3 minute read 13 Nov 2020
Why preparation is key when drafting your 2020 IFRS financial statements

Why preparation is key when drafting your 2020 IFRS financial statements

Authors
Vincent Van Caloen

Executive Director, Global Corporate Reporting Services, EY Bedrijfsrevisoren

Passionate about contributing to the common understanding of how IFRS accounting standards should be applied to complicated transactions. Enjoys spending time with family, running and reading.

Carolien Redant

EY Belgium Financial Accounting Advisory Services Director

Performance-driven financial professional in the area of IFRS and IPSAS.

3 minute read 13 Nov 2020
Related topics Accounting change IFRS Assurance
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Maintaining compliance with the everchanging IFRS requirements can require much time and effort. EY offers a number of tools that can reduce the weight on your shoulders. 

In brief

  • In 2020, new IFRS requirements come into effect that could have a significant effect on how you report your accounts, transactions and other events with financial impact.
  • EY updated its core tools to assist you in the process of updating your financial statements, accounting policies and notes. 

Entities reporting under IFRS continue to face a steady flow of new standards and interpretations. The resulting changes range from significant amendments of fundamental principles to some minor changes from the annual improvements process. They will affect different areas of accounting, such as recognition, measurement, presentation and disclosure.

Some of the changes have implications that go beyond matters of accounting, also potentially impacting the information systems of many entities. Furthermore, the changes may impact business decisions, such as the creation of joint arrangements or the structuring of particular transactions.

The challenge for preparers is to gain an understanding of what lies ahead.

Changes to IFRS

Potential changes to the application of IFRS do not result solely from (amendments to) standard and interpretations. Deliberations by the IFRS Interpretations Committee (IFRS IC) regularly lead to the publication of Interpretations Committee agenda decisions. Agenda decisions are issues that the IFRS IC decides not to add to its agenda and include the reasons for not doing so. For some of these items, the IFRS IC includes further information about how the standards should be applied. This guidance does not constitute an interpretation, but rather, provides additional information on the issues raised and the IFRS IC’s views on how the standards and current interpretations are to be applied.

According to the IFRS IC, ‘the process for publishing an agenda decision might often result in explanatory material that provides new information that was not otherwise available and could not otherwise reasonably have been expected to be obtained. Because of this, an entity might determine that it needs to change an accounting policy as a result of an agenda decision. The Board expects that an entity would be entitled to sufficient time to make that determination and implement any change (for example, an entity may need to obtain new information or adapt its systems to implement a change).’

How EY can help

EY’s IFRS Core Tools

EY’s IFRS Core Tools are designed as practical building blocks to provide a comprehensive basis to keep up with the changing landscape of IFRS.

The Tools include the following:

  • IFRS Update of standards and interpretations in issue at 30 September 2020
  • Good Group (International) Limited - Illustrative financial statements
  • International GAAP® Disclosure Checklist

Firstly, EY’s IFRS Update of standards and interpretations provides an overview of the upcoming changes in standards and interpretations (pronouncements). It also provides an update on selected active projects. It does not attempt to provide an in-depth analysis or discussion of the topics. Rather, the objective is to highlight key aspects of these changes. Reference should be made to the text of the pronouncements before taking any decisions or actions. The publication includes a table comparing mandatory application for different year ends presented at the beginning of Section 1. In the table, the pronouncements are presented in order of their effective dates.

Secondly, EY’s Good Group (International) Limited contains an illustrative set of consolidated financial statements for Good Group (International) Limited (the parent) and its subsidiaries (the Group) that is prepared in accordance with IFRS. This set of illustrative financial statements is one of many prepared by EY to assist you in preparing your own financial statements. The illustrative financial statements are intended to reflect transactions, events and circumstances that we consider to be most common for a broad range of companies across a wide variety of industries. Certain disclosures are included in these financial statements merely for illustrative purposes, even though they may be regarded as items or transactions that are not material for Good Group.

Finally, the International GAAP® Disclosure Checklist is designed to assist you in the preparation of financial statements in accordance with IFRS, as issued by the IASB, and in compliance with the disclosure requirements of IFRS. The checklist is available as an EY Intelligent Checklist. The scoping questions in the EY Intelligent Checklist save significant time, because they enable the user to filter the questionnaire to present only questions that are relevant to an entity’s annual financial statements. 

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Summary

As entities are responding to the impact of COVID-19, it is important to anticipate any potential impact resulting from changes to the application of IFRS. EY’s core tools are there to help entities navigate through the many significant and minor changes to the application of IFRS. 

About this article

Authors
Vincent Van Caloen

Executive Director, Global Corporate Reporting Services, EY Bedrijfsrevisoren

Passionate about contributing to the common understanding of how IFRS accounting standards should be applied to complicated transactions. Enjoys spending time with family, running and reading.

Carolien Redant

EY Belgium Financial Accounting Advisory Services Director

Performance-driven financial professional in the area of IFRS and IPSAS.

Related topics Accounting change IFRS Assurance
Upvote