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Subsidiaries that are SMEs

Date recorded:

AASB Proposed Simplified Disclosure Standard (Agenda Paper 31)

In this session, the Chair of the Australian Accounting Standards Board (AASB) gave a presentation on their proposal for a simplified disclosure standard, similar to the one the IASB is looking to develop.

The presentation gave an overview of the proposal and explained the rationale behind the proposals. It continued to analyse how the AASB can be helpful in developing a similar IFRS Standard. The AASB Chair then explained the methodology used in developing the Standard, in particular how recognition and measurement differences have been addressed. It was also demonstrated how the AASB will keep its Standard up to date for newly issued requirements. Outreach activities have shown that constituents are generally supportive of the AASB’s proposal and approach, but revealed some specific issues that the AASB would like to highlight to the IASB.

No decision was asked from the Board in this session.

Board discussion

Board members’ observations included:

  • The AASB start with the IFRS for SMEs disclosure requirements and then tailor those to develop the reduced disclosure requirements (RDR) for subsidiaries that are SMEs. It was also observed that applying the RDR was voluntary.
  • It might be worth finalising the review of the IFRS for SMEs Standard before starting any drafting for the IASB project.
  • This project would take pressure off the IFRS for SMEs Standard as those subsidiaries would have their own Standard and are therefore scoped out of IFRS for SMEs.
  • Users might not get enough information when applying the RDR. Some disclosures are indispensable to understand the balance sheet positions, for example expected credit losses under IFRS 9 can only be understood if the assumptions are disclosed.

No decisions were made.

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