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Briefing Sheet
January 2010, Issue 170

Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters Amendment to IFRS 1

This Briefing Sheet summarises the International Accounting Standards Boards (IASB or Board) Limited Exemption from Comparative IFRS7 Disclosures for First-time Adopters Amendment to IFRS 1, which was published on 28 January 2010.
The amendment to IFRS 1 First-time Adoption of International Financial Reporting Standards provides relief to a first-time adopter from providing comparative information for the disclosures required by Improving Disclosures about Financial Instruments Amendments to IFRS 7 (Amendments to IFRS 7) that was issued in March 2009. The amendment provides the same relief to first-time adopters as was given to current users of IFRSs upon adoption of the Amendments to IFRS 7 . As a consequence of the amendment to IFRS 1, the IASB decided to clarify the transition provisions of the Amendments to IFRS 7 .

are effective for annual periods beginning on or after 1 January 2009, but an entity that already reports under IFRSs is not required to provide comparative information for the disclosures required by the amendments. The IASB has now considered the impact of the Amendments to IFRS 7 on first-time adopters of IFRSs. IFRS1 generally requires retrospective application of current IFRS requirements to all periods presented in an entitys first set of IFRS financial statements and therefore first-time adopters would not have received the same relief from providing comparative information when they adopt the Amendments to IFRS7 . Summary of the amendment The IASB decided to amend IFRS 1 to provide to first-time adopters the same relief from the requirement to provide comparative period disclosures for the information required to be presented by the Amendments to IFRS7 as it had to existing IFRS reporters. In that way first-time adopters are not disadvantaged as compared with current IFRS reporters. As a consequence of the amendment to IFRS 1, the IASB decided to clarify the transition provisions of the Amendments to IFRS 7 . In summary, the IASB clarified that information for comparative periods, i.e. periods

KPMGs update on International Financial Reporting Standards (IFRSs)

Background On 5 March 2009 the IASB published the Amendments to IFRS 7 , which require enhanced disclosures about the fair value measurements of financial instruments, as well as additional qualitative and quantitative disclosures about liquidity risk. These amendments

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before the Amendments to IFRS 7 become effective, including an opening statement of financial position as at a date before 31 December 2009, need not comply with the disclosures required by the Amendments to IFRS 7 . Illustrative examples of the clarified transition provision Entity with a financial year ending 31 December Company B presents IFRS financial statements for the year ending 31 December 2010 with comparative information for the year ended 31 December 2009. Given the Amendments to IFRS 7 are effective for annual periods beginning on or after 1 January 2009, B provides the enhanced disclosures for both 2010 and 2009. However, the IASB clarified that if B is required to present a third statement of financial position as required by paragraphs 10(f) and 39 of IAS 1 Presentation of Financial Statements or paragraph 21 of IFRS 1, B need not provide the enhanced disclosures relating to its statement of financial position as at 1 January 2009. If B includes the enhanced disclosures in its interim financial statements at 30June 2010, then it provides comparative information for the period ending 30 June 2009; however, as clarified, B need not provide the enhanced disclosures relating to its statement of financial position as at 1January 2009, if applicable. Entity with a financial year ending 30June Company C presents IFRS financial statements for the year ending 30 June 2010 with comparative information for the year ended 30 June 2009. Given the Amendments to IFRS 7 are effective for annual periods beginning on or after 1 January 2009, C provides the enhanced disclosures for 2010, but need not provide comparative information for 2009. Similarly, if it is required to present a third statement of financial position as required by paragraphs 10(f) and 39 of IAS 1 or paragraph 21 of IFRS 1, C need not provide the enhanced disclosures relating to its statement of financial position as at 1 July 2008. If C includes the enhanced disclosures in its interim financial statements at 31 December 2010, then it provides comparative information for the period ending 31 December 2009; however, as clarified, C need not provide the enhanced disclosures relating to its statement of financial position as at 1 July 2009, if applicable. Effective date The amendment to IFRS 1 is effective for annual periods beginning on or after 1 July 2010. Early application is permitted as long as an entity discloses the fact that the amendment has been early adopted.

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2010 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (KPMG International), a Swiss entity. Publication name: Briefing Sheet Publication number: Issue 170 Publication date: January 2010