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Russian invasion of Ukraine and Russian sanctions

The Russian invasion of Ukraine, alongside the imposition of international sanctions, continue to have a pervasive economic impact, not only on businesses within Russia and Ukraine, but also globally where businesses engage in economic activities that might be affected by the recent developments. This necessitates careful consideration of the resulting accounting implications by entities who are affected by these developments. For 30 September 2022 year ends, there is a need to consider a number of areas including (but not limited to):
  • Russia’s restricted access to foreign currency reserves and restriction of certain Russian banks’ access to SWIFT.
  • Impairment of financial assets (such as loans, receivables and Russian bonds) as well as fair value measurement and hierarchy.
  • Impairment of non-financial assets.
  • Contingencies, onerous contracts and assessment of breaches of supply contracts to determine if an obligation exists.
  • Financing arrangements, including liquidity constraints and possible breaches of covenants.
  • Classification and availability of cash and cash equivalents which may now be restricted.
  • Foreign exchange exposure and translation of foreign currency transactions.
  • Level of influence or power over existing associates and subsidiaries within Russia and Ukraine.
  • Classification of businesses / operations as non-current assets held for sale.
  • Post balance sheet event considerations regarding measurement recognition and related disclosure for non-adjusting material events.
  • Going concern.
  • Presentation and disclosure of Russia /Ukraine specific impacts on the primary financial statements and notes thereof.
  • Modification or termination of a contract with a customer.
  • Change in settlement method of share-based payment award.
ESMA have issued a report on the Implications of Russia’s invasion of Ukraine on half-yearly financial reports.
Please also refer to In depth INT2022-05 for further guidance.

Impacts of rising inflation and interest rates

Many entities are experiencing the effect of rising inflation and interest rates which touch all aspects of an entity’s business including increasing costs such as raw materials and wages, changes in customer behaviour and credit risk, negotiations of contract terms and investment and financing decisions. In turn, the effect on the financial statements is likely to be equally widespread, and companies need to consider the accounting implications for this year-end.
Rising inflation and interest rates affect fair value measurements, expected future cash flow estimates, discount rates used to determine present value of cash flows, impairment indicators and impairment tests’. Some of the key IFRS Accounting Standards entities might consider in this regard include:
  • IFRS 9, ‘Financial instruments’, and the impact on expected credit losses.
  • IFRS 13, ‘Fair value measurement,’ and the impact on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, for example the impact on market prices for investment properties.
  • IFRS 15 ‘Revenue from contracts with customers’, and the impact on contracts that include a significant finance component at inception.
  • IAS 12 Income taxes, and the impact on forecasts of future taxable income.
  • IAS 19,’ Employee benefits’,’ and in particular the impact on measuring defined benefit pension liabilities.
  • IAS 21 The effects of changes in foreign exchange rates, and the impact on volatility of exchange rates when assessing whether using an average rate is appropriate.
  • IAS 23, ‘Borrowing costs’, and the potential increase in capitalised borrowing costs.
  • IAS 36,’ Impairment of assets’, and the impact on impairment indicators as well as cash flows and discount rates (see section on Impairment reviews) and
  • IAS 37 Provisions, contingent liabilities and assets’, and the impact of discount rates and inflation estimates on provisions including decommissioning obligations, and the recognition and measurement of onerous contracts.
Rising inflation and interest rates may cause significant estimation uncertainty for both short and long duration assets and liabilities. Entities may also need to consider new or expanded disclosures in this area. As a reminder, IAS 1 requires disclosures about sources of significant estimation certainty. This includes disclosing information about assumptions that could result in material adjustments to the carrying amount of assets and liabilities within the next financial year, and how sensitive those carrying amounts are to those assumptions. IAS 1 also requires disclosures about judgements that have a significant effect on the financial statements. Attention should also be given to all the IFRS 7 disclosures for financial instruments, in particular those relating to liquidity and sensitivity. For further details see UK In depth INT2022-12.

Climate change

The impact of climate change is a high-profile issue that investors and regulators are focusing on. See also the section below Reminders on climate change reporting requirements.
UK In depth INT2021-11 considers the impact of the environmental, social and governance (ESG) matters, specifically focused on the effect of climate change, both from a qualitative and quantitative perspective, on the IFRS financial statements including:
  • Paris aligned financial statements.
  • Financial instruments: Accounting for green loans.
  • Financial instruments: Expected credit losses.
  • Financial instruments: Disclosures.
  • Fair value measurements.
  • Insurance contracts: measurement assumptions.
  • Property, plant and equipment and intangibles: Impairment considerations.
  • Property, plant and equipment and intangibles: Useful life and residual value.
  • Other non-financial assets: considerations related to recoverability.
  • Provisions and contingent liabilities.
  • Emissions trading schemes.
  • Disclosures about judgments and assumptions; going concern assumptions.
There continues to be an unprecedented level of attention on the risks associated with climate change and the broader ESG agenda from the government, investors, and regulators. There are a number of reporting developments on the horizon, namely:
  • The International Sustainability Standards Board (ISSB) has developed a prototype climate change standard based on the TCFD approach. In March 2022, the ISSB released its first two exposure drafts for comment for details see In brief INT2022-07 and UK In depth INT2022-08. Comment period ended on 29 July 2022. The ISSB is currently reviewing feedback on the proposals in the second half of 2022 and aims to issue the new Standards by the end of the year.
  • UK Government’s Greening Finance Roadmap to Sustainable Investing proposes a number of new reporting disclosures, the Sustainability Disclosure Requirements (SDR), which are expected for consultation in 2022. These include:
‒ UK Green Taxonomy disclosures.
‒ Mandatory reporting on Net Zero transition strategies.
‒ Adopting the ISSB standards in the UK reporting framework.
These new requirements will increase transparency and consistency of reported non-financial information across organisations, and in some cases could require significant investment to establish appropriate governance, process and controls.
The FRC and the FCA, each issued a report regarding TCFD disclosures and climate in the financial statements see section below on Additional topical issues for listed and / or large companies.


Basis of preparation for UK companies reporting under IFRS
30 September year end reporters
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted International Accounting Standards (UK Adopted IAS). Future changes are subject to endorsement by the UK Endorsement Board. For financial years beginning on or after 1 January 2021, UK companies reporting under IFRS are required to apply UK-adopted IAS
Companies preparing IAS accounts for these periods should state that the financial statements are prepared in accordance with UK-adopted IAS and with the requirements of the Companies Act 2006 applicable to companies reporting under those standards. Companies should state that the transition to UK-adopted IAS constitutes a change in accounting framework and note that, as typically is the case, that there was no impact on recognition, measurement or disclosure in the period reported as a result of the changein framework.
The directors’ responsibility statement and audit report should also refer to the framework being applied as UK-adopted IAS.
Some UK companies may be listed in the UK and also be listed on EU-regulated exchanges, on non-EU exchanges or be dual-listed. These entities may be required to include other disclosures such as a statement of compliance with an additional framework such as IFRS as issued by the IASB or EU adopted IFRS. The relevant regulatory requirements should be determined and where an additional framework is referred to it will be necessary to confirm that there are no differences in the frameworks if the financial statements state they comply with both. For a comparison of the versions of IFRS, see FAQ UK.
Interim reporters
For financial years commencing on or after 1 January 2021, the basis of preparation in interim financial statements for UK-incorporated entities with listings on the LSE is required to reference ‘UK-adopted IAS 34
‘Interim Financial Reporting’. This is a change in basis from IAS 34 as adopted by the European Union, which was required by the DTR for earlier interim periods.
For illustrative wording see the 2022 Illustrative interim financial statements.

Budget updates and implications on tax accounting

In the October 2021 budget, the Government announced that the rate of the bank surcharge will be set at 3% from April 2023. This applies to banks and is a charge on their profits payable in addition to corporation tax. The reduction in the bank surcharge from 8% to 3% is included in Finance Bill 2021-22, which was substantively enacted on 2 February 2022. For financial reporting purposes under IFRS and UK GAAP, taxation balances are only adjusted for a change in tax law if the change has been substantively enacted by the balance sheet date. Therefore, deferred tax balances should be re-measured to reflect the change.
For the main changes arising from the October 2021 budget and the tax accounting implications, refer to: UK In brief 2021-66.
There is also a new requirement for large businesses to notify HMRC when they take a tax position in their returns for VAT, corporation tax, or income tax (including PAYE) that is uncertain. The new requirements apply to businesses for tax returns due to be filed on or after 1 April 2022, which means transactions and tax positions being taken now may be impacted. Refer to UK In brief 2021-64 for the auditing and accounting considerations.

Cash flow statements

The cash flow statement is a primary financial statement and provides extremely valuable information to users, particularly in respect of an entity’s liquidity and going concern. However, cash flow statements continue to be an area of focus for regulators in the UK. In the 2021 FRC Annual Review of Corporate reporting, the FRC has expressed a concern about the number of queries raised in relation to compliance with the requirements of IAS 7 ‘Statement of Cash Flows’. Errors relating to cash flow statements remain the most common reason for required references. Careful attention should be paid to cash flow statements, especially around the cash flow classification and the consistency between items in the cash flow statement and the notes.

Debt restructurings

Debt restructuring is a complex area of accounting which can require significant judgement. Relevant guidance is provided in IFRS Manual of accounting paras 44.106 – 44.119. Some of the key accounting considerations are summarised below.
  • Determining whether the new and old debt have substantially different terms – Applying IFRS 9, it is necessary for an entity to assess if the terms are substantially different where a financial liability is exchanged or its terms are modified but the liability remains between the same borrower and the same lender., the transaction should be accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.
  • Treatment of gain or loss on modification / extinguishment of debt – When a financial liability measured at amortised cost is modified without the modification resulting in derecognition, an entity should recognise a gain or loss immediately in profit or loss. The gain or loss is calculated as the difference between the original contractual cash flows and the modified cash flows discounted at the original effectiveinterest rate.
  • If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the liability’s carrying amount and are amortised over the modified liability’s remaining term.

FRC thematic reviews

FRC thematic review on Judgements and estimates
In July 2022, the FRC issued its thematic review on judgements and estimates as a follow-up to their 2017 report, due to the frequency with which issues on this topic have continued to be identified. This thematic review focussed on three relevant topics:
  • The use of sensitivity and range-of-outcome disclosures.
  • Mineral reserve estimates.
  • Judgements and estimates relating to climate change.
  • For the purpose of this thematic, the FRC also identified four areas where there is room for further improvement:
  • Companies should explicitly state whether estimates have a significant risk of a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
  • Sensitivity disclosures should be provided more frequently and in the way that is most meaningful to readers.
  • Companies should assess whether disclosure of climate-related significant judgements or assumptions and sources of estimation uncertainty are required by paragraphs 122 or 125 of IAS 1 and consider whether information about assumptions with a longer-term effect is required.
  • Where additional estimate disclosures are provided, such as those carrying lower risk, having smaller impact or crystallising over a longer timeframe, they should be clearly distinguished from those with a short-term effect.
For more PwC guidance on this thematic review see UK In brief 2022-42.
FRC thematic review on Discount rates
In May 2022, the FRC issued a thematic review on Discount rates with key observations as follows:
  • The assumptions used for discount rates and cash flows should be internally consistent.
  • An encouragement for companies to consider whether specialist third party advice may be required (in respect of material items where there is no internal expertise).
  • Stressing the importance of high quality disclosures.
For more PwC guidance on this thematic review see UK In brief 2022-24.
FRC thematic review on Alternative Performance Measures (APMs)
In October 2021, the FRC issued a Thematic review on Alternative Performance Measures (APMs). The FRC noted that generally companies provided good disclosures around their use of APMs, however there is room for improvement around the quality of disclosures.
The key recommendations related to APMs are:
  • To include entity specific explanations in the annual accounts for the inclusion of individual APMs as well as the basis for classifying amounts as adjusting items.
  • Explain terms such as ‘underlying profit' or 'core operations' and the basis for identifying adjustments as 'non-underlying' or non-core’.
  • Reconciliation of the APMs to the most appropriate items from the financial statements.
  • Disclose relevant information for any significant multi-year restructuring programmes that are classified as adjusting items.
  • Disclose the cash flow impact of material adjusting items and exceptional items.
  • Explain tax matters relating to APMs.
  • The prominence of the APMs should not be greater than GAAP measures of performance contained in the financial statements.
  • Companies should be fair and balanced when disclosing APMs so that they do not appear to have more authority than GAAP amounts from the financial statements.
FRC Thematic review for IAS 37, ‘Provisions, contingent liabilities and contingent assets’
In October 2021, the FRC issued a Thematic review of IAS 37, ‘Provisions, contingent liabilities and contingent assets’. The FRC noted that companies need to give sufficient focus to disclosures relating to provisions and contingent liabilities in the financial statements given their importance to users, especially investors. This was most especially around:
  • Descriptions of significant accounting policies need to be entity specific and concise.
  • Expected maximum exposure to contingent liabilities should include quantitative information and / or justification that is not practical to provide an estimate or negative confirmation as all can be helpful to report an exposure.
  • Potential financial effect of additional or reduced costs.
  • Material exposures, timing and the basis for determining the best estimate should be clear.
  • Comments over significant movements in year-end balances and movements recognised during the period.
  • Critical estimation uncertainty for next financial year – quantitative and qualitative information including key assumptions and sensitivities should be disclosed.
  • Management’s conclusions with explanations and rationale over significant judgements and the effect on the financial statements of taking an alternative view.

Impairment reviews

Impairment is an ongoing area of concern for many entities in the current economic environment. Regulators remain focused on this area and continue to push for increased transparency in disclosures. Groups holding significant amounts of goodwill and intangibles or those that are affected to a greater extent by the negative impacts of Covid-19, climate change or the current economic impact of the Russian invasion of Ukraine, are at greater risk of a regulatory challenge to their impairment assessments and in particular therelated disclosures.
There is a growing demand from the users of the financial statements for clear disclosures on how climate related risks are being incorporated into the impairment models. For the impact of climate change on the cash flow projections and IFRS impairment disclosures see UK In brief 2021-56.
For COVID-19 specific considerations on impairment refer to In depth INT 2020-02which remains relevant for 30 September 2022 year-ends. Many of these considerations might equally apply to those entities with significant exposure to climate risks or those impacted by the Russian invasion of Ukraine and Russian sanctions see In depth INT2022-05 for further guidance.
The key points in impairment testing are:
  • For the value-in-use (VIU) model – key assumptions should stand up against external market data. Cash flow growth assumptions should be comparable with up-to-date economic forecasts. The fair value-less costs of disposal (FVLCD) model, which is a post-tax model, must use market participant assumptions, rather than those of management.
  • In times of greater uncertainty, it is likely to be easier to incorporate the impact of the economic environment uncertainties in impairment testing by using multiple cash-flow scenarios and applying relative probability weightings to derive a weighted average set of cash flows rather than using a single central forecast and attempting to risk adjust the discount rate to reflect the higher degree of uncertainty in the environment.
  • Specific challenges might relate to incorporating cash outflows for replacing the leased assets on expiry of the leases into the impairment models, for further guidance in this area see FAQ 24.84.2.
  • IAS 36 requires that the VIU model uses pre-tax cash flows discounted using a pre-tax discount rate. In practice, post-tax discount rates and cash flows are used which theoretically can give the same answer but the need to consider deferred taxes makes this complicated. For guidance on how one might deal with deferred tax in a post-tax VIU model see EX 24.87.1.
  • Rising costs are becoming a noticeable issue in many countries that have not suffered significant inflation for many years so it is worth noting that a VIU calculation should incorporate specific price changes as well the effect of general inflation either by:
‒ Estimating future cash flows in real terms (i.e. excluding the effect of general inflation but including the effect of specific price changes) and discounting them at a rate that excludes the effect of general inflation or
‒ Estimating future cash flows in nominal terms (i.e .including the effect of general inflation) and discounting them at a rate that includes the effects of general inflation.
Where inflation assumptions could have a material impact on the financial statements, additional disclosures may be required to explain how inflation has been incorporated into the VIU.
  • If impairment of goodwill is identified at the group level this will most likely trigger an impairment review of the parent entity’s investment in the relevant subsidiaries in the parent’s separate financial statements. VIU of an investment in a subsidiary would be determined by the present value of expected dividend receipts. The present value of the estimated post tax cash flows from the subsidiary’s underlying assets might be used as a proxy for this if the subsidiary has no debt. Otherwise, the present value of expected cash flows should be reduced by the fair value of outstanding debt (both external and inter-company), in order to determine the net amount available for distribution see FAQ 24.165.2.
The required disclosures in IAS 36 are extensive. IAS 36 requires disclosure of the key assumptions (those that the recoverable amount is most sensitive to) and related sensitivity analysis. Note also IAS 1 para 125 requires disclosure of critical accounting judgements and of key sources of estimation uncertainty.
Where a reasonable possible change in key assumptions would reduce the headroom (excess of the recoverable amount over the carrying amount) of a CGU to nil, it is required to disclose this headroom as well as the specific changes in assumptions that would erode headroom to nil (+ / – x% in sales growth or discount rates). However, in cases where no reasonably possible change would either erode headroom for CGUs when testing goodwill or give rise to a material adjustment to any carrying value in the next year, companies should take care that additional sensitivity disclosures do not give the wrong impression or become confusing to users.
Given the increased uncertainty and volatility in many markets at present, the range of reasonably possible changes has widened which means that more extensive impairment disclosures will typically be required.
Key assumptions and wider ranging assumptions covering multiple Cash Generating Units (‘CGUs’) should be clearly disclosed. Where material assumptions specific to each CGU should be identified. Changes to assumptions used, such as the discount rate, which has changed significantly from the previous year should be explained. Furthermore, where an impairment arises, entities would need to clearly disclose the cause of the impairment and whether this is based on external data or changes in the company’s own estimates. An entity with a material impairment loss or reversal additionally needs to disclose the recoverable amount of the asset(s) or CGU(s) affected (IAS 36 para 130 [e]).
Regulators have observed that, whilst the long-term growth rate used to extrapolate cash flow projections (to estimate a terminal value) and the pre-tax discount rate are important; they are not ‘key assumptions’ on which the cash flow projections for the period covered by the most recent budgets or forecasts are based.Therefore, attention should also be paid to the discrete growth rate assumptions applied to the cash flows projected to occur before the terminal period. Accounting policy disclosures should always be consistent with the basis used in the according impairment test. The regulators have pointed out that they will continue to challenge companies where the recoverable amount is measured using VIU, but the cash flow forecasts appear to include the benefits of developing new business or to rely on future investment capacity.
An additional issue to consider is whether previous impairments should be reversed. For all assets that have been impaired, other than goodwill, paragraph 110 of IAS 36 requires entities to assess, at the end of each reporting period, whether there is any indication that an impairment loss might no longer exist or might have decreased. Determining whether there is an identifiable impairment reversal indicator might require the use of judgement. If there is any such indication, the entity has to recalculate the recoverable amount of the asset. Paragraph 111 of IAS 36 sets out example indicators that should be considered when assessing whether an impairment loss recognised in prior periods might no longer exist or might have decreased. The indicators are arranged, as in paragraph 12 of IAS 36, into two categories: external and internal sources of information. These indicators of a potential decrease in an impairment loss mainly mirror the indications of a potential impairment loss in paragraph 12 of IAS 36. The passage of time alone (also known as the ‘unwinding’ of the discount) would not be a sufficient trigger for reversal or impairment. Further details are in FAQ 24.153.2 and FAQ 24.154.2.

Supplier finance arrangements

Supplier finance arrangements raise the question of whether the trade payables that are subject to supplier financing should be derecognised and replaced by a bank borrowing and whether any investment vehicles should be consolidated by the entity.
In March 2021, Greensill Capital filed for administration in the UK. Even if an entity is using another bank for their working capital management, these events raise questions about the governance of, accounting for and disclosure of such activities. Accounting correctly for supplier financing arrangements has attracted significant attention from regulators since the failure of Carillion, with focus, amongst other areas, on a company’s source of finances. This attention focuses on whether a company has made material use of supplier finance, if this information is transparent from the annual report, whether related balances are appropriately presented as bank debt or trade creditors and whether subsequent cash flows are appropriately presented in the statement of cash flows.
In its 2019 open letter to audit committee chairs and finance directors, the FRC observed that it ‘continues to have particular concerns about the level of disclosure around supplier financing arrangements’ despite warning companies in June 2018 that this was an area of specific focus for them that year. In September 2019, the FRC’s Financial Reporting Lab published a report on disclosures of sources and uses of cash. This includes an appendix on the subject of supplier finance which provides, among other things, an illustrative example of good disclosure. The FRC note that IFRS 7 ‘Financial Instruments: Disclosures’ requires companies’ accounts to disclose information that allows readers to understand the nature of and risks around financial instruments, including liquidity risk and that IAS 1 requires companies to consider whether balances are financing or working capital in nature and present them accordingly. It is clear that they expect these requirements to lead companies to disclose the nature of any material supplier financing arrangements, the implications for the company’s liquidity and the relevant amounts, along with any significant accounting judgements.
In June 2021, the IASB decided to add a narrow-scope standard-setting project to its work plan on supplier finance arrangements. The exposure draft was published in November 2021 and proposes amendments to IAS 7 and IFRS 7 to add disclosure requirements, and ‘signposts’ within existing disclosure requirements, that would ask entities to provide qualitative and quantitative information about supplier finance arrangements. That information should help investors determine the effects of those arrangements on an entity’s liabilities and cash flows. Although the IASB document is only an exposure draft, it might be helpful to entities in determining what type of information might be useful to voluntarily provide at this stage, in addition to what is currently required by IAS 7, IFRS 7 and IAS 1.
For further details, refer to the exposure draft: Supplier finance arrangements and In depth INT2021-04: Financial reporting considerations for supplier finance arrangements.

Tax legislation

On 20 December 2021, the OECD published a draft legislative framework that sets out a two-pillar solution to address the tax challenges arising from the digitalisation of the economy. The rules define the scope and set out the mechanism for the so-called Global Anti-Base Erosion (GloBE) rules under Pillar Two, which introduces a global minimum corporate tax rate set at 15%. The minimum tax will apply to MNEs with revenue above EUR 750 million and is estimated to generate around USD 150 billion in additional global tax revenues annually. On 8 October 2021, expected changes to tax legislation agreement was reached between 137 countries for a two-pillar approach to international tax reform (‘the OECD agreement‘). Amongst other things, Pillar One proposes a reallocation of a proportion of tax to market jurisdictions, while Pillar Two seeks to apply a global minimum effective tax rate of 15%. The OECD Agreement is likely to see changes in corporate tax rates in a number of countries in the next few years. The impact of changes in corporate tax rates on the measurement of tax assets and liabilities depends on the nature and timing of the legislative changes in each country.
On 20 July 2022, HM Treasury released draft legislation to implement the 'Pillar Two' rules with effect for years beginning on or after 31 December 2023. Hence, the publication of the draft UK legislation with regard to the implementation of Pillar Two in the UK is an announcement of changes in tax laws for UK purposes. If the rules are announced or enacted before the financial statements are issued, entities will be required to disclose the significant effect of the change on current and deferred tax assets and liabilities. For further details on the UK legislation see UK In brief 2022-32.
At the September 2022 reporting period, there is no expected significant impact on current or deferred taxes and IAS 12 does not require any specific disclosure in regard to the above tax issue. However, entities that might be significantly affected by the OECD agreement might consider the requirements in IAS 1, where necessary to provide additional disclosures to enable users of financial statements to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance. If an entity concludes that disclosure should be provided related to the above tax issue, we would expect that disclosure to be qualitative at this point in time.
In addition, there have been some recent US tax reforms that were enacted in August 2022 that might impact IFRS reporters with operations in the US. For further details, refer to US In-Depth 2022-04.

Turkey hyper-inflation

Since the beginning of 2021, inflation in Turkey has increased significantly. Based on the current global economic environment and following the deteriorating economic condition and currency controls, Turkey is now considered to be hyper-inflationary for the purpose of IAS 29 for reporting periods ending on or after 30 June 2022.
Multinational companies that have subsidiaries with the Turkish Lira as their functional currency should consider paragraph 43 of IAS 21. This requires the financial statements of a subsidiary entity that has the functional currency of a hyper-inflationary economy to be restated, in accordance with IAS 29, before being included in the consolidated financial statements. Comparative amounts of these subsidiaries that were presented previously in the parent’s stable currency are not restated see UK In brief 2022-29.
IAS 29 requires financial statements of an entity whose functional currency is the currency of a hyper-inflationary country to be restated into the measuring unit at the end of the reporting period. Therefore, transactions in 2022 and non-monetary balances at the end of the period would be restated to reflect a price index that is current at the balance sheet date. Comparatives of entities within Turkey are typically restated to reflect a price index that is current at the balance sheet date. This is because IAS 29 is applied as if the economy had always been hyper-inflationary. Entities are not, however, required to present an additional balance sheet as at the beginning of the preceding period.

Transparency on implementation of IFRS 17 Insurance contracts

ESMA has issued some guidance on disclosures around IFRS 17.
In respect of 2022 interims, ESMA expects that, for most issuers, reasonably estimable information relevant to assessing the possible impact of the application of IFRS 17 will be available at the time of preparation of their 2022 half-year financial statements and with increasing level of detail as the end of the 2022 annual reporting period approaches.
In terms of 2022 financial statements, ESMA expects that the 2022 annual financial statements provide the quantitative impact of the application of IFRS 17 and explain the changes compared to the amounts reported under IFRS 4, disaggregated as appropriate. For further guidance on disclosures prior to the 2023 year - end financial statements refer to In depth UK INT2022-03.

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