United Kingdom


  • Service: Audit
  • Type: Press release
  • Date: 03/04/2014

KPMG report highlights support for re-thinking treatment of goodwill 


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 (external link).


View the full collection of KPMG interviews.




For further information, please contact:


Brian Bannister, Head of Global Communications


+44 7919 393753


Margot Cowhig, KPMG UK Corporate Communications


+44 207 694 4246 / +44 7920 274856:

KPMG Press Office: +44 207 694 8773


About KPMG International


KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 155 countries and have 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.


The financial information set forth represents combined information of the separate KPMG member firms that perform professional services for clients. The information is combined here solely for presentation purposes. KPMG International performs no services for clients nor, concomitantly, generates any client revenue.

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


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