Investment funds

91 Pages·2016·1.3 MB·English

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.
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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]
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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