30/09/2021 - EFRAG's Draft Comment Letter on the IASB ED Subsidiaries without Public Accountability: Disclosures

​​In its Draft Comment Letter, EFRAG welcomes the IASB’s efforts in developing reduced disclosure requirements for subsidiaries without public accountability and cautiously supports the proposed scope of the ED.

However, EFRAG recognises that there is also support for the alternative view expressed by Ms Françoise Flores in the Basis for Conclusions of the ED. Therefore, EFRAG has decided to ask constituents for their views on the scope of the ED, including a question to better understand which entities issue insurance contracts and are in the scope of the project.

In addition, EFRAG raises some concerns and provides suggestions to the IASB. For example, EFRAG:

• suggests that the key principles proposed by the IASB in paragraph BC33 of the Basis for Conclusions should encompass cost-benefit considerations;
• highlights the risks of not considering the existing disclosure requirements in IFRS Standards in the light of BC157 in the Basis for Conclusions of the ED, when there are no recognition and measurement differences between IFRS for SMEs and IFRS Standards;
• suggests that the reasoning for the exceptions is improved;
• suggests considering the interaction between the disclosure requirements of the ED and the disclosure requirements of the ED Disclosure Requirements in IFRS Standards – A Pilot Approach;
• considers that the application of a full set of disclosure requirements for IFRS 17 Insurance Contracts can be burdensome and costly for eligible subsidiaries; and
  
• suggests a number of additional disclosures that it considers relevant for users of financial statements. Nonetheless, EFRAG acknowledges that the assessment of users’ needs in terms of disclosures is difficult and subjective.