Overview

In IFRS-compliant consolidated financial statements, parent companies require subsidiaries to use IFRS Accounting Standards for reporting. However, subsidiaries can opt for IFRS, IFRS for SMEs, or national standards for their records. This often leads to maintaining two accounting record sets due to differing requirements. Subsidiaries using IFRS may provide disclosures disproportionate to user needs.

IFRS 19 enables subsidiaries to keep only one set of accounting records―to meet the needs of both their parent company and the users of their financial statements and reduces disclosure requirements.

Subsidiaries can apply IFRS 19 if they do not have public accountability and their parent company applies IFRS Accounting Standards in their consolidated financial statements. A subsidiary does not have public accountability if it does not have equities or debt listed on a stock exchange and does not hold assets in a fiduciary capacity for a broad group of outsiders.

In Canada, there is not a statutory requirement for entities without public accountability to issue financial statements prepared in accordance with IFRS Standards or another reporting framework. In accordance with the CPA Canada Handbook - Accounting, an entity without public accountability could apply either Accounting Standards for Private Enterprises (ASPE) or IFRS Standards in the preparation of their financial statements. The IFRS for SMEs Standard has not been adopted in Canada.

The Accounting Standards Board (AcSB) has indicated in its comment letter to the IASB that it thinks that the draft Standard as proposed would save costs and avoid the need to maintain separate accounting records. It also indicated in its own exposure-draft cover letter its intent to adopt IFRS 19, subject to deliberating comments received, as Canadian generally accepted accounting principles.