Professional Documents
Culture Documents
KpmG INtErNatIoNaL:
Impact of IFRS:
Banking:
kpmg.com/ifrs
Contents:
Overview of the International Financial Reporting
Standards (IFRS) conversion process
Accounting and reporting
Financial instruments classification, measurement,
recognition and derecognition
Financial instruments impairment
Hedge accounting
Consolidation and special purpose entities (SPEs)
Definition of debt versus equity
Presentation of financial statements and disclosures of
financial instruments
Leases
Insurance contracts
Post-employment benefits
IFRS 1 first-time adoption
4
5
6
8
9
10
12
13
14
16
17
18
20
21
22
People
29
Business
Stakeholder analysis and communications
Audit Committee considerations
Monitoring peer group
Other areas of conversion risks to mitigate
Benefits of IFRS
30
30
30
30
31
31
32
23
24
27
2011 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Foreword:
Given the significance of the financial crisis over the last few years, there is greater
political and regulatory will than ever before for a single set of converged, global
accounting standards. Transparency and comparability across the banking sector is in
the spotlight once again.
With many countries having converted to IFRS in 2005, conversion is imminent for
other countries such as Canada, South Korea and Mexico in 2011 and 2012; and with
the US debating the merits of conversion to IFRS, its clear that IFRS is high on the
accounting agenda across the globe.
Since the first major wave of adoption in Europe and Australia there is a mass of
information available for individuals to sift through over 699,000 hits for IFRS
in banks alone on some internet search engines. This publication is focused on
assisting conversions to IFRS in the banking sector. Whether you are starting your
project or merely considering the impact, the broad overview of the topics listed
below will help you to better understand the implications of an IFRS conversion:
Overview of the IFRS conversion process. We look at how the conversion
management needs to take a holistic view of the different aspects of the
accounting under IFRS and its impact across the entity.
Top Ten IFRS banking accounting and reporting issues, giving guidance on
the key areas of focus that are likely to be the cornerstone of the project. Many
other accounting areas are not specifically banking related and are therefore
excluded from our discussions, but will need consideration.
Information technology and systems considerations. We discuss how the
banks will need to bridge the gap between IFRS reporting and the general ledger
and sub-ledger systems so as to deal with parallel reporting (i.e. local generally
accepted accounting principles and IFRS reporting at the same time) and internal
vs external reporting.
People knowledge transfer and change management. Ways to drive training
and knowledge management into the teams dealing with the changes required.
Business and reporting. The issues around operational performance and
measurement that needs to reflect the impact of IFRS and how to communicate
this to different groups of stakeholders.
While the main audience of this publication are those contemplating IFRS conversion
rather than those already converted, we hope there is something stimulating and
thought-provoking for all those dealing with IFRS, particularly given the forthcoming
changes in standards such as IFRS 9 Financial Instruments, which will have a
significant impact on banks.
Colin Martin
Head of UK Assurance Services, Banking
2011 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
How to link?
s 4OOLS
s 4EMPLATES
MANAGE
ME
RAM
NT
OG
R
P
s )DENTIFY INFORMATION hGAPSv FOR
CONVERSION
s !SSESS IMPACT ON INTERNAL
CONTROLSPROCESSES
s )DENTIFY CURRENT SYSTEM
FUNCTIONALITYSUITABILITY RELATED
NEW INFORMATION TECHNOLOGY )4
SYSTEM NEEDS AND PERIOD
END CLOSE
CONTINGENCY PLANS
s 4AILOR CHART OF ACCOUNTS CONSIDERING
)&23 ACCOUNTING NEEDS
How to link?
s #OMMUNICATION
Business
s $EVELOP COMMUNICATION PLANS FOR ALL
STAKEHOLDERS INCLUDING
n 2EGULATOR
n !UDIT #OMMITTEE
n 3ENIOR -ANAGEMENT
n )NVESTORS
n %XTERNAL !UDITORS
s !SSESS INTERNAL REPORTING AND KEY
PERFORMANCE INDICATORS
s !SSESS IMPACT ON GENERAL BUSINESS
ISSUES SUCH AS RISK MANAGEMENT
PRACTICES TREASURY PRACTICES ETC
How to link?
s 0ROCESS CHANGES
s 4RAINING
PR
OG
RAM
MANAGE
NT
ME
Overall Management
IFRS CONVERSION
How to link?
s #HANGE