Draft Comment Letter published: Exposure Draft Subsidiaries without Public Accountability: Disclosures

Date: 17 December 2021

The UK Endorsement Board (UKEB) has published its Draft Comment Letter in response to the IASB’s Exposure Draft Subsidiaries without Public Accountability: Disclosures.

The Draft Comment Letter supports the IASB’s efforts to develop an IFRS Standard that would permit eligible subsidiaries to apply recognition and measurement requirements in IFRS, but with a reduced set of disclosure requirements. Our response to the ED focuses on three significant areas of the proposals—the scope, the approach to developing the proposed disclosure requirements and the proposed reduced disclosure requirements.

On the scope, we broadly agree with the proposals but recommend that the IASB extends the scope so that an ultimate parent of a group, that does not itself have public accountability, may also take advantage of the reduced-disclosure framework when preparing its individual financial statements.

We suggest that the IASB reviews its ‘bottom-up approach’ and consider aligning it more closely with the ‘top-down approach’ that the UK experience has demonstrated as being cost effective for preparers and which provides decision-useful information for users. As a minimum, there is merit in developing a clear link between full IFRS and the draft Standard, so that subsidiary preparers can easily navigate from the "full IFRS" package they will use in providing the information for the group accounts to the "reduced disclosure" package for their own statutory accounts.

Two main areas where we identified possible further reductions to the disclosure requirements include the disclosure requirements related to IFRS 7 Financial Instruments: Disclosures and IFRS 13 Fair Value Measurement.

In addition, we believe that UK groups with only UK registered subsidiaries are likely to prefer to continue to use FRS 101 Reduced Disclosure Framework, and we expect that the ED will be attractive to UK groups with overseas subsidiaries, where the group prepares consolidated accounts in accordance with IFRS.

The UKEB will consider all stakeholder feedback received by 31 January 2022 for inclusion in its final comment letter to the IASB. 

A link to the Draft Comment Letter and the Invitation to Comment can be found here.