefore, a company can elect to
measure bearer plants at cost. However, the produce growing on bearer plants
will continue to be measured at fair value less costs to sell under AASB 141
Agriculture.
AASB 2014-9: Equity
method in Separate
Financial Statements
Allows the use of the equity method in separate financial statements in the
accounting for associates, joint ventures and subsidiaries.
AASB 2014-3: Accounting
for Acquisitions of
Interests in Joint
Operations
Business combination accounting required to be applied to acquisitions of
interests in a joint operation that meets the definition of a ‘business’ under AASB 3
Business Combinations.
52
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Standards effective – June 2017June Y/Es
Year end and half-years
Annual Improvements
(2012 – 2014)
Amendments to existing accounting standards, particularly in relation to:
‒ AASB 5 – guidance on changes in method of disposal;
‒ AASB 7 – clarifies ‘continuing involvement’ for servicing contracts;
‒ AASB 7 – clarifies offsetting disclosures are not specifically required in interim
financial statements, but may be included under the general requirements of
AASB 134;
‒ AASB 119 – clarifies that discount rates used should be in the same currency as
the benefits are to be paid; and
‒ AASB 134 – clarifies that disclosures may be incorporated in the interim financial
statements by cross-reference to another part of the interim financial report.
Application of Australian
Accounting Standards
(AASB 1057)
Majority of AASB standards and interpretations have been reissued for editorial
changes. However, there is no technical application impact from reissue of
standards and interpretations. A new standard, AASB 1057 has been issued as
part of the reorganisation process.
53
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Standards effective – June 2017June Y/Es and HYs
Half-years only
Superannuation Entities
(AASB 1056)
A new Australian specific Standard for superannuation entities that will replace
AAS 25 Financial Reporting by Superannuation Plans. The standard applies to
large superannuation entities regulated by the Australian Prudential Regulation
Authority (APRA) and to public sector superannuation entities. It does not apply to
self-managed superannuation funds or small APRA funds.
AASB 2015-6: Extending
Related Party Disclosures
to Not-for-Profit Public
Sector Entities
Extends the scope of AASB 124 Related Party Disclosures to include not-for-profit
public sector entities.
AASB 2015-7: Fair Value
Disclosures of Not-for-
Profit Public Sector
Entities
Amends AASB 13 Fair Value Measurement to provide relief to not-for-profit public
sector entities from certain disclosures about fair value measurement of property,
plant and equipment held for current service potential rather than to generate net
cash inflows.
54
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Standards effective for June 2017 HYs only
Annual reporting periods beginning on or after 1 January 2017
AASB 112: Income
Taxes: Recognition and
Measurement
Amendments clarify that the existence of a deductible temporary differences
depends solely on a comparison of the carrying amount of an asset and its tax
base at the end of the reporting period, and is not affected by possible future
changes in the carrying amount or expected manner of recovery of the asset.
Guidance on how to determine future taxable profit for the recognition test is
also provided.
AASB 107: Statement of
Cashflows: Disclosure
Initiative
Amendments require additional disclosures to evaluate changes in liabilities
arising from financing activities, including both changes arising from cash flows
and non-cash changes (such as effects of changes in foreign exchange rates
and changes in fair values).
AASB 2016 – 4: Removal
of DRC as a value in use
measure
For Not-for profits the amendment removes the exemption that existed to apply
depreciated replacement costs as measure of value in use. The removal of
DRC as measure of recoverable amount will result in more focus on the fair
value measurements requirements of AASB 13.
Further Annual
Improvements 2014-2016
Cycle
Amendment clarifies the scope of AASB 12 by specifying that the disclosure
requirements apply to an entity’s interests in other entities that are classified as
held for sale, held for distribution to owners in their capacity as owners or
discontinued operations in accordance with AASB 5 Non-current Assets Held
for Sale and Discontinued Operations.
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Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Enhanced audit reportingIncreased audit attention due to.....example 3
New standards
History
Experience Risk interpretation
differences
Risk of error
This is a key audit matter due to…
• the first time application of X
accounting standard, made
more complex due to the lack
of institutional knowledge and
experience of the Company
• the (potential) significant
financial impact of the changes
to the Company results
• the unsophisticated recording
systems & processes recently
implemented by the Company
These conditions increased the
auditor effort applied.
Making the previously
unobservable
……observable
56
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Enhanced audit reporting KAMs: Trends to date
https://home.kpmg.com/au/en/home/insights/2017/03/
key-audit-matters-auditor-report-28-march-2017.html
57
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Enhanced audit reporting: KAMs: top 4
KAMs
58
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Enhanced audit reporting: KAMs
59
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Standards available for early adoption
Annual periods beginning on or after 1 January 2018
Financial Instruments
(AASB 9)
The AASB has issued the complete AASB 9. The new standard includes revised
guidance on the classification and measurement of financial assets, including a new
expected credit loss model for calculating impairment, and supplements the new general
hedge accounting requirements previously published. It supersedes AASB 9 (issued in
December 2009 – as amended) and AASB 9 (issued in December 2010).
Revenue from
Contracts with
Customer (AASB 15)*
This standard contains a single model that applies to contracts with customers and two
approaches to recognising revenue: at a point in time or over time. The model features a
contract-based five-step analysis of transactions to determine whether, how much and
when revenue is recognised.
*The original date for the amendment was deferred to 1 January 2018
AASB 2014-10: Sale or
Contribution of Assets
between an Investor
and its Associate or
Joint Venture*
The amendments require the full gain or loss to be recognised when the assets
transferred meet the definition of a ‘business’ under AASB 3 Business Combinations
(whether housed in a subsidiary or not).
60
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Standards available for early adoption
Annual periods beginning on or after 1 January 2018
Transfer of Investment
Property
Amendments to IAS 40
Provides guidance on transfers to, or from, investment properties.
Classification and
Measurement of
Share-based Payment
Transactions:
Amendments to AASB 2
Introduces new requirements for accounting for the effects of vesting and non-vesting
conditions on cash-settled share-based payments, share-based payment transactions
with a net settlement feature for withholding tax obligations; and modifications that
change classification of SBPs from cash-settled to equity-settled..
Foreign Currency Transactions and
Advance Consideration
IFRIC Interpretation 22
Provides guidance about the exchange rate to be used in reporting foreign currency
transactions when advances are made.
61
Document Classification: KPMG Public
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme
approved under Professional Standards Legislation.
Standards available for early adoption
Annual reporting periods beginning on or after 1 January 2019
Income of NFP entities
(AASB 1058 & AASB 15
NFP Implementation
guidance)
‒ This Standard and guidance changes the income recognition requirements that
apply to not-for-profit (NFP) entities, and requires an arrangement entered into
by a NFP to be enforceable and sufficiently specific to be considered within the
scope of AASB 15. The Standard replaces the income recognition requirements
relating to private sector NFP entities, previously in AASB 1004 Contributions
and the majority of existing requirements for income recognition relating to
public sector NFP entities.
Leases (AASB 16)
‒ AASB 16 removes the classification of leases as either operating leases or
finance leases – for the lessee – effectively treating all leases as finance leases.
‒ Short-term leases (less than 12 months) and leases of low-value assets (such as
personal computers) are exempt from the lease accounting requirements.
‒ There are also changes in accounting over the life of the lease. In particular,
companies will now recognise a front-loaded pattern of expense for most leases,
even when they pay constant annual rentals.
‒ Lessor accounting remains similar to current practice – i.e. lessors continue to
classify leases as finance and operating leases.
Document Classification: KPMG Public
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© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Liability limited by a scheme approved under Professional Standards Legislation.
The information contained in this document is of a general nature and is not intended to address the objectives,
financial situation or needs of any particular individual or entity. It is provided for information purposes only and
does not constitute, nor should it be regarded in any manner whatsoever, as advice and is not intended to influence
a person in making a decision, including, if applicable, in relation to any financial product or an interest in a financial
product. Although we endeavour to provide accurate and timely information, there can be no guarantee that such
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act on such information without appropriate professional advice after a thorough examination of the particular
situation.
To the extent permissible by law, KPMG and its associated entities shall not be liable for any errors, omissions,
defects or misrepresentations in the information or for any loss or damage suffered by persons who use or rely on
such information (including for reasons of negligence, negligent misstatement or otherwise).