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IASB Floats Rule Changes on Acquisition Disclosures

The Intercontinental Accounting Standards Board is looking at variations to its rules that would involve providers to disclose additional information and facts about how their acquisitions have performed.

In a discussion paper introduced on Thursday, the IASB said buyers want additional information and facts on whether or not takeovers are living up to anticipations and feel recent disclosures demanded underneath IFRS rules — these kinds of as the once-a-year check for goodwill impairment — are not enough.

The board’s preliminary perspective is that the need to disclose the key explanations for an acquisition ought to be changed with a need to disclose the strategic rationale for enterprise an acquisition and management’s goals for the acquisition at the acquisition day.

Also, the information and facts a organization discloses about an acquisition’s subsequent efficiency “should replicate the information and facts and metrics the company’s management utilizes to observe and evaluate the acquisition’s progress against the goals of the acquisition.”

“Investors want far better information and facts about how acquisitions are executing to help them hold a company’s management to account,” IASB Chair Hans Hoogervorst said in a news release. “Our recommended solution aims to satisfy investors’ requirements without having becoming as well expensive for providers.”

The IASB sets accounting rules that are mandatory in additional than one hundred forty nations. According to the discussion paper, buyers have said providers usually do not give more than enough information and facts to help them evaluate whether or not management’s goals for an acquisition are becoming met — for instance, whether or not the synergies management expect from an acquisition are becoming realized.

The board said it considered improving the impairment check by necessitating a organization to report at an before day if its goodwill had missing value, but concluded “there is no substitute that can goal goodwill far better and at fair expense.”

There is also “no distinct evidence that amortizing goodwill would drastically increase the information and facts that providers report to buyers,” the IASB said.

Stakeholders have right up until Sept. fifteen to remark on the discussion paper. The concentration “is really substantially on a set of disclosures to help buyers really fully grasp acquisitions and whether or not they have long gone effectively or not,” IASB Vice Chair Sue Lloyd told Reuters.

Acquisitionsgoodwill, Hans Hoogervorst, IFRS, Intercontinental Accounting Standards Board