This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

Disclosure Initiative — Subsidiaries that are SMEs

Date recorded:

Project plan (Agenda Paper 31A)

In the January 2020 meeting, the Board agreed to move the project from the research programme to the standard-setting programme.

In this paper, staff presented the objective of the standard-setting project and the staff’s project plan for the remainder of 2020.

The objective of the standard-setting project is to develop a reduced disclosure IFRS Standard that would apply on a voluntary basis to subsidiaries that are SMEs. To achieve this, the disclosure requirements of the IFRS for SMEs will be used as a starting point and adapted if and where recognition and measurement differences require such adaptation.

Ultimately, staff plan to discuss whether the consultation document should be an ED or a DP and seek permission to ballot in Q4 2020.

At this meeting, the Board were asked whether they agree with the staff’s proposed project plan.

Discussion and voting

The staff clarified that the plan presented was drafted before the global pandemic took effect. As a result, there may be delays to the plan as stated, but they will do their best to execute the plan as presented.

When asked to vote, 14 Board members voted in favour of the staff’s proposed project plan.

Presentation requirements (Agenda Paper 31A)

In this paper, staff presented alternatives for presentation requirements to be included in the standard under development. They discussed how presentation differs from disclosure and highlighted the advantages and disadvantages of the alternatives (below) under discussion.

The key alternatives discussed are:

  • a) require the presentation requirements of IFRS Standards, in which case the presentation requirements will not be reproduced in the IFRS Standard being developed in this project; and
  • b) require the presentation requirements of the IFRS for SMEs Standard, with appropriate tailoring, in which case the tailored presentation requirements will be reproduced in the IFRS Standard being developed in this project.

Another alternative is also presented. This involves applying IFRS Standards’ presentation requirements but varied to permit a single statement of income and retained earnings in place of the statement of comprehensive income and statement of changes in specified circumstances.

Staff recommend alternative a) above and will ask the Board whether they agree with this recommendation or if there is an alternative they prefer.

Discussion and voting

A question was posed regarding whether, conceptually, presentation should be seen as more aligned to disclosure requirements (in which case b) above would be a better outcome) or to recognition and measurement requirements (this would lead to a) above). In other words, should IFRS for SMEs’ presentation requirements (and not full IFRS’) be the starting point and supplemented where necessary (this is similar to the approach being taken by the AASB in their project).

Despite the conceptual merits of presentation being more aligned to disclosure, the Board supported the staff recommendation. This support was due to the arguments presented in the paper, the potential cost savings associated with this approach and, especially, as the staff recommendation is aligned with the overall objective of the project – to provide a simpler and more cost effective way for full IFRS requirements to be used by the target population but with simplified disclosure requirements.

When asked to vote, 14 Board members voted in favour of the staff’s recommendation.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.