Improving acquisition reporting: IASB’s latest move

Posted on March 22, 2024 by Editor

In a bid to enhance transparency in acquisition reporting, the International Accounting Standards Board (IASB) has proposed new amendments. The Board published an Exposure Draft last week, aiming to provide investors with better insights into companies’ acquisition strategies and post-acquisition performance.

Amidst a global landscape where acquisitions play a pivotal role, with deals amounting to US$3.2 trillion in 2023 alone, investors require robust information to comprehend the rationale behind significant acquisitions. Digital, easy-to-analyse XBRL data is crucial to help investors track the performance of acquisitions over time, understanding their potential and results.

The proposed amendments to IFRS 3 Business Combinations would mandate companies to disclose the objectives and performance targets of their major acquisitions, along with information on expected synergies. However, sensitive commercial data that could compromise acquisition objectives would be exempt from disclosure.

These proposals address concerns raised by stakeholders regarding the lack of timely and comprehensive information about acquisitions and goodwill accounting. Andreas Barckow, Chair of the IASB, emphasised the importance of transparency in acquisitions, highlighting the board’s efforts to balance enhanced disclosure with the associated risks and costs for companies.

The IASB invites feedback on these proposals until 15 July.

To delve deeper into the Exposure Draft and its implications, click here.

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