A series of stakeholder interviews conducted by KPMG highlights that the current IFRS model of mandatory annual impairment testing of goodwill without amortisation is due for a re-think.
We interviewed a sample of stakeholders to find out what they thought about goodwill impairment testing – its relevance, its effectiveness, the difficulties and the disclosures.
Although interviewees identified that goodwill impairment testing is relevant in assessing how well an investment has performed, they noted that its relevance to the market is in confirming rather than predicting value. In addition, the degree of subjectivity involved limits its effectiveness, and the high number of judgements and assumptions make it a complex and time-consuming exercise.
Find out more in our report Who cares about goodwill impairment?, which is timed to coincide with the IASB’s outreach as part of its post-implementation review of the accounting for business combinations. Comments on the post-implementation review are due to the IASB by 30 May 2014 – now is the time to engage.