Support for planning and assessment, in the context of accounting

Accounting in accordance with the International Financial Reporting Standards (IFRS) or the US accounting standards (US GAAP) requires the valuation of a large number of assets and liabilities at fair value. PwC helps businesses to find individual solutions to problems and to discover alternatives.

Many businesses have problems accurately valuing assets and liabilities when preparing financial accounts. This problem becomes much more complex when accounts are subject to International Financial Reporting Standards (IFRS) or the US accounting standard (US GAAP): both standards require a large number of assets to be valued at fair value.

This is particularly important in business transactions. The standards also require the regular valuation of certain assets, using the impairment test.

The evaluation of complex transactions, such as leasing transactions, purchase of businesses, financing processes and derivatives, can place large demands on businesses. In each case, the underlying accounting and evaluation methods are complex and subject to continual change.

The incorrect use of accounting methods is inherently risky and can lead to an inaccurate assessment of a company's future performance, and thus of its value. Proprietors and shareholders, company managers, oversight boards - and, where share option plans are in place, even employees - can all be equally affected by erroneous accounting.

PwC's specialists provide support to businesses, in particular in the following areas:

  • Impairment tests
  • Business valuations and purchase price allocations in company acquisitions
  • Identification and measurement of intangible assets and goodwill
  • Property, plant and equipment (IAS 16)
  • Leasing transactions
  • Pension obligations
  • Share options
  • Derivatives
  • Taxes

PwC supports businesses by preparing initial accounts following a business acquisition. At the same time, PwC's specialists install efficient and widely recognised processes that help fulfil all subsequent obligations by means of a regular impairment test.

This impairment test is an obligatory lowest value test, used to measure intangible assets and goodwill.

PwC's solutions include implementing purchase price allocations, identifying intangible assets and goodwill and revaluing fixed assets (property, plant and equipment) in connection with business transactions. This is complemented by ongoing checks of intangible assets and goodwill for any required value adjustments (impairments). PwC helps businesses set up the processes and systems required for their impairment test, so that it can be advantageously carried out as part of routine business reporting.

Leasing transactions

An evaluation of the profitability of this form of financing should evaluate its impact on the company's financial position. The regulations on balancing lease contracts, particularly valuation of the lessor and lessee's business property, vary widely between HGB, IFRS and US GAAP. Errors in assessments have a high impact on the business's financial position and thus on its financing costs. PwC provides support in valuing and structuring leasing businesses, to ensure a fair and balanced accounting picture.

Tax accounting

The tax accounting standards under IFRS, US GAAP and the commercial code regulations of the Accounting Standards Committee of Germany (known by its German initials DRSC) recognise the accounting of deferred taxes and current taxes. PwC helps businesses to correctly apply the complex tax accounting standards, supporting them with a tried and tested web-based database and Excel solutions. These programmes support the calculation of current and deferred taxes. At the same time, they include tax planning for quarterly reporting and medium term planning purposes. PwC's experts help with the design and introduction of these systems, and the adjustment of processes within tax accounting.

Derivatives

PwC's experts help businesses to understand and confidently apply the complex rules on valuation. They also support businesses in selecting and setting up appropriate workflows and systems that display derivative financial instruments on the balance sheet in accordance with IAS 39 (recognition and assessment), in particular hedge accounting. This process also covers the business's outward presentation in business reports, consolidated financial statements and other media for communicating with analysts and investors.

Pensions and other employee compensation schemes

PwC's specialists support businesses in all issues relating to valuing and balancing employee benefits on tax and corporate balance sheets and international consolidated account balance sheets, particularly in conversions to IFRS and US GAAP. The experts analyse the existing corporate benefits arrangements, identify where changes are needed and develop alternatives that comply with current employment, tax and oversight law requirements. What are of greatest importance are the effects and obligations that arise with assessments and the drawing up balance sheets.

The valuation systems and methodologies used by PwC are well grounded in theory and tried and tested in practice. This provides a secure base for the seamless interaction between with public auditors and supervisory bodies.

Contact us

Klaus Bernhard

Klaus Bernhard

Partner, Deals Accounting & Reporting

Tel: +49 89 5790-5240

Andreas Mackenstedt

Tel: +49 69 9585-5704

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