IFRS 19 Subsidiaries without Public Accountability: Disclosures

EFRAG recognised the benefits and the support for the IASB's proposals to permit eligible subsidiaries to apply IFRS Standards with reduced disclosure requirements.

European constituents asked for the IASB to consider widening the scope and provided different suggestions. EFRAG acknowledges that there are potential benefits of a broader scope, nonetheless EFRAG also recognises that there is no consensus on whether and to what extent the scope should be widened. Therefore, any decision on the extension of the scope is likely to be challenging and controversial.

Considering this, at this stage, EFRAG supported that the IASB should proceed with its project with the current scope.

Nonetheless, EFRAG recommended that, before the issuance of a new IFRS Standard on reduced disclosures, the IASB clarifies the concept of holding assets in a fiduciary capacity (as insurers, for example, do not in general regard themselves as holding assets in a fiduciary capacity) and, therefore, explores the applicability of the ED to the insurance sector.

EFRAG also believed that the IASB should, in parallel to the finalisation of this project, assess the possibility of extending the proposed benefits to other type of entities (associates, joint ventures, joint operations, not listed banks that are subsidiaries, separate financial statements of ultimate parent entities and all entities without public accountability).

Finally, EFRAG highlighted that the IASB's proposals in this project were likely to put pressure on the definition of 'available for public use' and 'public accountability and welcomes further application guidance on this area.

In addition, EFRAG raised some concerns and provided suggestions on the IASB approach for developing the draft Standard, the proposed structure of the draft Standard, the proposed list of disclosure requirements (including not reducing the disclosure requirements for IFRS 17) and some other topics.

Other Publications

​The ​EFRAG Secretariat issued a Briefing to stimulate debate within Europe and clarify the IASB's discussions on Subsidiaries without Public Accountability: Disclosures. The views expressed in this Briefing are tentative and reflect the EFRAG Secretariat's understanding of how the IASB's proposals might be applied in the EU. More specifically, the Briefing provides an EU Perspective on the IASB's proposed scope.

The ​EFRAG Secretariat has also issued a second Briefing focused on the compatibility of the Accounting Directive 2013/34/EU with the IASB's ED.  The views expressed in this Briefing are tentative and reflect the EFRAG Secretariat's understanding of whether there are different disclosure requirements in the Accounting Directive 2013/34/EU and the ED and whether there are any disclosures in the Accounting Directive 2013/34/EU that are not required in the IASB’s ED. The Briefing is available here.

Finally, EFRAG issued a Summary of the inputs received from preparers that includes the feedback received from EFRAG's survey "Would you prefer less disclosures for subsidiaries?", which was focused on the costs and benefits and some of the content of the IASB’s proposals. The summary report is available here.

Feedback Statement

In April 2022, EFRAG published its feedback statement. The Feedback Statement summarises the main comments received by EFRAG on its Draft Comment Letter and explains how those comments were considered by EFRAG during its technical discussions leading to the publication of EFRAG’s Final Comment Letter.

Completion of the IASB project

The IASB redeliberated the proposals in its Exposure Draft Subsidiaries without Public Accountability: Disclosures and proceeded with the balloting of the IFRS 19 Standard. 

On 9 May 2024 the International Accounting Standards Board issued IFRS 19 Subsidiaries without Public Accountability: Disclosures. IFRS 19 has an effective date of 1 January 2027. Earlier application is permitted. The EFRAG Secretariat updated the briefings to explain how IFRS 19 would work within the European landscape. 

The updated EFRAG Secretariat Briefing - "AN EU PERSPECTIVE ON THE SCOPE OF IFRS 19" focuses on the scope of IFRS 19 Accounting Standard in the EU environment.

The updated Briefing - "STUDY ON COMPATIBILITY OF THE EU ACCOUNTING DIRECTIVE WITH IFRS 19" provides an overview of the differences of the disclosure requirements between the Accounting Directive 2013/34/EU and IFRS 19 Accounting Standard.

Endorsement phase

On 17 September 2024 EFRAG received the request for endorsement advice on IFRS 19 from the European Commission. Per the request and in addition to the assessment of the technical endorsement criteria according to the Regulation (EC) No1606/2002 and Article 4(3) of Directive 2013/34/EU, the endorsement advice should include in-depth cost-benefit analysis of how high the potential savings would be and how many companies would be affected by IFRS 19 in the EU. Further, the endorsement advice should consider and outline the differences of the disclosure requirements between IFRS 19 and EU Accounting Directive (Directive 2013/34/EU).