IFRS 19: Subsidiaries without public accountability: disclosures
A reduced-disclosure option for eligible subsidiaries, effective from 2027: who qualifies and what changes.
ACCA exams this helps with: SBR Strategic Business Reporting See the ACCA map
New to this topic?
What it is: A new standard (issued May 2024, effective for periods beginning on or after 1 January 2027, early use allowed). It lets certain subsidiaries use full IFRS for recognition and measurement but with far fewer disclosures.
The key idea: a subsidiary that isn’t publicly accountable, whose parent publishes IFRS consolidated accounts, doesn’t need the full set of notes. Its users can look at the group accounts.
UK link. The idea is similar to FRS 101, the UK’s reduced disclosure framework for subsidiaries.
Key words
- Public accountability
- An entity has public accountability if its debt or equity is traded in a public market (or it is in the process of issuing them), or it holds assets in a fiduciary capacity for a broad group of outsiders as a main business.Example: A listed company; a bank; an insurer.
- Eligible subsidiary
- A subsidiary without public accountability whose ultimate or intermediate parent produces consolidated accounts available for public use that comply with IFRS.Example: An unlisted UK trading subsidiary of a listed group.
- Reduced disclosures
- The shorter set of disclosure requirements in IFRS 19, replacing those in other IFRS standards.Example: Fewer notes on financial instruments risks.
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Who can use it?
An entity may apply IFRS 19 if, at the end of the reporting period:
- it is a subsidiary;
- it does not have public accountability; and
- its ultimate or any intermediate parent produces consolidated financial statements available for public use that comply with IFRS.
What changes
- Recognition, measurement and presentation: full IFRS, unchanged.
- Disclosures: the reduced IFRS 19 requirements replace the disclosure requirements of other standards.
- It is optional. An entity using it must state that it has applied IFRS 19, and can later stop using it.
Why
Before IFRS 19, subsidiaries reporting to the group under IFRS often kept a second set of records under local GAAP for their own accounts, to avoid the full IFRS disclosures. IFRS 19 lets them keep one set of IFRS numbers with lighter notes.
Worked example
Which can use IFRS 19?
| Entity | Eligible? |
|---|---|
| Unlisted subsidiary of a listed group that publishes IFRS consolidated accounts | Yes |
| Subsidiary whose bonds are listed on a stock exchange | No: public accountability |
| Subsidiary that is a bank taking deposits from the public | No: holds assets in a fiduciary capacity |
| Unlisted company with no parent | No: not a subsidiary |
| Unlisted subsidiary whose parent publishes only local GAAP accounts | No: parent’s accounts aren’t IFRS |
The eligible subsidiary still measures leases, financial instruments, revenue and so on exactly as under full IFRS. Only its notes are shorter.
Practice questions
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