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Consolidation

Date recorded:

Disclosures

The staff noted that as part of their preparations for joint IASB/FASB deliberations (in March 2010) of proposed disclosures in ED 10 and those in FAS 167, they had identified issues to be decided by the IASB in advance of the March meeting:

  • whether the proposed disclosures in ED 10 and ED 9 Joint Arrangements could be combined into a comprehensive disclosure standard for a reporting entity's involvement with other entities that is not in the scope of IAS 39 Financial Instruments: Recognition and Measurement and IFRS 9 Financial Instruments;
  • whether a reporting entity should disclose information about its risk exposure from its involvement with unconsolidated entities; and
  • whether those disclosures should be integrated into the proposed comprehensive disclosure standard for involvement with other entities.

A single disclosure standard

After a brief debate, the Board agreed that the proposed disclosure requirements in ED 10 and ED 9 should be combined with the disclosures in IAS 28 within a comprehensive disclosure standard that addresses a reporting entity's involvement with other entities that are not in the scope of IAS 39/IFRS 9. In addition, the Board agreed that such a combined disclosure standard should include the proposed disclosure requirements for joint operations that might not relate to an involvement with another entity.

Disclosures - Unconsolidated structured entities

The staff noted that ED 10 proposed disclosure requirements for both subsidiaries and unconsolidated structured entities. While there was general agreement among respondents that additional disclosures about subsidiaries would assist users in their understanding of consolidated financial statements, many questioned the proposal to require disclosures about the nature of, and risks associated with, the reporting entity's involvement with structured entities that the reporting entity does not control.

In another brief debate, the Board:

  • Agreed that a reporting entity should disclose information that enables users of its financial statements to evaluate the nature of, and risks associated with, structured entities that the reporting entity does not control.
  • Agreed that these disclosures should be integrated into the proposed combined disclosure standard for a reporting entity's involvement with other entities, rather than IFRS 7.

The Board resisted the temptation to address disclosures for separate financial statements as part of this project.

A Board member also noted that the proposed disclosure standard would also be the appropriate place for any disclosures arising from the Board's Derecognition project.

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