The International Financial Reporting Standard (short: IFRS) 7 “Financial Instruments: Disclosures” requires capital market-oriented companies in the EU to make comprehensive disclosures on risks arising from financial instruments.5 These disclosures include, in particular, liquidity risk, credit risk and market price risk, which is the focus of this report.6 Market price risk is defined as the risk that exchange rates, interest rates and other prices, such as commodity prices or share prices, move in a negative direction.7 In this respect, IFRS 7 requires companies to offer transparency to their report readers and therefore disclose qualitative and quantitative information. The primary requirement for this disclosure is a sensitivity analysis.8 This poses a challenge for companies, as the standard specifies neither concrete calculation models nor fixed fluctuation ranges for the risk variables for the sensitivity analysis. This paper therefore aims to systematically present the provisions of IFRS 7 with regard to market price risk and to examine their implementation in practice. To this end, selected practical examples and the illustrative financial statements of the Big 4 (KPMG, EY, Deloitte and PwC) are analyzed. The focus is on the structure of the required disclosures and the methods used to quantify market price risks. The analysis is based on a predefined set of criteria defined in advance, which enables a systematic examination and makes differences and similarities comprehensible. The results of the analysis illustrate a very different implementation of IFRS 7 in relation to market price risk in practice. The companies included in the analysis interpret the extent and presentation of risks very differently, both in terms of the scope of content and the selection of risk types to be reported. The principle of materiality plays a key role in disclosure, as only those risk types that are of significant importance to the company are disclosed in detail. This paper aims to present the possible interpretations of the standard for those companies that will have to apply IFRS 7 with regard to market price risk in the future and thus offer them a guideline for their own implementation.
- Controlling, Accounting and Financial Management
Anforderungen des IFRS 7 an die Offenlegung des Marktpreisrisikos von Unternehmen außerhalb der Finanzbranche
Brunner, T. (Author). 2025
Student thesis: Bachelor's Thesis