Russia

Details

  • Type: Press release
  • Date: 4/3/2014

KPMG report highlights stakeholder support for re-thinking treatment of goodwill under IFRS 

A series of stakeholder interviews conducted by KPMG in major capital markets highlights that the current IFRS (International Financial Reporting Standards) model of mandatory annual impairment testing of goodwill is due for a re-think.

A series of stakeholder interviews conducted by KPMG in major capital markets highlights that the current IFRS (International Financial Reporting Standards) model of mandatory annual impairment testing of goodwill is due for a re-think.


Timed to coincide with the IASB’s (International Accounting Standards Board) outreach as part of its post-implementation review of the accounting for business combinations[1], KPMG interviewed an international sample of nearly thirty senior stakeholders from business, investors, regulators and academics to find out what they think about goodwill impairment testing – its relevance, its effectiveness, the difficulties and the disclosures.


Mark Vaessen, KPMG’s Global IFRS Leader said:


“We are delighted that so many of these key stakeholders were keen to go on the record in this report to share their views, which reinforces our view that this is an important topic. I thank all of our interviewees for their candour.”


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. Interviewees also highlighted that the degree of subjectivity involved in assessing goodwill limits its effectiveness, and the high number of judgments and assumptions make it a complex and time-consuming exercise.


Mark. Vaessen continued:


“Our interviewees showed considerable support for a return to the amortisation of goodwill, where the value of the asset is reduced to reflect their reduced worth over time.  Combined with the feedback on the subjectivity and complexity of goodwill impairment testing, it begs the question of whether it’s time to simplify the accounting for goodwill. I think that our report will provide valuable input to the IASB as part of its review of business combinations accounting.”


[1] Request for Information Post-implementation Review: IFRS 3 Business Combinations.

Who cares about goodwill impairment?

Feature image
The current IFRS model of mandatory annual impairment testing of goodwill without amortisation is due for a re-think, according to a series of interviews with stakeholders. Find out what interviewees thought about goodwill impairment testing – its relevance, its effectiveness, the difficulties and the disclosures.

About KPMG in Russia and CIS

KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 155 countries with more than 155,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

 

KPMG has been operating in Russia more than twenty years. For the last years KPMG in Russia and the CIS has been one of the fastest growing practices in KPMG worldwide.

 

In the CIS, KPMG now has offices in Moscow, St. Petersburg, Yekaterinburg, Kazan, Nizhny Novgorod, Novosibirsk, Rostov-on-Don, Krasnoyarsk, Perm, Almaty, Astana, Atyrau, Bishkek, Kiev, Donetsk, Lviv, Yerevan, Tbilisi and Baku, employing together over 3,800 people.

Media contacts

For any media enquiries or interview requests contact our media team at PR@kpmg.ru or Sabina Kasparova, Manager, PR & Communications, KPMG in Russia and the CIS, at +7 (495) 937 4477 (ext 14264), +7 (968) 6911037 or sabinakasparova@kpmg.ru.
 
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