Q2 2026 new IFRS® Accounting Standards and amendments: Are you ready?

Effective January 1, 2026

Effective January 1, 2027

Effective January 1, 2029

Amendments to existing standards

New IFRS Accounting Standards requirements

Comparison to US GAAP

Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9, Financial Instruments and IFRS 7, Financial Instruments: Disclosures) clarify financial assets and financial liabilities are derecognized at settlement date except for regular way purchases or sales of financial assets, and financial liabilities meeting conditions for a new exception. The new exception permits companies to elect to derecognize certain financial liabilities settled via electronic payment systems earlier than the settlement date.

The amendments also provide guidelines to assess the contractual cash flow characteristics of financial assets, which apply to all contingent cash flows, including those arising from environmental, social, and governance (ESG)-linked features.

Further, the amendments introduce new disclosure requirements and update others.

Under Topic 405, financial liabilities are considered extinguished once the debtor has settled the debt or is legally released from being the primary obligor. There are no specific considerations to assess the timing of debt extinguishment when payments are made via electronic payment systems. US GAAP also does not address the timing of the recognition of financial asset settlements.

Further, the classification of financial assets under US GAAP is primarily based on management’s intent for holding the assets. Any contingent cash flows, including those arising from ESG-linked features, are evaluated for potential bifurcation as embedded derivatives.

Nature-dependent Electricity Contracts (Amendments to IFRS 9 and IFRS 7) addresses the application of ‘own use’ and hedge accounting requirements for agreements that meet specified criteria. If a nature-dependent electricity contract (also known as a Power Purchase Agreement or PPA) qualifies for the ‘own use’ exemption, it is accounted for as an executory contract rather than as a derivative. In contrast, if a PPA does not qualify for the ‘own use’ exemption, it is accounted for as a derivative to which hedge accounting considerations may apply. The amendments permit a variable nominal amount of forecast electricity transaction to be designated as the hedged item. The amendments apply to contracts that reference electricity generated from nature-dependent sources and for which cash flows vary based on the amount of electricity generated by a reference production facility. New disclosures have also been introduced.

• Article: Settlement by electronic payments
• Article: Classification of financial assets
• Article: Own use scope exemption under IFRS® Accounting Standards
• Article: Nature-dependent electricity contracts

Amendments to existing standards

New IFRS Accounting Standards requirements

Comparison to US GAAP

Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9, Financial Instruments and IFRS 7, Financial Instruments: Disclosures) clarify financial assets and financial liabilities are derecognized at settlement date except for regular way purchases or sales of financial assets, and financial liabilities meeting conditions for a new exception. The new exception permits companies to elect to derecognize certain financial liabilities settled via electronic payment systems earlier than the settlement date.

The amendments also provide guidelines to assess the contractual cash flow characteristics of financial assets, which apply to all contingent cash flows, including those arising from environmental, social, and governance (ESG)-linked features.

Further, the amendments introduce new disclosure requirements and update others.

Under Topic 405, financial liabilities are considered extinguished once the debtor has settled the debt or is legally released from being the primary obligor. There are no specific considerations to assess the timing of debt extinguishment when payments are made via electronic payment systems. US GAAP also does not address the timing of the recognition of financial asset settlements.

Further, the classification of financial assets under US GAAP is primarily based on management’s intent for holding the assets. Any contingent cash flows, including those arising from ESG-linked features, are evaluated for potential bifurcation as embedded derivatives.

Nature-dependent Electricity Contracts (Amendments to IFRS 9 and IFRS 7) addresses the application of ‘own use’ and hedge accounting requirements for agreements that meet specified criteria. If a nature-dependent electricity contract (also known as a Power Purchase Agreement or PPA) qualifies for the ‘own use’ exemption, it is accounted for as an executory contract rather than as a derivative. In contrast, if a PPA does not qualify for the ‘own use’ exemption, it is accounted for as a derivative to which hedge accounting considerations may apply. The amendments permit a variable nominal amount of forecast electricity transaction to be designated as the hedged item. The amendments apply to contracts that reference electricity generated from nature-dependent sources and for which cash flows vary based on the amount of electricity generated by a reference production facility. New disclosures have also been introduced.

• Article: Settlement by electronic payments
• Article: Classification of financial assets
• Article: Own use scope exemption under IFRS® Accounting Standards
• Article: Nature-dependent electricity contracts

New IFRS Accounting Standards requirements

Comparison to US GAAP

IFRS 18 replaces IAS 1, which sets out presentation and base disclosure requirements for financial statements. The changes, which mostly affect the income statement, include the requirement to classify income and expenses into three new categories – operating, investing and financing – and present subtotals for operating profit or loss and profit or loss before financing and income taxes.

Further, operating expenses are presented directly on the face of the income statement – classified either by nature (e.g. employee compensation) or function (e.g. cost of sales) or by using a mixed presentation. Expenses presented by function require more detailed disclosures about their nature.

IFRS 18 also provides enhanced guidance for aggregation and disaggregation of information in the financial statements, introduces new disclosure requirements for management-defined performance measures (MPMs)* and eliminates classification options for interest and dividends in the statement of cash flows.

*Non-GAAP measures that meet the definition of MPMs will be subject to the disclosure requirements.

US GAAP generally has no requirements to classify income and expenses by specific category, or present subtotals for profit or loss. SEC regulations prescribe expense classification requirements for certain specialized industries. Non-GAAP measures are generally prohibited from inclusion in financial statements. Therefore, presentation and disclosure differences are expected to continue to arise in practice when IFRS 18 comes into effect.

Starting 2027, the FASB will require² income statement expenses to be disaggregated into certain natural expense categories in the financial statement notes. The new US GAAP disclosures are similar in spirit to certain IFRS 18 disaggregation requirements but may be more cumbersome and will apply only to public business entities.

KPMG resources:

• Article: How companies communicate financial performance is changing
• Defining Issues: Rolling the DISE: FASB issues final ASU

New IFRS Accounting Standards requirements

Comparison to US GAAP

IFRS 18 replaces IAS 1, which sets out presentation and base disclosure requirements for financial statements. The changes, which mostly affect the income statement, include the requirement to classify income and expenses into three new categories – operating, investing and financing – and present subtotals for operating profit or loss and profit or loss before financing and income taxes.

Further, operating expenses are presented directly on the face of the income statement – classified either by nature (e.g. employee compensation) or function (e.g. cost of sales) or by using a mixed presentation. Expenses presented by function require more detailed disclosures about their nature.

IFRS 18 also provides enhanced guidance for aggregation and disaggregation of information in the financial statements, introduces new disclosure requirements for management-defined performance measures (MPMs)* and eliminates classification options for interest and dividends in the statement of cash flows.

*Non-GAAP measures that meet the definition of MPMs will be subject to the disclosure requirements.

US GAAP generally has no requirements to classify income and expenses by specific category, or present subtotals for profit or loss. SEC regulations prescribe expense classification requirements for certain specialized industries. Non-GAAP measures are generally prohibited from inclusion in financial statements. Therefore, presentation and disclosure differences are expected to continue to arise in practice when IFRS 18 comes into effect.

Starting 2027, the FASB will require² income statement expenses to be disaggregated into certain natural expense categories in the financial statement notes. The new US GAAP disclosures are similar in spirit to certain IFRS 18 disaggregation requirements but may be more cumbersome and will apply only to public business entities.

KPMG resources:

• Article: How companies communicate financial performance is changing
• Defining Issues: Rolling the DISE: FASB issues final ASU

New IFRS Accounting Standards requirements

Comparison to US GAAP

IFRS 19 is a voluntary standard that applies to entities without public accountability, but whose parents prepare consolidated financial statements under IFRS Accounting Standards.

For in-scope companies, IFRS 19 simplifies disclosures on various topics, including leases, exchange rates, income taxes, and statement of cash flows.

In recent amendments to IFRS 19, other disclosure requirements have also been reduced, including those around supplier finance arrangements, lack of exchangeability and financial instruments.

If elected, IFRS 19 is expected to reduce the cost of preparing in-scope financial statements while maintaining the usefulness of those financial statements for stakeholders.

Under US GAAP, private companies can elect to apply Private Company Alternatives, aimed at reducing complexity and costs in financial reporting for in-scope companies.

This includes the option to amortize goodwill over a set period, the ability to combine similar intangible assets, a simplified approach to evaluating variable interest entities, a simplified approach to lease accounting, and alternative methods for estimating fair value in certain cases. There is no specific alternative focused solely on reducing disclosures; however, certain US GAAP disclosure requirements only apply to public entities.

The entities eligible to elect Private Company Alternatives under US GAAP compared to IFRS 19, as well as the results of applying each, may differ.

KPMG resources:

• Article: Reducing disclosures for subsidiaries

New IFRS Accounting Standards requirements

Comparison to US GAAP

IFRS 19 is a voluntary standard that applies to entities without public accountability, but whose parents prepare consolidated financial statements under IFRS Accounting Standards.

For in-scope companies, IFRS 19 simplifies disclosures on various topics, including leases, exchange rates, income taxes, and statement of cash flows.

In recent amendments to IFRS 19, other disclosure requirements have also been reduced, including those around supplier finance arrangements, lack of exchangeability and financial instruments.

If elected, IFRS 19 is expected to reduce the cost of preparing in-scope financial statements while maintaining the usefulness of those financial statements for stakeholders.

Under US GAAP, private companies can elect to apply Private Company Alternatives, aimed at reducing complexity and costs in financial reporting for in-scope companies.

This includes the option to amortize goodwill over a set period, the ability to combine similar intangible assets, a simplified approach to evaluating variable interest entities, a simplified approach to lease accounting, and alternative methods for estimating fair value in certain cases. There is no specific alternative focused solely on reducing disclosures; however, certain US GAAP disclosure requirements only apply to public entities.

The entities eligible to elect Private Company Alternatives under US GAAP compared to IFRS 19, as well as the results of applying each, may differ.

KPMG resources:

• Article: Reducing disclosures for subsidiaries

New IFRS Accounting Standards requirements

Comparison to US GAAP

IFRS 20 aims to improve financial performance reporting for entities subject to rate regulation, such as utilities and transport. It introduces a new accounting model under which a company, subject to rate regulation that meets the scope criteria, recognizes regulatory assets and regulatory liabilities. The new model aligns the total income recognized in a period under IFRS Accounting Standards with the total allowed compensation the company is permitted to earn for regulatory goods or services supplied in the period.

This standard replaces IFRS 14, Regulatory Deferral Accounts, which acted as a temporary measure and allowed entities transitioning to IFRS Accounting Standards to continue using their former accounting policies for rate-regulated activities, resulting in a diversity of practices.

The new standard includes detailed disclosure requirements and is designed to give users clearer information about the financial effects of rate regulation and expected future cash flows. The standard will be mandatory for all entities with rate-regulated activities, not just for first time IFRS Accounting Standards adopters.

Topic 980, Regulated Operations,provides a framework for entities subject to rate-regulated activities, allowing for the recognition of regulatory assets and liabilities that would not be recognized under other US GAAP Topics, based on the actions and intent of the regulator.

Unlike under IFRS 20, there are no specific disclosure requirements under Topic 980. 

Although conceptually aligned, Topic 980 and IFRS 20 differ in structure and specific requirements, which may result in varied reporting outcomes.

KPMG resources:

• Article: Regulatory assets and regulatory liabilities

New IFRS Accounting Standards requirements

Comparison to US GAAP

IFRS 20 aims to improve financial performance reporting for entities subject to rate regulation, such as utilities and transport. It introduces a new accounting model under which a company, subject to rate regulation that meets the scope criteria, recognizes regulatory assets and regulatory liabilities. The new model aligns the total income recognized in a period under IFRS Accounting Standards with the total allowed compensation the company is permitted to earn for regulatory goods or services supplied in the period.

This standard replaces IFRS 14, Regulatory Deferral Accounts, which acted as a temporary measure and allowed entities transitioning to IFRS Accounting Standards to continue using their former accounting policies for rate-regulated activities, resulting in a diversity of practices.

The new standard includes detailed disclosure requirements and is designed to give users clearer information about the financial effects of rate regulation and expected future cash flows. The standard will be mandatory for all entities with rate-regulated activities, not just for first time IFRS Accounting Standards adopters.

Topic 980, Regulated Operations,provides a framework for entities subject to rate-regulated activities, allowing for the recognition of regulatory assets and liabilities that would not be recognized under other US GAAP Topics, based on the actions and intent of the regulator.

Unlike under IFRS 20, there are no specific disclosure requirements under Topic 980. 

Although conceptually aligned, Topic 980 and IFRS 20 differ in structure and specific requirements, which may result in varied reporting outcomes.

KPMG resources:

• Article: Regulatory assets and regulatory liabilities