In July 2021, the IASB published the Exposure Draft Subsidiaries without Public Accountability: Disclosures that introduced proposals which would allow eligible subsidiaries that are small and medium-sized entities (SMEs) to apply International Financial Reporting Standards (IFRSs) but with reduced disclosure requirements.

In its draft comment letter, the UKEB:

• supports the IASB’s efforts to develop an IFRS Standard that would permit eligible subsidiaries to apply recognition and measurement requirements in IFRS, but with a reduced set of disclosure requirements.
• whilst broadly agreeing with the scope of the proposals, recommends that the IASB extends the scope so that an ultimate parent of a group, that does not itself have public accountability, may also take advantage of the reduced-disclosure framework when preparing its individual financial statements.
• suggests that the IASB reviews its ‘bottom-up approach’ and considers aligning it more closely with the ‘top-down approach’ that the UK experience has demonstrated as being cost effective for preparers and which provides decision-useful information for users. 
• identifies that further reductions in disclosure requirements could be made with respect to IFRS 7 Financial Instruments: Disclosures and IFRS 13 Fair Value Measurement.
• indicates that it expects the ED to be attractive to UK groups with overseas subsidiaries, where the group prepares consolidated financial statements in accordance with IFRS but that UK groups with only UK subsidiaries are likely to continue to apply FRS 101 Reduced Disclosure Framework.

Comments on the draft comment letter are requested by 31 January 2022.

The press release, the draft comment letter and the invitation to comment are available on the UKEB website.