EFRAG has issued a supplementary study on the impact of IFRS 10 on the consolidation of special purpose entities (SPEs). The EFRAG secretariat undertook this study to provide input for the impact assessment of IFRS 10 for the European Commission, in cooperation with the staff of certain European National Standards Setters.
This supplementary study was developed to describe the impact of IFRS 10 on the scope of consolidation in relation to SPEs, compared to IAS 27/SIC‑12. The study was prepared with EFRAG’s endorsement advice on IFRS 10, which was issued on 30 March 2012.
Fourteen companies participated in the study, and findings include:
- New guidance will result in more informative financial statements in relation to SPEs.
- The overall quantitative impact from adopting IFRS 10 on the scope of consolidation, compared to current requirements for SPEs, is likely to be relatively limited for total assets and total consolidated SPEs.
- Participants reported that alothough IFRS 10 did not necessarily result in consolidation of considerably more or less of SPEs, the standard should not be considered in isolation, but should be assessed in conjunction with the disclosure requirements of IFRS 12. Some of these participants specifically noted that the new disclosure requirements in IFRS 12 would require them to provide significantly more narrative information about their interests in unconsolidated SPEs.
- Some participants also pointed out that even if certain SPEs were deconsolidated, they would still be required to continue to recognise the assets of those SPEs because of the risks and rewards model underlying criteria in IAS 39 Financial Instruments: Recognition and Measurement.
Click to view the supplementary study on the EFRAG website.