IFRS 19 Subsidiaries without Public Accountability: Disclosures

IFRS 19 is a new International Financial Reporting Standard, issued by the International Accounting Standards Board (IASB) on 9 May 2024.

It allows eligible subsidiary companies to apply full IFRS accounting standards with Considerably reduced disclosure requirements

Key Points of IFRS 19

• Objective: To reduce the reporting burden (cost and effort) for eligible subsidiaries while ensuring the information provided in their financial statements remains useful to users.
• IFRS 19 Effective Date: – On or after 1^st January 2027, with the option of earlier application is permitted.
• Scope: This standard only deal with disclosures. It does not alter the recognition, measurement, or presentation requirements of other IFRS standards.
• Voluntary Application: Adopting IFRS 19 is optional for eligible companies.

Eligibility Criteria

An entity can elect to apply IFRS 19 if it meets all of the following conditions at the end of the reporting period:

• It is a subsidiary (as defined in IFRS 10 Consolidated Financial Statements).
• It does not have public accountability
• It instruments are not traded in a public market, and
• It does not hold assets in a fiduciary capacity for a broad group of outsiders, such as a bank).
• It has an ultimate or intermediate parent that publishes consolidated financial statements, available for public use, that comply fully with IFRS Accounting Standards.

Benefits of IFRS 19

• Cost Savings: Reduces the time, effort, and cost associated with preparing extensive disclosures.
• Streamlined Processes: Removes the need for separate accounting records under local GAAP and IFRS.
• Consistency: Standardizes accounting methods between the subsidiary and parent company, fostering greater consistency across the group.

Key Considerations

• Full IFRS Accounting: Entities must still apply the full recognition, measurement, and presentation requirements of all other IFRS Accounting Standards.
• Exceptions: The standard does not provide reduced disclosures for
1. IFRS 8 Operating Segments,
2. IFRS 17 Insurance Contracts, and
3. IAS 33 Earnings per Share; entities applying
4. IFRS 19 that are involved in these areas must apply the full disclosure requirements of those specific standards.
• Materiality: Entities are not required to provide a specific disclosure if the resulting information would not be material to the users of their financial statements.
• Jurisdictional Endorsement: The ability to apply IFRS 19 depends on its endorsement and permission for use within each local jurisdiction.

https://www.ifrs.org/issued-standards/list-of-standards/ifrs-19-subsidiaries-without-public-accountability-disclosures/