Consolidation package of Standards: Consolidation, Joint Arrangements and related standards

On 12 May 2011, the IASB issued a package of five standards: IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures (the 'Standards').

IFRS 10 Consolidated Financial Statements provides a new guidance on the assessment of control and carries forward consolidation procedures from currently effective IAS 27 Consolidated and Separate Financial Statements.

IFRS 11 Joint Arrangements supersedes IAS 31 Interests in Joint Ventures and SIC-13 Jointly Controlled Entities-Non-Monetary Contributions by Venturers. IFRS 11 provides guidance on assessment of joint control and on the classification of joint arrangement into joint venture or joint operation. 

IFRS 12 Disclosure of Interests in Other Entities provides expanded disclosures about entity's interests in subsidiaries, associates and joint arrangements. It also introduces a new set of disclosures related to unconsolidated structured entities.

IAS 27 Separate Financial Statements is a revised version of currently effective IAS 27 Consolidated and Separate Financial Statements. IAS 27 (2011) applies only to separate financial statements.

IAS 28 Investments in Associates and Joint Ventures is a revision of currently effective IAS 28 Investments in Associates. It provides guidance on accounting for interests in associates and joint ventures in accordance with equity method.

All the new standards are effective for annual periods beginning on or after 1 January 2013.

EFRAG finalised its discussions on its initial assessments of the Standards against the technical criteria for endorsement in the EU and the costs and benefits that would arise from their implementation in the EU.

Therefore, on 9 February 2012, EFRAG issued the Invitation to Comment on its Initial Assessments of: IFRS 10, IFRS 11, IFRS 12, IAS 27 (2011) and IAS 28 (2011). EFRAG's initial assessment is that each of the Standards meets the technical criteria to be adopted in the EU. However, EFRAG does not support the effective date of the Standards as being 1 January 2013. EFRAG's reasons are explained in the proposed letter to the European Commission, which accompany EFRAG's Invitation to Comment. Comments were requested by 11 March 2012. 

On 30 March 2012, EFRAG issued its Endorsement Advice Letter and Effects Study Report relating to the endorsement of IFRS 10, IFRS 11, IFRS 12, IAS 27 (amended 2011) and IAS 28 (amended 2011) for use in the European Union and European Economic Area. EFRAG supports IFRS 10, IFRS 11, IFRS 12, IAS 27 (amended 2011) and IAS 28 (amended 2011) and has concluded that it meets the requirements of endorsement.

Notwithstanding the positive recommendation that the Standards meet the endorsement criteria, EFRAG does not support the mandatory effective date of 1 January 2013, the field-tests it has conducted provided evidence that some financial institutions would need more time to implement IFRS 10, IFRS 11 and IFRS 12 in a manner that brings reliable financial reporting to capital markets. EFRAG recommends the mandatory effective date of the Standards to be 1 January 2014, with early adoption permitted. Given the interaction between the Standards, EFRAG believes that the mandatory effective date should be the same for all the Standards.

EFRAG has also concluded that the benefits to be derived from implementing IFRS 10, IFRS 11, IFRS 12, IAS 27 (amended 2011) and IAS 28 (amended 2011) are likely to outweigh the costs involved.

For a background information on each of ´the Standards´ refer to the individual project.

On 29 December 2012 each of the ´the Standards´ were published in the official journal.