• Disclosure of Significant Accounting Estimates

FMA Issues Guidance on Disclosures of Significant Accounting Estimates

Following its recent review of a range of entity financial statements, the Financial Markets Authority ("FMA") has released an Information Sheet Disclosure of Significant Accounting Estimates. The Information Sheet highlights the disclosures that may be critical to the decision making of existing or potential investors.

In its review of financial statements, the FMA identified a lack of disclosure around significant accounting estimates and assumptions, particularly those containing high levels of uncertainty. The FMA identified the following as common areas requiring more transparent disclosure:

  • Potential liabilities subject to the outcome of litigation
  • Recognition and measurement of revenues of long term contracts
  • Recognition and measurement of any expected contract losses
  • Unobservable inputs used in assessments of the fair value or recoverable amount of an asset or liability
  • Recognition and measurement of a group of insurance contracts
  • The cost of a business combination when consideration is contingent on future performance or events.

The Information Sheet (which will be a useful resource to financial statement preparers going forward) can be accessed on the FMA’s website here

For more on the above, please contact your local BDO representative.