The Board of the International Organization of Securities Commissions (IOSCO) has published a Consultation on Goodwill, seeking inputs from market participants to identify good practices for addressing the risk of unrecognized impairment on accumulated goodwill balances and related disclosures arising from business combinations.
Our Consultation builds on the work already done by IOSCO’s Committee on Issuer Accounting, Audit and Disclosure (Committee 1), in recognition that the risk of unrecognised impairment on accumulated goodwill and related disclosures is an area of concern, particularly in times of increasing economic uncertainty.
The feedback received will be used to formulate a set of recommendations for regulators, auditors, issuers and those charged with governance (TCWG). They will also underpin IOSCO’s engagement with standard setters, including the International Accounting Standards Board (IASB), on improvements to accounting, reporting and disclosure requirements related to goodwill.
IOSCO remains committed to supporting consistent application and enforcement of high-quality reporting standards and disclosure regulations, which are of critical importance to the proper functioning of the capital markets.
In that context, IOSCO reminds issuers of the importance that their accounting and disclosures result in a fair and transparent presentation of the financial position, performance and cash flows of the company. This means the goodwill should not be stated at an amount in excess of its recoverable amount, that impairment losses should be recognised in a timely manner, and that disclosures of significant judgements and key assumptions related to the recoverability be transparent.
How to respond
We ask our stakeholders to respond to this consultation in order to provide additional information that will better inform the standard-setting processes and address issues that may arise in practice. Responses to the consultation questions set out in Chapter 4 should be sent to k.nathanail@iosco.org with a subject line: “Public Comment – Consultation on Goodwill” no later than Wednesday 20 September 2023.
Source: IOSCO
