Project Initiation Plan - IFRS 19 Subsidiaries without Public Accountability Disclosures
1. Purpose
1This paper sets out the plan to assess whether to adopt, for use in the UK[^1], as a single package (together ‘the Amended Standard'):
a) IFRS 19 Subsidiaries without Public Accountability: Disclosures (paragraphs 5-9);
b) the forthcoming amendments to IFRS 19 (‘the Amendments') (paragraphs 10-12); and
c) issued consequential amendments to IFRS 19[^2] (paragraph 13).
2IFRS 19 was issued by the International Accounting Standards Board (IASB) in May 2024. The IASB is expected to issue the Amendments in August 2025. The Amended Standard will be effective for annual reporting periods beginning on or after 1 January 2027, with early application permitted.
3The UKEB's statutory functions mean that the Board must assess the requirements in the Amended Standard against the statutory adoption criteria before deciding whether to adopt it for use in the UK.
4This Project Initiation Plan (PIP) is presented to the UKEB ahead of the publication of the Amendments by the IASB. The UKEB has been considering the IASB's tentative decisions in relation to the Amendments and the assessment will incorporate those decisions[^3]. This PIP proposes publication of the Draft Endorsement Criteria Assessment (DECA) for consultation, after the Amendments are issued.
Background
Development of IFRS 19
5IFRS 19 is a result of the IASB's Disclosure Initiative, a set of projects aiming to improve the effectiveness of financial statement disclosures.
6The Subsidiaries without Public Accountability: Disclosures project was added to the IASB's research agenda in May 2016, following its 2015 Agenda Consultation[^4]. Stakeholders had requested that eligible subsidiaries, in particular, be permitted to apply IFRS Accounting Standards with reduced disclosure requirements. In January 2020, the project was added to the IASB's active standard-setting projects.
7The IASB's proposals were set out in Exposure Draft ED/2021/7 Subsidiaries without Public Accountability: Disclosures (ED), published in July 2021. The UKEB submitted its Final Comment Letter (FCL) on the ED to the IASB, on 23 February 2022, following public consultation. The UKEB's feedback statement summarises the outreach work undertaken, stakeholder views, and the final position on the ED proposals.
8The IASB received 68 comment letters in response to the ED. It conducted additional stakeholder outreach during the finalisation of IFRS 19[^5]. Annex 1, of this paper, provides a summary of the main changes made by the IASB in its redeliberation on the ED proposals, which took place between April 2022 and June 2023.
9Consistent with paragraphs 4.18–4.19 of the UKEB's Due Process Handbook, the Board has received regular progress reports on the Subsidiaries without Public Accountability: Disclosures project since the ED was published, including updates of tentative decisions made by the IASB, commentary on how those decisions changed the ED proposals, and also on consistency with the UKEB's comments[^6].
Forthcoming Amendments to IFRS 19
10IFRS 19, as issued in May 2024, included reduced disclosure requirements for IFRS Accounting Standards issued before 28 February 2021[^7].
11The IASB published the Exposure Draft Amendments to IFRS 19 (ED) on 30 July 2024. The Amendments proposed reductions to disclosure requirements for new or amended IFRS Accounting Standards issued between 28 February 2021 and May 2024. The UKEB submitted its Final Comment Letter (FCL) on the ED to the IASB, on 28 November 2024, following public consultation. The UKEB's feedback statement (published in November 2024) summarises the outreach work undertaken, stakeholder views, and the final position on the ED proposals.
12The IASB received 33 comment letters in response to the ED. The IASB redeliberated the ED proposals in the ED in January and February 2025 and indicated its intention to publish the final Amendments in Q3 2025.
Consequential amendments to IFRS 19
13In addition to the forthcoming Amendments, the IASB has issued consequential amendments to IFRS 19, in the following amendments to IFRS Accounting Standards:
a) Amendments to IFRS 9 and IFRS 7 – Amendments to the Classification and Measurement of Financial Instruments, issued in May 2024; and
b) Amendments to IFRS 9 and IFRS 7 – Contracts Referencing Nature-dependent Electricity, issued in December 2024.
Description of the main requirements in IFRS 19
14A description of the main requirements in IFRS 19 and of their expected effects is presented in the table below.
| Requirements in IFRS 19 | Expected effects |
|---|---|
| Scope | IFRS 19 is a voluntary standard, restricted to subsidiaries that do not have public accountability. |
| IFRS 19 will: | |
| - Provide a reduced disclosure framework under IFRS Accounting Standards. | |
| - Permit UK eligible subsidiaries to prepare IAS accounts with reduced disclosures. | |
| Definition of public accountability | An entity has public accountability if: |
| - its debt or equity instruments are traded in a public market; or | |
| - it holds assets entrusted to it by its customers (i.e. in a fiduciary capacity). | |
| The IFRS 19 definition of public accountability: | |
| - Is different from the definition of Public Interest Entity (PIE) in the Companies Act 2006. UK Government is also considering expanding the current definition. | |
| - Might lead to a UK PIE being eligible to apply IFRS 19. | |
| Disclosure requirements | IFRS 19 is a disclosure-only standard. An eligible subsidiary that applies the Standard does so by applying the recognition, measurement and presentation requirements in other IFRS Accounting Standards and the reduced disclosure requirements in IFRS 19. |
| The reduced disclosures will: | |
| - Reduce costs for eligible subsidiaries in preparing general purpose financial statements. | |
| - Eliminate those disclosures that go beyond the needs of users of eligible subsidiaries' financial statements, by removing "clutter". | |
| Statement of compliance | IFRS 19 is part of IFRS Accounting Standards. An eligible subsidiary applying IFRS 19 asserts its compliance with IFRS Accounting Standards and states that it has applied IFRS 19. |
| The statement of compliance will: | |
| - Clarify that the subsidiary's financial statements have been prepared under IFRS 19. | |
| - Make it easier for users to compare financial statements. |
Project plan
15The Secretariat recommends the project plan shown below. The factors considered are described in paragraphs 16 to A38. A timeline for the key project milestones is presented in paragraph 40.
| Proposed activities The UK needs to create new markets, foster innovation, increase productivity and grow new companies. This requires capital, a vibrant ecosystem for private companies and investment expertise. The UK benefits from strong capital pools, some of the world's most innovative companies and leading investment talent, but needs a more connected system to leverage these effectively.
The UK Endorsement Board (UKEB) launched its Private Companies project on 9 November 2023. The project objective is to consider possible improvements to the UK's financial reporting framework to better support private companies to grow and raise capital, and to provide recommendations to the UK Government.
The Private Companies project focuses on how financial reporting could best support private companies in the UK to grow, including in relation to capital raising. It is not about reducing reporting burdens on very small companies. As highlighted by the UK Government, smaller companies are typically supported by less formal credit, for example from banks, family, and friends, where the public reporting of accounts plays a lesser role.
The project is structured into three phases:
-
Phase 1: Initial Research (November 2023 – February 2024)
This phase involves identifying and surveying the current UK financial reporting landscape for private companies, gathering initial evidence and insights, including from stakeholders. A key output of this phase will be an Initial Research Paper summarising the findings. 2. Phase 2: Developing Recommendations (March 2024 – August 2024)
Building on Phase 1, this phase will focus on developing potential recommendations and considering the associated costs and benefits. This will include targeted engagement with stakeholders through roundtables and interviews. The output of this phase will be an Interim Report presenting the preliminary recommendations. 3. Phase 3: Final Recommendations (September 2024 – November 2024)
The final phase will involve refining the recommendations based on further stakeholder feedback and detailed analysis. The output of this phase will be a Final Report and Recommendations to the UK Government.
The UKEB aims to complete the project and submit the Final Report to the UK Government by November 2024. Regular updates on the project's progress and findings will be published on the UKEB website.
Summary of the main changes
Changes made by the IASB as a result of the feedback on the proposals in the Exposure Drafts
- Aligning the language used in IFRS 19 with that used in IFRS Accounting Standards: This includes clarifying the terminology and ensuring consistency in how specific terms are used across different standards.
- Amending the detailed disclosure requirements, particularly those relating to financial instruments: This involves introducing a narrow-scope disclosure requirement for credit risk that applies only to a specific group of eligible subsidiaries, primarily entities that provide financing to customers as a main business activity.
- Changing the structure of IFRS 19: This reorganisation includes modifying the placement of references to disclosure requirements from other IFRS Accounting Standards that remain applicable, aiming for a more logical and user-friendly structure.
Key considerations and next steps
- Stakeholder engagement: Continued engagement with stakeholders through public consultations, roundtables, and targeted interviews will be crucial to ensure the recommendations are practical and address the needs of private companies.
- Impact assessment: A comprehensive assessment of the costs and benefits of any proposed changes will be conducted to inform the final recommendations.
- Alignment with UK Government objectives: The recommendations will be developed in alignment with the UK Government's objectives to support private company growth, foster innovation, and increase productivity.
About the UK Endorsement Board (UKEB)
The UK Endorsement Board (UKEB) is an independent body responsible for influencing and endorsing International Financial Reporting Standards (IFRS) for use in the UK. Its primary objective is to ensure that IFRS Standards adopted in the UK are appropriate for the UK corporate environment and contribute to the long-term public good. The UKEB also engages with the International Accounting Standards Board (IASB) to influence the development of new IFRS Standards.
The UKEB's work covers a range of activities, including:
- Endorsement decisions: Assessing new and amended IFRS Standards against statutory adoption criteria before deciding whether to endorse them for use in the UK.
- Influence activities: Engaging with the IASB and other international bodies to ensure that UK perspectives are considered during the development of IFRS Standards.
- Outreach and engagement: Consulting with a wide range of stakeholders, including preparers, users, auditors, and academics, to gather feedback and insights on financial reporting matters.
- Research and analysis: Conducting detailed research and analysis on the potential impacts of IFRS Standards on the UK economy and financial reporting landscape.
The UKEB operates transparently, with its decisions and processes documented and publicly available. Further information about the UKEB's mission, governance, and activities can be found on its website: www.endorsement-board.uk.