Corporate Reporting Theory: IFRS 13 Fair Value Measurement Review

This report provides a comprehensive review of IFRS 13 Fair Value Measurement within the context of corporate reporting theory and practice. It critically evaluates the Post-implementation Review (PIR) of IFRS 13 issued by the International Accounting Standards Board (IASB), examining the standard's effectiveness and challenges in its application. The report discusses fair value measurement disclosures, prioritizes Level 1 inputs, and analyzes the implications for organizations in accurately reflecting their financial position in annual reports. The assessment also highlights limitations and potential areas for improvement in fair value measurement, as identified by the IASB's monitoring process. The overall aim is to provide insights into the significance of fair value measurement and its impact on financial reporting.

Running head: CORPORATE REPORTING THEORY AND PRACTICE
Corporate Reporting Theory and Practice
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Table of Contents
Introduction:...............................................................................................................................2
Question 1 – Reviewing and discussing the PIR of IFRS 13.....................................................2
Question 2 - Fair Value Measurement Disclosures....................................................................3
Question 3 - Prioritising Level 1 inputs or the unit of account..................................................5
Conclusion:................................................................................................................................6
References:.................................................................................................................................7

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Introduction:
The overall assessment focuses on identifying the level of Post-implementation
Review (PIR) of IFRS 13 Fair Value Measurement, which could be used by the organisation
in formulating their annual report. The relevant fair value measurement is mainly depicted by
the International Accounting Standard Board. In addition, appropriate knowledge on
analytical techniques with familiar and unfamiliar provisions. Adequate examination of the
problems and issues from umber of perspectives. The fair value measurement mainly helps in
conducting fair representation of the annual report, which is conducted by the company every
fiscal year. the organisation also discloses fair value measurements, which could be used in
depicting the measurement used in valuing the assets, liabilities, and entities own equity.
Question 1 – Reviewing and discussing the PIR of IFRS 13
The augmentation of fair value measurement disclosure and the post implementation
review of the IFRS code would eventually help IASB to effectively identify the effectiveness
of its regulatory measure. The relevant IFRS code has helped organisations to determine fair
value measurement of different assets, liabilities, and equity value. The IFRS 13 relatively
helps the organisation to prepare the financial statement by providing Useful information and
disclosing all the relevant notes in their annual report. However, the ethical utilisation of
IFRS 13 is not detected by IASB, which relatively augmented the use of post implementation
review of the IFRS 13 (Barker and Schulte 2017).
Being one of the public group companies listed in London Stock Exchange adequate
review of the post implementation review measure that is imposed by IASB needs to be
evaluated. The valuation measures of Tesco Plc need to be conducted fairly, as maximum of
the valuation of the organisation is based on measurement and disclosure of certain liabilities

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(Cenciarelli, Santis and Greco 2018). The main reason behind IASB opting for the Post
implementation review of IFRS 13 is due to the limitation and hindrance that might occur
within the organisation for effectively utilising the valuation method. There are certain areas
that is focused by IASB during the post implementation review of IFRS 13. The aims of the
board are to acquire the required information of the organisation with the help of IFRS 13 and
detect is usefulness for the users in the financial statements. Moreover, IASB also AIMS in
detecting the challenges and preventing them from occurring during the formulation of
financial statement (DeFond et al. 2018).
The major focus of post implementation review is on assessing the effects of IFRS 13,
while detecting the overall unexpected cost incurred by the organisation during the
implementation of the IFRS 13. In addition, the board also aims in getting deeper
understanding of both uses and preparers of the perspective annual report which indicates the
fair value measurement disclosures of the organisations. The priority levels, issues, and
current practices of IFRS 13 are relatively disclosed, which might allow IASB to understand
the impact fair value measurement. On the other hand, Dvorak (2017) indicated that IASB
aims in understanding the limitations of IFRS 13, which would eventually help in improving
the fair value measurement conducted by the organisation during the formulation of the
annual report.
Question 2 - Fair Value Measurement Disclosures
Fair value measurement has a relevant disclosure which needs to be conducted by
organisation during the preparation of the annual report. Moreover, IFRS 13 is used in
detecting the fair value measurement of different assets and other valuation of the
organisation. The current standard relatively indicates that fair valuation needs to be
conducted by the organisation with adequate disclosure requirements that allows the users to

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understand the measures taken by the organisation in valuing the assets. The definition of fair
value is relatively indicated in IFRS 13, where the price of a particular set needs to be at the
perspective of buyers of assets who are willing to pay for the transfer of asset or liability. this
relatively indicates that the current market value of the Asset and liabilities needs to be
implemented in fair value measurement, which has been depicted in IFRS 13. On the
contrary, Farrugia (2014) argued that fair valuation is a relatively based on the perception of
the organisation, where manipulation is conducted to increase value of the organisation by
increasing assets value and reducing liability value in the annual report.
There are certain measures that needs to be followed by the organisation when
complying with IFRS 13 during the preparation of the annual report. The measures of
depicted as follows.
 Assets and liabilities needs to be measured with inclusion of the current condition,
location, and any kind of restrictions on this day. this highly reflects the actual value of
the Asset or liability of the organisation.
 The second measures that need to be evaluated by the organisation is the principal market
in which the orderly transaction needs to be taken place for the Asset or liability. this
would eventually help in protecting the actual or fair value for the Asset or liability of the
organisation and allow the organisation to present the actual value in their annual report.
 The third component relatively focuses on non-financial assets, where the biggest and the
best used for the asset is relatively evaluated to understand its impact on the valuation of
the organisation. the non-performing asset is a relatively evaluated on two different
fronts where it is used in combination with other assets on a standalone basis (González-
Sánchez 2018).

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 Lastly, the fair value measurement relatively value which the assumption that the market
participants would use when pricing the Asset or liability, as it helps in understanding the
level of market value for the particular component.
Question 3 - Prioritising Level 1 inputs or the unit of account
Certain priority that needs to be followed by IFRS 14 known as the level of input or
the unit of account. These priorities are relatively depicted as follows.
 The overall fair value measurement conducted by the organisation on the Asset or
liabilities needs to be considered as unit of account for the item being measured.
Moreover, the unit of account is relatively applying other IFRS standards, which needs to
be maintained by the organisation in their annual report.
 Moreover, the organisation need to select inputs that are relatively consistent with the
liabilities assets characteristics. These characteristics would be carried out by the market
participants during the transaction for the Asset or liability. This detection is mainly helps
in identifying the fair value of the Asset or liability for the organisation (Ifrs.org 2018).
 Lastly, level 1 input needs to be compared to without any kind of adjustments to the fair
value of the Assets and liabilities of the organisation.
From the evaluation it is also indicated that fair value of an investment in subsidiary
needs to be conducted by the organisation where the active market value of the investment
needs to be conducted by the company. In addition, the recoverable amount of the cash
generating unit is considered as the basis of fair value where the disposable cost is deducted
to identify the active market value for the cash generating unit. Both the concepts have
relatively helped in improving the level of fairness in disclosure of the annual report.
Moreover, the problems faced by the organisation in conducting the fair measurement of
there is it was relatively discussed during draft of IFRS 13. Therefore, from their opinion it is

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indicated that fairness in the measurement can be identified when measurements are objective
and verifiable by the organisation (MARTÍN and Osma 2018).
There are certain criticisms regarding the net valuation process that is used in IFRS
13, as organisations were not able to adequately comply with the measurement components
laid down by IASB. In addition, these measurements were relatively indicated as unfair and
unethical by IASB, as organisations were able to manipulate their valuation to increase the
actual value of their assets (Mueller 2015). This is relatively provided with adverse impact on
the measures used by IASB in minimising the fraudulent activities of the organisation and
depicting the actual valuation of the Assets and liabilities. However, the monitoring process
implemented by IASB has a relatively helped in Supporting the operations of IASB and
detecting different limitations of IFRS 13 (Sundgren, Maki and Somoza-Lopez 2018).
Conclusion:
After evaluating the assessment, the significance of fair value measurement and the
implementation of Post implementation review for IFRS 13 can be identified. From the
assessment the significance and evaluation of the value is relatively derived and how
organisation could effectively depict their actual financial position in the annual report. In
addition, the relevant discussion on fair value measurement disclosure and the price rising
level 1 inputs are the unit of account discussed in IFRS 13 is a relatively depicted in the
assessment. The limitations of fair value measurement are detected by IASB, where
adequately review of the implementation process that is conducted by the organisation is
analysed. this implementation reviewing process has a relatively allowed IASB to understand
the level of problems that is faced by the organisation in valuing their Assets and liabilities.
Overall, fair value measurement is considered to be one of the biggest

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References:
Barker, R. and Schulte, S., 2017. Representing the market perspective: Fair value
measurement for non-financial assets. Accounting, Organizations and Society, 56, pp.55-67.
Cenciarelli, V.G., De Santis, F. and Greco, G., 2018. External audit and fair value
measurements.
DeFond, M., Hu, J., Hung, M. and Li, S., 2018. The Usefulness of Fair Value Accounting in
Executive Compensation.
Dvořák, J., 2017. How Do Czech Companies Report Fair Value Measurement Under IFRS
13?. European Financial and Accounting Journal, 2017(3), pp.117-128.
Farrugia, C., 2014. An analysis of the impact of IFRS 13 fair value measurement on local
listed entities (Master's thesis, University of Malta).
González-Sánchez, M., 2018. Effects of IFRS-13 on the relevance of fair value adjusted by
credit risk: Evidence from Europe. Advances in Accounting, 40, pp.89-97.
Ifrs.org. (2018). [online] Available at:
https://www.ifrs.org/-/media/project/pir-ifrs-13/published-documents/request-for-
information-pir-ifrs-13.pdf [Accessed 14 Jul. 2018].
MARTÍN, F.M. and Osma, B.G., 2018. Does IFRS 9 Consider Financial Statement Users’
Preferences with Respect to IFRS 13 Fair Value Hierarchy? A Suggestion to Refine the
Definition of OCI. Estudios de Economía Aplicada, 36(2), pp.515-536.
Mueller, A., 2015, April. Implications of new IFRS concepts on the information policy in the
European real estate sector. In International scientific conference" Economics and
Management, ICEM" (Vol. 1, No. 1).

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Sundgren, S., Mäki, J. and Somoza-López, A., 2018. Analyst coverage, market liquidity and
disclosure quality: a study of fair-value disclosures by European real estate companies under
IAS 40 and IFRS 13. The International Journal of Accounting, 53(1), pp.54-75.