IFRS News January 2018

Our latest IFRS News contains some information about the US Tax reform, IFRS IC decision, cryptocurrency and more.

US Tax reform – accounting under IFRS

President Trump signed into law on 22 December 2017 extensive changes to the US tax system. These changes are substantively enacted for accounting purposes in 2017 and should be reflected in the financial statements at 31 December 2017.

IFRS News – January 2018

IFRS IC decision on interest and penalties related to income taxes

The IFRS Interpretations Committee (IC) issued an agenda decision in September 2017 on interest and penalties related to income taxes.

IFRS News – January 2018

IFRS Blog: Accounting for Cryptocurrency

Guest blogger Gary Berchowitz, PwC Partner discusses the issues of the month: What is cryptocurrency? So what’s the accounting issue? What is wrong with today’s accounting?

IFRS News – January 2018

Cannon street press

The January 2018 IASB Update has been published and the work plan updated.

IFRS News – January 2018

Read last quarter’s IFRS News issue from October 2017

Read more

Disclose – PwC’s online magazine

Reading our latest issue of Disclose you’re sure to get an adrenaline rush as we investigate a topic with particularly close connections to sport: high-performing organisations.

Read more about “IFRS: the impact of IFRS 15 on your financial statements prepared under the Swiss Code of Obligations” in our latest Disclose 27 issue here.

EMEA Webcast: US Tax Reform practical guidance for European Multinationals – Episode 1: US Tax Reform and Tax Accounting Implications

Impact of US Tax Reform on European Multinationals

 Wednesday, 10 January, 4.00- 5.00 pm CET

On December 22 2017, President Trump signed the ‘Tax Cuts and Jobs Act of 2017’ (2017 Act) marking the completion of the U.S. tax reform legislative process.

The 2017 Act will have a significant impact for European multinationals. In a series of three webcast sessions we will focus on the areas of the 2017 Act likely to have the biggest impact on European Multinationals:

  • Episode 1: US Tax Reform and Tax Accounting Implications
  • Episode 2: US Tax Reform Base Erosion Measures, focus on interest deductibility and base erosion and anti-avoidance tax (BEAT)
  • Episode 3: US Tax Reform Outbound Measures, focus on CFC rules and participation exemption

PwC specialists will provide insights and practical guidance on these key topics, focusing on what they mean for European Multinationals.

The first session, on Wednesday 10 January, will focus on the tax accounting implications of the 2017 Act and we will be joined by specialists from our tax accounting and assurance teams to discuss the key considerations for European groups, including specific consideration for IFRS.

Speakers for this webcast will include:

  • Monica Cohen-Dumani – Partner, International Tax Services, EMEA ITS Leader, PwC Switzerland
  • Graham Partner – Director, Tax Reporting & Strategy, PwC UK
  • Steven Mendez – Director, US Desk Leader, PwC Switzerland
  • Tom Patten – Partner, US Tax, PwC UK
  • Bernard Moens – US International Inbound Tax Services Leader, PwC US

To register for the WebEx Session: Click Here 

Contact Us

Richard Brunt
Tel.+41 58 792 81 82
richard.brunt@ch.pwc.com

Grasiele Teixeira Neves
Tel.+41 58 792 98 25
grasiele.neves@ch.pwc.com

Three approaches for insurers to address the IFRS 17 technology conundrum

As my colleague, Richard Hart alluded to in his November blog, we held our second IFRS 17 Technology Showcase in Zurich last week.

We similarly hosted a number of IFRS 17 Technology vendors to showcase their solutions and a number of insurance CFOs in a panel discussion. Indeed many of the themes that were discussed in London in November, were also discussed at our Zurich event.

However, the key difference was a bit more of a detailed discussion around what level of ambition insurance companies should aim for – what do you, as a board member at an insurance company, want to achieve as you adhere to the forthcoming accounting principle that is IFRS 17?

There are three possible options, depending on your level of ambition…

Compliance only – This approach is about identifying and implementing a pragmatic solution to make sure you’re compliant across all of the regions you operate in. It’s about using or extending existing capabilities with a minimum investment in terms of both time and resource.

Compliance plus – Here you can make targeted investments beyond what’s needed to achieve basic compliance where you can enjoy the tangible benefits with only a minimal increase in overall delivery risk.

Modernisation – This is where you use IFRS 17 as a catalyst to modernise and optimise your finance function. It’s about using the latest new technology such as workflow management, analytics, cloud and robotics to standardise and streamline your end-to-end finance processes and applications and focusing on delivering significant value back to the business.

Unfortunately there is no right answer for insurance companies. It’ll differ by company. Your choice of approach will obviously be driven by cost of implementation to a certain extent but also by your organisations’ ambition level, scope, size and complexity.

But, no matter which approach you take, it’ll still be important to maximise the changes you do make to deliver as much benefit as possible to your organisation.

If you’d like to discuss any of the themes we covered on the day or above then please do get in touch.

Patrick Mäder
EMEA Insurance Leader
PwC Switzerland

Sven Stark
IFRS17 Global Team Member, Transformation & Technology Driver
PwC Switzerland

Eva Dewor
EMEA Risk & Finance Transformation
PwC Germany

Intensive Course on IFRS 2018

June 2018 | Swissôtel | Zurich

Does your company report in accordance with International Financial Reporting Standards (IFRS), or are you responsible for preparing the financial statements in compliance with IFRS? Is your company considering a move to IFRS? Or do you simply want to extend or to refresh your IFRS expertise? Then PwC’s intensive course on IFRS is right for you.

Objectives

Our module based IFRS course will help you deal with IFRS professionally and apply the standards competently by giving you:

  • a solid basic understanding of the most important IFRS/IAS standards and of recent developments
  • detailed knowledge of the content of these standards and how they are applied.

You will learn how IFRS facilitates transparent external reporting. But you will also find out how to use it as a helpful instrument that supports you in assessing the financial position of your company and in recognising priorities. The course shows you how to put the theory into practice.

Dates and Topics

The course will be held in four modules, each lasting one day from 8:30 am to approx. 6 pm, in English.

Monday, 4 June 2017
Module 1: Revenue (IFRS 15), Share based payments and others

Tuesday, 5 June 2017
Module 2: Leases (IFRS 16), Taxes, Pension, Foreign exchange rates

Monday, 11 June 2017
Module 3: Consolidation & Business combinations

Tuesday, 12 June 2017
Module 4: IFRS 9 Financial instruments

Organisation

All modules are specially designed for finance specialists and users of IFRS. In class you have presentations, group work, case studies and sharing sessions to expand and apply what you have learned.

Presenters and instructors

The course is presented by experienced PwC IFRS specialists.

Register here

Fee

Module 1: CHF 1,300 including VAT
Module 2: CHF 2,500 including VAT
Module 3: CHF 3,600 including VAT
Module 4: CHF 4,500 including VAT

For further information please visit our website Intensive Course on IFRS

Contacts

David Mason
PwC ACS Leader
+41 58 792 9490
david.mason@ch.pwc.com

Gesa Mannigel
PwC Assurance Director
+41 58 792 2454
gesa.mannigel@ch.pwc.com

Integrated Thinking and Acting – An opinion paper by the University of St. Gallen and PwC Switzerland

Integrated management control in the context of modern performance management systems

Financial performance is of vital importance to the senior management of a company. Non-financial performance, however, often lurks in the shadows and is relegated to specialised departments such as the accounting department, or treated as a separate part of sustainability. The results of our survey show that such an approach is counterproductive. Senior managers interested in long-term value creation and success must take into consideration the concerns of their company’s various stakeholders, and identify financial as well as non-financial value drivers. Long-term value creation and success not only depend on the identification of key value drivers, but also, in particular, on the establishment of a performance management system that allows for controlling these drivers. The results of our survey show that there is an expectation gap in this context.

The message is clear: the more intensively senior management is involved in the modification of a performance management system, the greater its acceptance and usefulness for decision-making. Higher decision quality, in turn, is positively linked to performance. Senior management members should therefore ask themselves how they can take into account (and manage) all the key aspects, of both a financial and non-financial nature. Integrated thinking and acting create added value, counteract a silo mentality and render a separate sustainability department unnecessary: medium and long-term value creation is enabled by integrated thinking and acting. A strategic commitment is required from management so that key aspects are linked to strategy and not outsourced to operational units.

We are pleased to be able to share the main findings of the survey based on a questionnaire that was designed and distributed by PwC in association with the professors of the Accounting department at the Institute for Public Finance, Fiscal Law and Law and Economics of the University of St. Gallen. The goal of the St. Gallen researchers (led by Prof. Dr. Thomas Berndt and Tobias Müller) and the PwC team (under the direction of Peter Eberli and Stephan Hirschi) was to gain valuable insights into the organisation of performance management systems and the external stakeholder management of the participants, and to draw conclusions from the information that was gathered.

As senior managers (from CEOs to heads of risk management) from a variety of different fields and a wide range of companies took part in the survey, we consider the survey for companies in Switzerland to be meaningful. Firms from the financial sector had the largest voice, with over 40% of the participants coming from this field.

This publication is designed to provide a comprehensive overview of our findings, which are divided into the following sections:

  1. Private standard setters and regulation
  2. Performance management systems
  3. Relationship between financial and non-financial performance
  4. Importance of modern performance management systems
  5. Usefulness of standards and frameworks
  6. Success through integrated thinking and acting

 

Read the paper

Contacts

Peter Eberli
Assurance Partner
Technical Accountant Leader IFRS 17
Office: +41 58 792 28 38
Email: peter.eberli@ch.pwc.com

Stephan Hirschi
Advisory Director
Office: +41 58 792 2789
Email: stephan.hirschi@ch.pwc.com

Raphael Rutishauser
Assurance & Advisory Senior Manager
Office: +41 58 792 5215
Email: raphael.rutishauser@ch.pwc.com

US Tax Reform – Impact on US GAAP / IFRS Financial Reporting for FY 2017

Following the House passage of HR 1, the Tax Cuts and Jobs Act, the Senate Finance Committee has approved its version of the tax reform legislation on November 16. The tax reform legislation keeps pace despite the derailed budget meeting. Last night the next hurdle was taken and the bill will now be debated on Senate floor starting today, November 29 with expected Senate conclusion this Friday.

Following the Senate floor debate, the reconciliation process of the two bills will start with the expectation to have it completed shortly. Surprises in the Senate floor and reconciliation are expected and it will not be a straight forward debate but the intention for completion is significant.

With House passage complete and Senate floor discussion coming up, the US tax reform makes strong headway. If the process continues without delay, a feasible timeline may be for House and Senate to resolve differences and vote to pass a final bill which would then be signed into law by President Trump still in December 2017 or early 2018.

Why US tax reform might impact FY 2017 Financial Reporting for Swiss Groups?

Swiss groups that apply  international accounting and reporting standards with operations in the US (US (sub)-holding companies or local US operating companies or activities), will need to consider the ongoing US tax reform development in their 2017 financial statements either due to (substantive) enactment or potentially for disclosure.

What if the US Tax Reform is (substantively) enacted in 2017?

Accounting for income tax requires the effects of changes in tax laws or rates to be recognized in the period in which the law is (substantively) enacted regardless of the effective date.

For US federal tax purposes, the enactment date is most often the date the President signs the bill into law. While the release of the bill does not constitute enactment, companies should stay abreast of current legislative developments and evaluate the potential implications on financial reporting to ensure they are prepared to account for any changes in the period of enactment.

The current bill proposes significant changes that, if (substantively) enacted, will have pervasive financial reporting implications. For example, lowering the corporate tax rate and mandatory taxation of deferred foreign income will impact measurement of deferred taxes and taxes payable in the period of enactment.

Other changes, such as elimination or limitation of certain deductions and changes to international taxation, will impact both current and deferred taxes on a prospective basis. Changes in (substantively) enacted tax law may also require the reassessment of realizability of deferred tax assets. In the period of (substantive) enactment, critical analysis of the resulting changes in US tax law will be needed to determine the appropriate financial statement effects.

Disclosure requirements if US Tax Reform is not (substantively) enacted in 2017?

In periods prior to (substantive) enactment, consideration should be given to potential requirements for disclosure within management’s discussion and analysis (MD&A) where the potential impacts on the financial statements may be significant.

The emphasis should be on the potential effect of the proposed legislation on the variability of earnings, financial condition, and liquidity. As future tax law or rate changes cannot be anticipated and should not be recognized until enacted, it generally is expected that disclosures in the period prior to enactment should be limited to the MD&A.

Nevertheless, if enactment occurs after the balance sheet date but before issuance of financial statements it may be necessary to include more transparent disclosures regarding the change in tax law and an estimate of its impact on the financial statements, or include a statement that such an estimate cannot be made.

Are you prepared?

For many companies, depending on the footprint and structure, the assessment of tax accounting impacts including disclosure will be complex and may require significant effort.

What companies should do if not done so yet is to take stock of existing positions, understand the company’s facts, risks and strategies, closely follow the US tax reform and other global tax developments, manage communication and ensure discussion with management, audit committee and board are up to date.

How can PwC help?

PwC has developed various tools and has a fully dedicated tax policy group that can assist you with:

  • Model the potential impact including potential corporate tax rate changes or of mandatory repatriation, as well as E&P and tax pool studies, using our proprietary tools – the Toll Charge Analytic Tool and the E&P Tool.
  • Model the potential impact of a territorial tax system using our high-level analytic tool, Tax Restructuring Impact Modelling (TRIM).
  • Assist treasury departments with evaluating capital structures and options for deploying repatriated cash (e.g., shift from debt to equity, reduction in need to borrow for acquisitions, investments, and R&D expansion).
  • Visit our website to stay up to date on US Tax Reform developments on a daily basis – on demand daily video subscription available with tax policy analysis and insider briefings.

Contact Us

Martina Walt
Partner – International Tax Services
+41 58 792 68 84
martina.walt@ch.pwc.com

Reto Inauen
International Tax Senior Manager
+41 58 792 42 16
reto.inauen@ch.pwc.com

IFRS 17 Technology Day

Thursday 14th December 2017

Systems, data and processes are likely to make up a significant proportion of most insurance company’s capital outlay to adhere to IFRS 17. Given legacy systems estate within many insurers and the changes in reporting required, insurers are heading towards a significant cross-roads around their technology and data roadmap.

You need to be fully equipped with the best view of the options available and the key factors that will influence your decision making process.

Join us at our IFRS 17 Technology Day on Thursday 14th December 2017, where you will get to:

  • Hear from your peers about the process, data and systems challenges they have seen arising from IFRS 17
  • Discuss the key issues and opportunities presented by IFRS 17 with a panel of experts drawn from insurance companies and PwC subject matter specialists
  • Engage with leading technology vendors to learn about their IFRS 17 solutions
  • Understand what you need to do to move from IFRS 17 strategy to execution

Our IFRS Technology Day is a platform on which finance practitioners, vendors and PwC experts can learn, interact and discuss about technological solutions and hot topics.

In the afternoon eight software vendors will present their IFRS 17 solution and you have the chance to raise your questions.

This event is aimed at CFOs, Chief Actuaries, CIOs, CTOs, COOs, Finance Directors, Financial Controllers, FP&A Directors, Finance Business Partners, Program Directors & Managers, Heads of Finance Systems, Data Warehousing Managers and Heads of Innovation in the insurance sector.

Register online

Please note that seats are limited to 85 participants, which will be assigned by the “first come, first serve”-principle.
Therefore please register no later than Nov 12th 2017 to secure your place.

Date and Time
Thursday, 14th December, 2017
09.30 – 17.00 (incl. finger food lunch)

Venue
PwC Experience Center
Room “Sandbox”
Rieterstrasse 6
8002 Zurich

Programme
You can find the detailed programme here.

Your hosts are looking forward to welcoming you soon.

Patrick Mäder
Partner and Leader in Financial Services
PwC Switzerland

Eva Dewor
EMEA Risk & Finance Transformation
PwC Germany

Sven Stark
Advisory Partner
PwC Switzerland

Contact

Maren Rickert
Consulting
PwC Switzerland
+41 58792 1639
maren.rickert@ch.pwc.com
www.pwc.ch

How can you use your investment in Solvency II to implement IFRS 17?

After a number of years of development, Solvency II came into force on 1 January 2016. Many insurers completed their first annual reporting cycle just as the latest insurance accounting standard, IFRS 17, was published in May 2017. There are a number of similarities between the Solvency II and IFRS 17 models – for example the basic components of a best estimate and allowance for risk are the same, along with many of the underlying cash flows in the best estimate.

So how can you make the most of the investment you made during your Solvency II implementation for the purposes of IFRS 17?

  • Insurance companies can use some models, systems and processes developed for Solvency II for IFRS 17.
  • It is important to understand the differences between Solvency II and IFRS 17, not only so you know the scope of developments required, but also so you can manage your business in the new world.
  • Take a look at our guide to using your Solvency II investment to implement IFRS 17, which includes a detailed comparison of the differences between the  frameworks.

Read full article

IFRS News October 2017

Our latest IFRS News contains some information about
IFRS 16, IFRS 9 for Corporates, IFRS 15 Mole, Cannon Street Press, IFRIC Rejections — IAS 39 and more.

Behind the Scenes at the Interpretations Committee

Satenik Vanyan, PwC Consultant on secondment at the IASB, gives a behind the scenes tour of the Interpretations committee (IC).

IFRS News – October 2017

IFRS 16 – How To Guide

In this new series of articles we’ll explain how to implement IFRS 16; Sharing practical tips and insights to help identify issues and focus your transition effort. In this article, Richard Brown, explains how to get started.

IFRS News – October 2017

Scene 6, Take 1: Demystifying IFRS 9 for Corporates: Hedge

Sandra Thompson, Global Financial Instruments leader, explains that even though keeping your IAS 39 hedge accounting might sound easier, there’s more to consider.

IFRS News – October 2017

The IFRS 15 Mole

Akemi Miura, revenue specialist, investigates how to determine whether an entity should recognise contract costs as assets under IFRS 15 with the help of the IFRS 15 Mole

IFRS News – October 2017

Cannon Street Press

Changes in accounting policies arising from agenda decisions

IFRS News – October 2017

IFRIC Rejections – IAS 39

Hannah King of Accounting Consulting Services examines the practical implications of IC rejections related to IAS 39.

IFRS News – October 2017

Read the latest issue on IFRS News from August 2017

Read more

In brief – A look at current
financial reporting issues

  • SASB​ ​issues​ ​Exposure​ ​Drafts​ ​for​ ​public
    comment:

    PwC In brief US2017-29
    Read more
  • SEC​ ​announces​ ​compliance-related​ ​relief​ ​for those​ ​affected​ ​by​ ​hurricanes:
    PwC In brief US2017-28
    Read more
  • PCAOB​ ​requests​ ​additional​ ​feedback​ ​on
    proposals​ ​addressing​ ​other​ ​auditors:
    PwC In brief US2017-27
    Read more

 

How IFRS 17 impacts CSM – Actuaries vs Finance

As all insurance companies are probably aware by now, the introduction of IFRS 17 comes with many new requirements. One of these new requirements is a contractual service margin (CSM). The CSM is the unearned profit of an insurance contract. While technical experts are still considering what methodology should be used to calculate the CSM, CTOs and other IT experts such as heads of systems are investigating what technology should be used to calculate the CSM.

  • The contractual service margin (CSM) is a significant part of IFRS 17
  • How are insurance companies factoring this into their IT strategy?

Read full article