A snapshot ‘IFRS 19 Long Term Public Good Costs and Benefits for Preparers and Users’

A Snapshot of Costs and Benefits for Preparers and Users considered in the UKEB's [Draft] ECA

IFRS 19 Subsidiaries without Public Accountability: Disclosures is a new voluntary IFRS ® reduced disclosure standard. It is effective from 1 January 2027 (subject to the Standard being adopted for use in the UK).

For an overview of the Standard, refer to the UKEB's 'A snapshot of IFRS 19’.

The UKEB identified key potential benefits and costs of IFRS 19 for UK stakeholders through stakeholder outreach and desk-based research.

Factors affecting Costs and Benefits for Preparers

As IFRS 19 is a voluntary standard; preparers will only apply it if they assess that the benefits will outweigh implementation costs.

Costs and benefits for preparers are expected to vary, depending on the following factors:

• Number and geographical spread of subsidiaries within the group
• Size of subsidiaries and complexity of transactions undertaken
• Accounting framework(s) that subsidiaries apply before transitioning to IFRS 19
• Existing reporting systems and processes within the group, including degree of centralisation e.g. into shared service centres
• Local law and regulation in jurisdictions where subsidiaries are incorporated

Costs and benefits are likely to occur at group or subsidiary level, or both, depending on existing reporting systems and processes and the degree of centralisation within the group.

Costs for Preparers

• At subsidiary level:
  • For subsidiaries that apply IFRS Accounting Standards, one-off and ongoing costs are expected to be minimal.
  • For subsidiaries that apply local GAAP, one-off and ongoing costs would depend on how closely aligned relevant local GAAP requirements for subsidiaries' financial statements are to IFRS.
• At group level:
  • Minor one-off costs are expected for familiarisation with the IFRS 19 requirements and adjusting existing processes and systems to the reduced disclosure framework.
  • Minor ongoing costs are expected to remain up to date with IFRS 19 disclosure requirements as these evolve.
  • Groups may implement a phased approach to transitioning subsidiaries to IFRS 19. This would spread costs over several periods, and potentially reduce them overall compared with a non-phased approach, due to learning effects from early implementation experience.

Benefits for Preparers

• At subsidiary level:
  • Potential reduction in the time, cost and effort to prepare subsidiaries' financial statements, depending on prior accounting framework(s) used.
  • There may be a modest reduction in audit costs.
• At group level:
  • Potential reduction in audit costs as fewer reconciling items between local GAAP subsidiary financial statements and IFRS group reporting.
  • Alignment of accounting policies across the group (especially where many different accounting frameworks previously used by subsidiaries) and elimination of dual accounting records.
  • Efficiency gains where subsidiary financial reporting is centralised e.g. in shared service centres.

Nature of Expected Costs for Preparers

Subsidiary Level

Group Level

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