Disclosure Initiative — Subsidiaries without Public Accountability: Disclosures

Date recorded:

Cover Paper (Agenda Paper 31)

At its June 2022 meeting, the IASB agreed on a project plan for redeliberating the Exposure Draft Subsidiaries without Public Accountability: Disclosures (ED) towards developing an IFRS Accounting Standard (Standard).

At the May 2023 meeting, the IASB continued its redeliberations of the feedback on aspects of the proposed disclosure requirements in the draft Standard.

Feedback on proposed disclosure requirements (Agenda Paper 31A)

This agenda paper set out the approach to developing the proposed disclosure requirements and analysing the feedback on the proposed disclosure requirements.

Feedback on proposed disclosure requirements

Many respondents commented on individual proposed disclosure requirements in the draft Standard. Comments received included deleting, adding, and clarifying the proposed disclosure requirements in the draft Standard. For each IFRS Accounting Standard, the analysis is summarised in a table in the agenda paper.

Staff recommendation

The staff recommended that the IASB retain the proposed disclosure requirements in the draft Standard for IFRS Accounting Standards analysed in the paper, subject to recommendations in the table in the agenda paper to the individual proposed disclosure requirements.

IASB decisions

The IASB decided to revise the proposed disclosure requirements in the ED:

  • IFRS 3—by adding subparagraph B64(j)(i) of IFRS 3
  • IFRS 7—by restricting the application of paragraphs 62, 66 and 67 of the ED to eligible subsidiaries that provide financing to customers as a main business activity
  • IFRS 12—by:
  • Adding paragraphs 14, 15, 19D(b), 19E, 19F, 30 and 31 of IFRS 12
  • Amending paragraph 68 of the ED to add ‘joint operations’ from paragraph B4 of IFRS 12
  • IFRS 15—by:
  • Withdrawing paragraph 93 of the ED
  • Adding paragraph 119(a) of IFRS 15
  • IFRS 16—by:
  • Withdrawing paragraphs 100(d) and 105 of the ED
  • Adding subparagraphs (e), (g) and (i) of paragraph 53 of IFRS 16
  • IAS 1—by:
    • Adding paragraph 137 of IAS 1
    • Withdrawing paragraphs 120–122 of the ED and retaining paragraphs 112–114 of IAS 1 as applicable
  • IAS 19—by:
  • Adding paragraph 141(b) of IAS 19, in particular the requirement to disclose separately the effects of interest income
  • Replacing paragraph 152(c)(iii) of the ED with paragraph 141(c)(i) of IAS 19
  • Adding paragraph 147(b) of IAS 19
  • IAS 27—by amending paragraphs 177–180 of the ED to reference the applicable IFRS 12 disclosure requirements

Paragraph 16 of the draft Standard (Agenda Paper 31B)

This agenda paper discusses whether to provide guidance on or update paragraph 16 of the draft Standard set out in the ED.

Paragraph 16 of the draft Standard states:

“In accordance with paragraph 31 of IAS 1 Presentation of Financial Statements, an entity need not provide a disclosure required by this [draft] Standard or other IFRS Standards if the information resulting from that disclosure is not material. An entity shall also consider whether to provide additional disclosures when compliance with the specific requirements in this [draft] Standard, including the requirements in other IFRS Standards that remain applicable, is insufficient to enable users of financial statements to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance.”

Staff recommendation

The staff recommended that the IASB does not:

  • Add guidance on or revise paragraph 16 of the draft Standard
  • Develop an overall disclosure objective in the new Standard

IASB discussion

All IASB members agreed with the staff recommendation.

IASB members agreed that amending IAS 1:16 or developing an overall disclosure objective would be time consuming and might cause unintended consequences.

IASB decision

The IASB decided:

  • To retain paragraph 16 of the ED and not add guidance
  • An overall disclosure objective for the Standard was not necessary

Disclosure requirements about transition in other IFRS Accounting Standards (Agenda Paper 31C)

This agenda paper discussed whether to retain the proposal set out in the ED that disclosure requirements specified in a new or amended IFRS Accounting Standard about the entity’s transition to that new or amended Standard would remain applicable to an eligible subsidiary that applies the draft Standard.

Staff analysis

New and amended IFRS Accounting Standard normally include transition requirements that apply on initial application of that new or amended IFRS Accounting Standard. Occasionally replace, the disclosure requirements in IAS 8.

The IASB proposed that the disclosure requirements about transition in other IFRS Accounting Standards apply to eligible subsidiaries applying the draft Standard because those disclosure requirements are specific to that transition and are relevant only on initial application of that new or amended IFRS Accounting Standard. The disclosure requirements about transition in other IFRS Accounting Standards enable users of financial statements to better understand the impact of initial application of a new or amended IFRS Accounting Standard.

Staff recommendation

The staff recommended that the IASB proceed with its proposal to require any disclosure requirements specified in a new or amended IFRS Accounting Standard about the entity’s transition to that new or amended IFRS Accounting Standard to remain applicable to an eligible subsidiary that applies the new Standard.

IASB decision

All IASB members agreed with the staff recommendation.

New disclosure requirements in IFRS Accounting Standards (Agenda Paper 31D)

This agenda paper discussed whether disclosure requirements in IFRS Accounting Standards that have been issued since development of the draft Standard set out in the ED apply to eligible subsidiaries applying the new Standard.

Staff analysis

An eligible subsidiary that elects to apply the new Standard applies the requirements in IFRS Accounting Standards, but instead of the disclosure requirements set out under individual IFRS Accounting Standards it applies the disclosure requirements in the new Standard. In the staff view, those requirements should include requirements from new and amended IFRS Accounting Standards that have been issued since the ED was published, including any disclosure requirements in those new and amended IFRS Accounting Standards. The staff think that users of eligible subsidiaries’ financial statements should be able to access all information from those improved disclosure requirements. Whilst the disclosure requirements remain applicable, they will be subject to a materiality assessment.

This is a temporary situation that will only exist until the IASB issues a ‘catch up’ amendment to the new Standard. This is because in the future, the IASB plans to propose amendments to the new Standard as part of each exposure draft of a new or amended IFRS Accounting Standard as this facilitates consideration of the amendments to the new Standard at the same time as the related amendments to IFRS Accounting Standards are being discussed.

Staff recommendation

The staff recommended that the disclosure requirements in amendments to IFRS Accounting Standards that have been issued or will be issued since the ED was published apply to eligible subsidiaries until the IASB issues an amendment to the new Standard.

IASB discussion

IASB members agreed that the decision statement should be included in the Standard.

IASB decision

All IASB members agreed with the staff 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.