Consumer products IFRS financial statements survey
Assessing fair value and sensitivity to meet IFRS 7
Almost all entities disclose foreign exchange risk, interest rate risk, liquidity risk and credit risk as significant risk factors.
Consumer product companies in our survey showed the following trends about IFRS 7 disclosures.
- Almost all entities disclose foreign exchange risk, interest rate risk, liquidity risk and credit risk as significant risk factors. Only some entities present equity risks and commodity price risks as significant risk factors.
- Quantitative data is generally presented using a sensitivity analysis, although two entities surveyed have used a VaR analysis.
- Variations used for sensitivity analysis are regularly compared to observable market volatilities. A variation of 50 or 100 BP has developed as an implicit reporting standard for interest rate risks. Variations regarding equity prices and foreign exchange risks are less uniform amongst the entities surveyed.
Finding the right level of risk
IFRS 7 Financial Instruments: Disclosures requires entities to make disclosures about the significance of financial instruments to the entity's financial position and performance, and the nature and extent of risks arising from those financial instruments.
Our survey respondents identified the frequency of risk factors they consider, as illustrated below.
Frequency of risk factors considered
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