Inactive markets and non-orderly transactions
IFRS 13 provides specific guidance on measuring fair value
when the volume or level of activity for a quoted asset or liability
has significantly decreased. If the volume or level of activity on a
market has declined significantly, a quoted price may need to be
adjusted or even substituted by a valuation technique. IFRS 13
sets out a number of factors to consider in determining whether
there has been such a decrease, while noting that a decrease in
the volume or level of activity on its own may not indicate that a
transaction price or quoted price does not represent fair value or
that a transaction in that market is not orderly.
Disclosure requirements for fair values
The new standard includes detailed disclosure
requirements for items measured at fair value or disclosed
at fair value in the notes to the financial statements. Some of
these disclosures are in addition to those currently required by
IFRS and may result in additional information being collected.
The focus of the disclosures is on fair values which include
significant unobservable inputs and hence have more inherent
uncertainties. These requirements are intended to help users of
financial statements assess the valuation techniques and inputs
used in determining the fair value measurements.
In many cases EMD’s should not experience significant
measurement changes as a result of IFRS 13 as most of the
requirements of the new standard are largely consistent with
valuation practices that already operate today. However IFRS 13
does, at a minimum, introduce significant increased disclosure.
EMD’s will need to examine the increased disclosure requirements
and assess the need for additional processes to gather the
For more information contact:
Sean Du Plessis
IFRS REQUIRES ADDITIONAL DISCLOSURE.
Where do you go from here?
Under IFRS, financial statements of exempt market
dealers will require additional disclosure. It takes the right
knowledge, experience and thought leadership to ensure
your financial statements are well drafted and in compliance
with IFRS to take your business where you want to go.
Contact Sean Du Plessis, CA, IFRS Leader at 403.536.2161