EFRAG final comment letter on the IASB's proposed new reduced disclosure IFRS

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image

01 Mar, 2022

The European Financial Reporting Advisory Group (EFRAG) has published its final comment letter on the International Accounting Standard Board’s (IASB's) Exposure Draft ED/2021/7 'Subsidiaries without Public Accountability: Disclosures'.

In general EFRAG agrees with the proposed objective of the proposals.  EFRAG:

  • whilst acknowledging that there are potential benefits of broadening the scope of the proposals, notes that any decision in this regard is likely to be a challenge and controversial especially as there is no consensus on whether and to what extent the scope should be widened.  As a result EFRAG believes that the IASB should proceed with the scope as is and that the final Standard should be available to subsidiaries on an optional basis.   
  • recommends that before the issuance of a new IFRS Standard on reduced disclosures, the IASB clarifies the concept of holding assets in a fiduciary capacity (as insurers, for example, do not in general regard themselves as holding assets in a fiduciary capacity) and, therefore, explores the applicability of the Exposure Draft to the insurance sector.
  • recommends the IASB should, in parallel to the finalisation of this project, assess the possibility of extending the proposed benefits to other type of entities (associates, joint ventures, joint operations, non-listed banks that are subsidiaries, separate financial statements of ultimate parent entities and all entities without public accountability).
  • highlights that the IASB's proposals in this project are likely to put pressure on the definition of 'available for public use' and 'public accountability' and welcomes further application guidance in this area.

In addition, EFRAG raises some concerns and provides suggestions on the IASB's approach for developing the draft Standard, the proposed structure of the draft Standard, the proposed list of disclosure requirements (including not reducing the disclosure requirements for IFRS 17 Insurance Contracts) and some other topics.

press release, the final comment letter, the summary of the inputs received from preparers and a briefing prepared by the EFRAG Secretariat focused on the compatibility of the Accounting Directive 2013/34/EU with the IASB's ED are available on the EFRAG website.

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