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Investment funds PDF

91 Pages·2016·1.3 MB·English
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Illustrative disclosures for investment funds Guide to annual fnancial statements IFRS December 2016 kpmg.com/ifrs Contents About this guide 2 References and abbreviations 4 Independent auditors’ report 5 Financial statements 8 Financial highlights 9 Statement of fnancial position 10 Statement of comprehensive income 11 Statement of changes in net assets attributable to holders of redeemable shares 12 Statement of cash fows 13 Notes to the fnancial statements 14 Appendices I Example disclosures for an investment fund that is an investment entity and measures its subsidiaries at fair value through proft or loss 63 II Example disclosures for segment reporting – Multiple-segment fund 72 III Example disclosures of an open-ended fund with puttable instruments classifed as equity 76 IV Example disclosure of schedule of investments – Unaudited 81 V Example disclosures of exposure to market risk – Value-at-risk analysis 83 Contacts 85 Keeping in touch 86 Acknowledgements 8 Notes Basis of preparation 14 1. Reporting entity 14 2. Basis of accounting 14 3. Functional and presentation currency 14 4. Use of judgements and estimates 14 Financial risk review and fair value 15 5. Financial risk review 15 6. Fair values of fnancial instruments 29 Performance for the year 38 7. Interest income 38 8. Net gain from fnancial instruments at fair value through proft or loss 39 Income taxes 40 9. Withholding tax expense 40 Assets, liabilities and equity 41 10. Classifcation of fnancial assets and fnancial liabilities 41 11. Financial assets and fnancial liabilities at fair value through proft or loss 42 12. Balances due from/to brokers 43 13. Equity 44 14. Net assets attributable to holders of redeemable shares 45 Other information 47 15. Transfers of fnancial assets 47 16. Involvement with unconsolidated structured entities 48 17. Related parties and other key contracts 49 18. Subsequent events 49 19. Financial risk management 50 Accounting policies 55 20. Basis of measurement 55 21. Signifcant accounting policies 56 22. Standards issued but not yet effective 61 2 | Guide to annual n� ancial statements – Illustrative disclosures of r investment uf nds INTRODUCTION About this guide hT is guide has been produced by the KPMG International tS andards Group p( art o f KPMG IFRG Limited ) and the viesw epx ressed herein are those o f the KPMG International tS andards Group. It is intended to help preparers in the preparation and presentation o f n� ancial statements of r investment uf nds or similar n� ancial institutions in accordance iw th IFR.S hT is guide illustrates one possible of rmat of r n� ancial statements based on a c� titious tae- x ex mpt opene- nded singleuf- nd investment company t( he Fund,) hw ich does not of rm part o f a consolidated entity or hold investments in any subsidiaries, associates or oj int venture entities. AppendiI�x illustrates eax mple disclosures of r an investment uf nd that is an investment entity and measures its subsidiaries at af ir value through prot� or loss F( PTV L.) In this guide, the Funds’ redeemable shares are classie� d as n� ancial liabilities and the management shares meet the den� ition o f euq ity ; the Fund is outside the scope o f IFR S 8 Operating Segments of( r eax mple disclosures of r a multiples- egment uf nd that af lls in the scope o f IFR,8 �S see� AppendiI�x I.) hT is hypothetical Fund has been applying IFR S of r some time – i.e. it is not a r� st- time adopter of IFR.S For more inof rmation on adopting IFR S of r the r� st time, see hC apter 6.1 in the 1t3 h dE ition 20161/ 7 o f our publication Insights into IFRS. Standards covered hT is guide ree� cts standards and interpretations that have been issued by the IA BS as at 1 5 eD cember 2016 and that are reuq ired to be applied by an entity iw th an annual reporting period beginning on 1 aJ nuary 2016 c‘( urrently eef f ctive reuq irements.)’ hT e early adoption o f standards that are eef f ctive of r annual reporting periods beginning atf er 1 aJ nuary 2016 of‘( rthcoming reuq irements )’ is not illustrated. hT is guide of cuses on investment uf nds- pecic� issues, and thereof re does not illustrate disclosures o f a more general nature or disclosures relevant to activities that are not usually carried out by an investment uf nd – e.g. impairment, hedge accounting, employee benet� s etc. For guidance on these areas, see our publication Illustrative disclosures – Guide to annual fnancial statements cO( tober 2016.) IFR S and its interpretation change over time. Accordingly, this guide should not be used as a substitute of r reef rring to the standards and other relevant interpretative guidance. Preparers should also consider applicable legal and regulatory reuq irements. hT is guide does not consider the reuq irements o f any particular uj risdiction. What’s new in 2016? uO r IFRS: New standards – Are you ready? provides a summary o f nelw y eef f ctive and of rthcoming standards. hT e Fund has no transactions that ow uld be aef f cted by these ne w amendments ; thereof re, these reuq irements are not illustrated in this guide. hT is guide includes an updated illustrative auditors ’ report of r a nonl- isted investment uf nd that has no other inof rmation and has adopted the of lloiw ng revised and ne w International tS andards on Auditing I( AS s,) hw ich are eef f ctive of r audits o f n� ancial statements of r periods ending on or atf er 1 5 eD cember 2016: – IAS 07 0 R( evised ) Forming an Opinion and Reporting on Financial Statements; – IAS 07 1 Communicating Key Audit Matters in the Independent Auditor’s Report ; and – IAS 27 0 R( evised ) The Auditor’s Responsibilities Relating to Other Information. © 2016 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. Appendices Notes Primary statements Auditors’ report INTRODUCTION About this guide � | 3 hT e standards impose additional reuq irements of r reporting on an audit o f n� ancial statements o f a listed entity. For an illustration presenting the illustrative auditors ’ report of r a listed entity, see our publication Illustrative disclosures – Guide to annual fnancial statements cO( tober 2016.) Need for judgement hT is guide is part o f our suite o f publications – Guides to fnancial statements – and specic� ally of cuses on compliance iw th IFR.S Although it is not ehx austive, this guide illustrates the disclosures required by IFR S of r one hypothetical investment uf nd ; largely iw thout regard to materiality. hT e preparation and presentation o f n� ancial statements reuq ire the preparer to eex rcise uj dgement, in terms o f the choice o f accounting policies, the ordering o f notes to the n� ancial statements, ho w the disclosures should be tailored to ree� ct the entitys’ specic� circumstances, and the relevance o f disclosures considering the needs o f the users. pS ecic� guidance on materiality and its application to the n� ancial statements is Materiality included in paragraphs 213–9 o f IA S 1 Presentation of Financial Statements. Materiality is relevant to the presentation and disclosure o f the items in the n� ancial statements. Preparers need to consider hw ether the n� ancial statements include all o f the inof rmation that is relevant to understanding an entitys’ n� ancial position on the reporting date and its n� ancial perof rmance during the reporting period. Preparers also need to taek care not to reduce the understandability o f an entitys’ n� ancial statements by obscuring material inof rmation iw th immaterial inof rmation or by aggregating material inof rmation that is dief f rent by nature or uf nction. Individual disclosures that are not material to the n� ancial statements do not have to be presented – even i f they are a minimum reuq irement o f a standard. Preparers need to consider the appropriate level o f disclosure based on materiality of r the reporting period. Investors continue to as k of r a stepu- p in the uq ality o f business reporting Step-up in the quality so entities should be careuf l not to become buried in compliance to the of fnancial statements ecx lusion o f relevance. In preparing its n� ancial statements, an entity needs to ek ep in mind its iw der responsibilities of r reporting this inof rmation in the most meaninguf l aw y. For more inof rmation, see our Better business reportingew � bsite. © 2016 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. Appendices Notes Primary statements Auditors’ report INTRODUCTION 4 | Guide to annual n� ancial statements – Illustrative disclosures of r investment uf nds References and abbreviations Reef rences are included in the letf h- and margin o f this guide. Generally, the reef rences relate only to presentation and disclosure reuq irements. IAS 1.82(a) Paragraph 28 a( ) o f IA S 1. Paragraph 2..3 60.10 o f the 1t3 h dE ition 20161/ 7 o f our Insights 2.3.60.10 publication Insights into IFRS. Maoj r changes related to reuq irements that are ne w in2� 016. hT e of lloiw ng abbreviations are used otf en in this guide. IBE ADT aE rnings beof re interest, taex s, depreciation and amortisation PE S aE rnings per share oN tes oN tes to the n� ancial statements ICO tO her comprehensive income CT O vO ert- hec- ounter © 2016 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. Appendices Notes Primary statements Auditors’ report INTRODUCTION Independent auditors ’ report | 5 [Name of the investment fund] Independent auditors’ report © 2016 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. Appendices Notes Primary statements AUDITORS’ REPORT Introduction 6 | Guide to annual n� ancial statements – Illustrative disclosures of r investment uf nds a Independent auditors’ report [Addressee] Opinion eW have audited the n� ancial statements o f [ name of the investment fund ] t( he Fund,) hw ich comprise the statement o f n� ancial position as at 13 eD � cember 2016, the statements o f comprehensive income, changes in net assets attributable to holders o f redeemable shares and cash o� sw of r the year then ended, and notes to the n� ancial statements, including signic� ant accounting policies and other epx lanatoryi� nof rmation. In our opinion, the accompanying n� ancial statements present af irly, in all material respects, the n� ancial position o f the Fund as at 13 eD cember2� 016, and its n� ancial perof rmance and its cash o� sw of r the year then ended in accordance iw th International Financial Reporting tS andards I( FR.)S Basis for Opinion eW conducted our audit in accordance iw th International tS andards on Auditing I( AS s.) uO r responsibilities under those standards are uf rther described in the Auditors’ Responsibilities for the Audit of the Financial Statements section o f our report. eW are independent o f the Fund in accordance iw th the ethical reuq irements that are relevant to our audit o f the n� ancial statements in [ jurisdiction,] and ew have uf ll� led our ethical responsibilities in accordance iw th these reuq irements. eW believe that the audit evidence ew have obtained is suc� f ient and appropriate to provide a basis of r our opinion. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible of r the preparation and af ir presentation o f the n� ancial statements in accordance iw th IFR,S and of r such internal control as management determines is necessary to enable the preparation o f n� ancial statements that are rf ee rf om material misstatement, hw ether due to rf aud or error. In preparing the n� ancial statements, management is responsible of r assessing the Funds’ ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis o f accounting unless management either intends to liuq idate the Fund or to cease operations, or has no realistic alternative but to do so. hT ose charged iw th governance are responsible of r overseeing the Funds’ n� ancial reportingp� rocess. a. hT is eax mple report of r a nonl- isted investment uf nd that has no other inof rmation has been prepared based on IAS s, eef f ctive of r audits o f n� ancial statements of r periods ending on or atf er 1eD�5 cember2� 016: – IAS 07 0 R( evised ) Forming an Opinion and Reporting on Financial Statements; – IAS 07 1 Communicating Key Audit Matters in the Independent Auditor’s Report ; and – IAS 27 0 R( evised ) The Auditor’s Responsibilities Relating to Other Information and Related Conforming Amendments. hT e of rmat o f the eax mple report does not ree� ct the legal or regulatory reuq irements o f any particular uj risdiction. © 2016 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. Appendices Notes Primary statements AUDITORS’ REPORT Introduction Independent auditors ’ report | 7 Independent auditors’ report (continued) Auditors’ Responsibilities for the Audit of the Financial Statements uO r obej ctives are to obtain reasonable assurance about hw ether the n� ancial statements as a hw ole are rf ee rf om material misstatement, hw ether due to rf aud or error, and to issue an auditors ’ report that includes our opinion. R‘ easonable assurance ’ is a high level o f assurance, but is not a guarantee that an audit conducted in accordance iw th IAS s iw ll alaw ys detect a material misstatement hw en it eix sts. Misstatements can arise rf om rf aud or error and are considered material i,f individually or in aggregate, they could reasonably be epx ected to inu� ence the economic decisions o f users taek n on the basis o f these n� ancial statements. As part o f an audit in accordance iw th IAS s, ew eex rcise proef ssional uj dgement and maintain proef ssional scepticism throughout the audit. eW also: – Identiyf and assess the rissk o f material misstatement o f the n� ancial statements, hw ether due to rf aud or error, design and perof rm audit procedures responsive to those rissk , and obtain audit evidence that is suc� f ient and appropriate to provide a basis of r our opinion. hT e ris k o f not detecting a material misstatement resulting rf om rf aud is higher than of r one resulting rf om error, as rf aud may involve collusion, of rgery, intentional omissions, misrepresentations or the override o f internal control. – bO tain an understanding o f internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not of r the purpose o f epx ressing an opinion on the eef f ctiveness o f the Funds’ internal control. – vE aluate the appropriateness o f accounting policies used and the reasonableness o f accounting estimates and related disclosures made by management. – oC nclude on the appropriateness o f managements’ use o f the going concern basis o f accounting and, based on the audit evidence obtained, hw ether a material uncertainty eix sts related to events or conditions that may cast signic� ant doubt on the Funds’ ability to continue as a going concern. I f ew conclude that a material uncertainty eix sts, then ew are reuq ired to dra w attention in our auditors ’ report to the related disclosures in the n� ancial statements or, i f such disclosures are inadeuq ate, to modiyf our opinion. uO r conclusions are based on the audit evidence obtained up to the date o f our auditors ’ report. oH ew ver, uf ture events or conditions may cause the Fund to cease to continue as a going concern. – vE aluate the overall presentation, structure and content o f the n� ancial statements, including the disclosures, and hw ether the n� ancial statements represent the underlying transactions and events in a manner that achieves af ir presentation. eW communicate iw th those charged iw th governance regarding, among other matters, the planned scope and timing o f the audit and signic� ant audit n� dings, including any signic� ant dec� iencies in internal control that ew identiyf during our audit. Report on Other Legal and Regulatory Requirements [ Form and content of this section of the report will vary depending on the nature of our other reporting responsibilities prescribed by local law, regulation or national auditing standards.] KPMG [ Auditors’ address] [ Date] © 2016 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. Appendices Notes Primary statements AUDITORS’ REPORT Introduction 8 | Guide to annual n� ancial statements – Illustrative disclosures of r investment uf nds [Name of the investment fund] Financial statements 31 December 2016 © 2016 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. Appendices Notes PRIMARY STATEMENTS Auditors’ report Introduction

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