Example Public Company Limited

Example Public Company Limited

Guide to annual reportsillustrative disclosures 2019-2020

November 2019 .au

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Australian content

b | Example Public Company Limited

Teling your story

With the effective date of the new leases standard now passed, the most significant changes to financial reporting standards since the adoption of IFRS in Australia have now been implemented.

Communicating your story to investors and other stakeholders is paramount. As with the revenue and financial instruments standards, entities need to explain the transition (see Note 5) and provide new enhanced ongoing disclosures for lease arrangements (see Note 38). Entities should keep front of mind that users are focussed on the impact of the new accounting standards and ASIC surveillance activities have resulted in enquiries into application of the revenue and financial instruments standards. We expect leases is next on the agenda.

This may also be a good opportunity for entities to perform a post implementation review and critically evaluate the financial instruments and revenue disclosures in their financial statements against peers and illustrative disclosures to assess whether disclosures satisfy users' expectations.

ASIC has also indicated that climate-related disclosures will be carefully monitored, both in the discussion included in the Operating and Financial Review (OFR) or equivalent, and in the notes to the financial statements. The AASB and AuASB released a Joint Bulletin in April on Climate-related and other emerging risks disclosures: assessing financial statement materiality using AASB/IASB Practice Statement 2 asking reporters and auditors to consider how climate-related risks should be reflected within financial statements. Qualitative external factors such as the industry in which the entity operates and investor expectations may make climate-related risks `material'. In such circumstances disclosure should be made in the appropriate notes in the financial statements, regardless of their numerical impact.

Our observations are that climate-related risks are routinely discussed in the OFR or equivalent, however, disclosure of the translation of this to the impact on the financial statements itself has been limited to date. We consider conveying the climate change story and the impacts on assumptions and judgements within the financial statements as the next challenge for preparers.

A summary of other newly effective accounting and regulatory requirements for this period, including those mentioned above, are set out on our "What's new?" page.

Once again, due to Australia's close alignment to IFRS, we have made minimal changes to the source document prepared by our international colleagues and have built the Australian-specific disclosures around that International guide. The navigation bookmarks and links will assist you to identify the changes and disclosures you need.

We trust you will find Example Public Company Limited Guide to annual reports ? illustrative disclosures a useful reference in your annual report preparation. For further information on the contents of this publication or for assistance in the application of the new accounting standards, please contact your KPMG professional.

Andrew Yates National Managing Partner ? Audit, Assurance and Risk Consulting

Primary statements

Notes

Appendices

? 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo and are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

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How to use this guide

The purpose of this publication is to help you in preparing annual financial reports in accordance with Australian Accounting Standards (AASBs), which are International Financial Reporting Standards (IFRS) developed by the International Accounting Standards Board (IASB) as adopted by the AASB for for-profit entities.

It illustrates one possible format for financial statements for a fictitious multinational corporation involved in general business (Example Public Company Limited).

This publication relates to both annual financial years ending 31 December 2019 and 30 June 2020 and reflects standards and interpretations that have been issued by the AASB as at 15 August 2019 and that are required to be applied by an entity with an annual period beginning on 1 January 2019 and 1 July 2019 (`currently effective requirements'). The early adoption of standards or amendments to standards that are effective for annual periods beginning after 1 January 2019 (`forthcoming requirements') is not illustrated.

Although it is not exhaustive, this guide illustrates the disclosures required by IFRS for one hypothetical corporation, merely for illustrative purposes and, as such, largely without regard to materiality.

This guide should not be used as a boilerplate template. The preparation and presentation of financial statements require the preparer to exercise judgement, in terms of the choice of accounting policies, the ordering of notes to the financial statements, how the disclosures should be tailored to reflect the entity's specific circumstances, and the relevance of disclosures considering the needs of the users.

Navigating this guide

If you are using this guide for the first time: Given Australia's close alignment to International Financial Reporting Standards (IFRS), a substantial portion of Example Public Company Limited has been based on the illustrative disclosures publication prepared by our international colleagues based on `pure' IFRS.

However to illustrate additional Australian specific disclosure and alternative presentation methods that are commonly used in Australia, a separate section, has been included, just before the main financial statements. A clear cross-reference to the Australian section is included on affected international pages.

Australian specific disclosure is shown in section one Australian content

Illustrative disclosure based on IFRS is shown in section two Guide to annual financial statements.

This hypothetical corporation (the `Group') used in this publication has been applying IFRS for some time ? i.e. it is not a first-time adopter of IFRS. If you are preparing your first set of annual financial statements, that include an explicit and unreserved statement of compliance with IFRS, you are considered a first time adopter of IFRS. For more information on adopting IFRS for the first time, see Chapter 6.1 in the 16th edition 2019/20 of our publication Insights into IFRS.

If you are recurring user of this guide: We direct you to our What's new page, which contains a summary of all new or revised accounting standards and regulatory changes that have been reflected in Example Public Company Limited since the previous edition of this guide and references to other resources in the guide that you might find useful to your financials statement preparation for the current period.

Materiality considerations

Materiality is relevant to the presentation and disclosure of the items in the financial statements. Preparers need to consider whether the financial statements include all of the information that is relevant to understanding an entity's financial position at the reporting date and its financial performance during the reporting period.

Preparers also need to take care not to reduce the understandability of an entity's financial statements by obscuring material information with immaterial information or by aggregating material information that is different by nature or function. Individual disclosures that are not material to the financial statements do not have to be presented ? even if they are a minimum requirement of a standard. Preparers need to consider the appropriate level of disclosure based on materiality for the reporting period

Specific guidance on materiality and its application to the financial statements is included in paragraphs 29?31 of AASB 101 Presentation of Financial Statements. In addition Making Materiality Judgements (AASB Practice Statement 2) provides practical guidance on how to apply the concept of materiality in the preparation of financial statements.

? 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo and are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

Notes

Appendices

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Further KPMG guidance

We also have a number of accompanying tools and publications that can be used to assist you in the preparation of your annual report and helping you to report financial information in the most meaningful way. These materials and more, can be accessed from our Financial statements preparation site, which contains a number of other valuable references and resources.

Keeping in touch

Follow `KPMG IFRS' on LinkedIn or visit ifrs for the latest on IFRS.

Whether you are new to IFRS or a current user, you can find digestible summaries of recent developments, detailed guidance on complex requirements, and practical tools such as illustrative disclosures and checklists.

Australian Topics

KPMG Australia Financial Reporting and Accounting Standards

KPMG Global IFRS Institute

Accounting & Reporting Webinars

Australian Reporting Updates

Standards on issue

IFRIC agenda decisions

Leases

Revenue

Primary statements

Notes

Financial Instruments

Climate Change & Sustainability

Insurance contracts

Better business reporting

? 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo and are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

Appendices

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Primary statements

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? 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo and are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

Notes

Appendices

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