IASB publishes request for information on the post-implementation review of IFRS 10-12

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09 Dec 2020

The International Accounting Standards Board (IASB) has issued a request for information (RFI) seeking comments from stakeholders to identify whether IFRS 10 'Consolidated Financial Statements', IFRS 11 'Joint Arrangements', and IFRS 12 'Disclosure of Interests in Other Entities' provide information that is useful to users of financial statements; whether there are requirements that are difficult to implement and may prevent the consistent implementation of the standards; and whether unexpected costs have arisen in connection with applying or enforcing the standards.

The post-implementation review process for IFRS 10, IFRS 11, and IFRS 12 was officially added to the IASB's agenda in September 2019. The IASB has been gathering information to determine the scope of the review and to identify the main questions that need to be answered before the implementation of IFRS 10, IFRS 11, and IFRS 12 can be assessed.

The information gathered so far indicates that many stakeholders believe that the standards work, however, IASB stakeholders have also indicated that there are areas where the standards to their mind might still benefit from improvements. Based on this feedback, the Board agreed the following matters be examined further in the RFI:

IFRS 10 Consolidated Financial Statements provides a single consolidation model that identifies control as the basis for consolidation for all types of entities. The following areas might warrant further investigation:

  • power over an investee, including relevant activities, rights that give an investor power over an investee and control without a majority of voting rights;
  • the link between power and returns, including principal and agent and non-contractual agency relationships;
  • investment entities, including criteria for identifying an investment entity and subsidiaries that are investment entities; and
  • accounting requirements for
    • transactions that give rise to a change in ownership; and
    • the partial acquisition of a subsidiary that does not constitute a business.

IFRS 11 Joint Arrangements establishes a principle-based approach for the accounting for joint arrangements, in which the parties recognise their rights and obligations arising from the arrangements. The following areas might warrant further investigation:

  • collaborative arrangements outside the scope of IFRS 11;
  • classification of joint arrangements; and
  • accounting requirements for joint operations.

IFRS 12 Disclosure of Interests in Other Entities combines, enhances and replaces the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. There were relatively few comments on IFRS 12 requirements and feedback was mixed. Therefore, the RFI aims to establish to what extent the requirements assist an entity to meet the objective of the standard.

After the comment period ends, the IASB will consider the comments received along with information gathered through other consultation activities. The final conclusions of the IASB will be presented in a report and a feedback statement which will also set out the steps the IASB believes should be taken as a result of the review. The Board could decide to add a standard-setting project to its agenda, consider one or more matters further as part of its research programme, or both. The Board could also decide to take no action.

Comments on the RFI are requested by 10 May 2021. The request for information and a corresponding press release are available on the IASB website. Deloitte has released an IFRS in Focus newsletter outlining the contents of the RFI.

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