Disclosure initiative — Subsidiaries that are SMEs

Date recorded:

Cover Paper (Agenda Paper 31)


The objective of the project is to develop an IFRS Standard (reduced disclosure IFRS Standard) that will permit subsidiaries that are small and medium-sized entities (SMEs) to apply IFRS Standards but with reduced disclosure requirements.

At its February 2021 meeting, the Board gave the staff permission to begin the balloting process for the Exposure Draft of the proposed disclosure standard for subsidiaries without public accountability.

Staff recommendations

The staff recommend that:

  • amendments affecting disclosure requirements in IAS 1 requiring an entity to disclose its material accounting policy information rather than its significant accounting policies should be reflected in the ED
  • a description of changes to the entity’s risk management strategy as a result of the interest rate benchmark reform should be included in the ED
  • in order to provide clarity, disclosure requirements in full IFRS Standards that do not have to be met should be included in the ED

Board discussion and decision

With regard to the disclosure requirements in IAS 1, there was no significant discussion. 12 of the 13 Board members supported the staff recommendation.

With regard to the changes resulting from the interest rate benchmark reform, one Board member highlighted to ask a specific question about this in the ED as there could be significant exposure and therefore more information than recommended by the staff might be required from a user perspective.

With regard to the list of disclosure requirements that do not have to be met, most Board members supported the approach. They thought it would add clarity to tell preparers what does not have to be included. Some Board members proposed to ask a specific question in the ED whether the list should be included or not.

One Board member opposed the staff recommendation saying that the list of disclosures that have to be made in accordance with the newly proposed Standard is a minimum list, but preparers should feel free to provide more information. A list of requirements that have not to be met might discourage preparers from doing this, which can lead to a loss of information. It would also be difficult to maintain that list.

10 of the 13 Board members supported this staff recommendation.

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