IFRS: IASB proposes IFRS with reduced Disclosure Requirements for Subsidiaries without Public Accountability

The International Accounting Standard Board (IASB) has issued an exposure draft proposing new IFRS standards with reduced disclosure requirements in the financial statements for eligible subsidiaries. Over a research period, it has been seen that subsidiaries prefer to comply with IFRS standards for preparing financial statements but with reduced disclosures. The currently issued IFRS standards sems to provide huge disclosures for subsidiaries and a need was felt to issue a set of IFRS standards for eligible subsidiaries providing reduced disclosure requirements.

1. Applicability of new IFRS standards

The new IFRS standards shall be applicable to subsidiaries provided –

(a) The subsidiary does not have public accountability, and

(b) Its ultimate parent company has produced the consolidated financial statements in compliance with IFRS for public use.

2. Proposal in the Exposure draft

The reduced disclosures as explained in the draft would be –

(a) Optional for subsidiaries that is eligible to apply it;

(b) Set out the minimum disclosure requirements for a subsidiary that elects to apply the new IFRS standards; and

(c) Specify the disclosure requirements in other IFRS standards that do not reply and are replaced if subsidiary elects to apply the draft standards.

Along with the required disclosures on each standard, the draft also provides the Basis for Conclusion on Exposure draft. The draft is open for public comments by 31 January 2021.

The detailed document can be accessed here.