The survey indicates that the IFRS/US GAAP funding level of a typical plan might have improved by around 5 … If substantial doubt is raised, management then assesses whether that substantial doubt is alleviated by management’s plans. Going concern – the underlying basis of financial statements. Partner, Dept. Events and conditions to consider in the assessment. When management concludes that there are no material uncertainties that may cast significant doubt on a company’s ability to continue as a going concern, but reaching that conclusion involved significant judgment, disclosure of the judgments is required. When management becomes aware of material uncertainties related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern, those uncertainties must be disclosed in the financial statements. This means the 12-month period is a minimum and management needs to exercise judgment to determine the appropriate look-forward period under the circumstances. Disclosures of material uncertainties that may cast doubt on a company’s ability to continue as a going concern as well as significant judgments involved in close-call scenarios may be more frequent as a result of COVID-19, given the continued economic uncertainty. Many offer CPE credit. a 'close-call’ scenario, disclosure of the judgements made is required3. a close-call scenario)3, disclosure of the judgments is required. Please take a moment to review these changes. +1 212-954-1086. Under IAS 19, the recognition of involuntary … US GAAP also has specific requirements for motion picture films, website development, cloud computing costs and software development costs. It follows that when this is not the case, a detailed analysis will be necessary, which likely includes robust cash flow forecasts and a review of existing and forthcoming financial obligations. New UK GAAP replaces the previous, long-standing UK accounting standards and comprises a multiplicity of separate accounting frameworks, all of which are part of New UK GAAP. Therefore, an understanding of the differences between IFRS and US GAAP continues to be important to preparers and users of financial statements. Tune in to KPMG Advisory podcasts to hear perspectives on today's business issues. Dual reporters may also wish to consider our US GAAP Handbook, Going concern. The Darkest Hour is Just Before Dawn: Challenges remain before vaccinations can save the day. While the objective is conceptually simple, implementing the component approach can be challenging. The going concern presumption – i.e. Further, under US GAAP, certain requirements apply … We want to make sure you're kept up to date. Editorial The novel coronavirus (COVID-19) continues to affect the companies in India and has created significant financial reporting and auditing challenges for the Disclosures are required if events and circumstances raise substantial doubt about the entity’s ability to continue as a going concern. Please note that your account has not been verified - unverified account will be deleted 48 hours after initial registration. After more than five years of unprecedented accounting change under both IFRS Standards and US GAAP, timelines were extended and the International Accounting Standards Board and the FASB provided targeted guidance offering some accounting relief. Home | COVID-19 | Better communication  | Business combinations | Financial instruments  | Insurance | Leases | Revenue | Sustainability reporting. This guide explains in depth the financial reporting implications of the CARES Act under US GAAP, followed by a high-level comparison to IFRS; this comparison is intended to provide directional guidance related to the application of IFRS. Management’s plans are ignored under Step 1, but considered under Step 2, to determine if they alleviate the substantial doubt raised in Step 1. Our IFRS Standards resources will help you to better understand the potential accounting and disclosure implications of COVID-19 for your company, and the actions management can take now. column, it compares US GAAP to IFRS, highlighting similarities and differences. Management’s going concern assessment may be significantly affected by the current economic environment. Here is a summary of the 2020 IFRS Interpretations Committee’s Agenda Decisions. * Get a 10% discount on KPMG Executive Education digital self-studies when you purchase four or more courses in a single transaction. From the IFRS Institute – December 4, 2020. Assessment is performed for a period of at least, but not limited to, 12 months from the reporting date (i.e. Going concern: IFRS® Standards compared to US GAAP. Under US GAAP, management’s plans are ignored under Step 1 of the going concern assessment. The focus of this publication is primarily on recognition, measurement and presentation. IAS 1 is silent on which management plans can be considered in the assessment. Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities. The assumptions used in the going concern assessment should be consistent with those used in other areas of the company’s financial statements, for example impairment of assets, liquidity risk disclosures, etc. IFRS Standards do not prescribe how management should evaluate its plans to mitigate the effects of these events or conditions in the going concern assessment. Disclosures addressing these requirements may need to be expanded, with added focus on the company’s response to the effects of COVID-19. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. Partner, Dept. details of events or conditions that may cast significant doubt about the company’s ability to continue as a going concern and management’s evaluation of their significance in relation to the going concern assessment; management’s plans to mitigate the effect of these events or conditions; significant judgments made by management in their going concern assessment, including their determination of whether there are material uncertainties; and, an explicit statement that there is a material uncertainty related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern, and therefore that it may be unable to realize its assets and discharge its liabilities in the normal course of business, IFRS Interpretations Committee Agenda Decision, July 2014, IAS 1 Presentation of Financial Statements – disclosure requirements relating to assessment of going concern, IAS 10, Events after the Reporting Period, ASC 205-30, Liquidation Basis of Accounting, IFRS 7, Financial Instruments: Disclosures. 2020 KPMG IFRG Limited, a UK company, limited by guarantee. Explore challenges and top-of-mind concerns of business leaders today. events or conditions requiring disclosure may arise after the reporting period. Impacts from a fall and winter COVID-19 surge may bring further uncertainty to many companies. KPMG refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity. KPMG's Office of the Chief Economist analyzes the current data and potential scenarios for economic recovery now that vaccine distribution is imminent. If you’re a preparer, it may help you to identify areas to emphasise in your financial statements; if you’re a user, it may help you spot areas to focus on in your dialogue with preparers. KPMG International entities provide no services to clients. Therefore, historical trends may not indicate present and future conditions. Management should carefully consider the requirements of IFRS Standards and reevaluate their historical approach to the going concern analysis; it may no longer be sufficient given the current economic environment. At KPMG, our accounting advisory services team are committed to helping you reach the right accounting solution, in the context of reporting objectives, commercial reality and regulatory requirements. Both IFRS Standards 1 and US GAAP 2 prescribe specific recognition and measurement requirements for determining interim period balances, the minimum content of interim financial statements and presentation of comparatives. Your guide to applying fair value measurement requirements under both IFRS® Standards and US GAAP. Our privacy policy has been updated since the last time you logged in. Similarly, US GAAP financial statements are prepared on a going concern basis unless liquidation is imminent. You will not continue to receive KPMG subscriptions until you accept the changes. Although US GAAP is more prescriptive than IFRS Standards, we do not expect significant differences in the types of events or conditions management would consider when assessing going concern under both GAAPs. When adopting IFRS 17, US insurers are trying to minimize disruption to their primary basis of reporting. For example, under US GAAP, the look-forward period for a company with a December 31, 20X0 balance sheet date and financial statements issued on March 31, 20X1 is the 12-month period ended March 31, 20X2. , IFRS Standards, and summarize key differences between the Standards that could affect for... More prescriptive | 14 Rapid changes in stakeholder expectations, technology and economic landscapes are creating Contents market have! Of successful refinancing or carrying out other plans or related entities and conditions... 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