IFRS 19 Subsidiaries without Public Accountability: Disclosures

IFRS 19 is a new voluntary reduced disclosure framework as part of IFRS Accounting Standards that sets out reduced disclosure requirements that is intended to maintain the usefulness of the financial statements for users. The IASB undertook this project in response to preparers’ requests to permit subsidiaries with a parent that applies IFRS Accounting Standards in its consolidated financial statements to apply IFRS Accounting Standards with reduced disclosure requirements.

In July 2021, the IASB published the Exposure Draft ED/2021/7 Subsidiaries without Public Accountability: Disclosures (ED). The UKEB submitted its final comment letter on  23 February 2022. The UKEB Feedback Statement ( published in February 2022) summarises the outreach activities undertaken, stakeholder views, and the UKEB’s final position on the ED proposals.

Refer to this project webpage for details of the UKEB’s influencing project on the ED to develop IFRS 19. 

Main Requirements in IFRS 19

An entity may elect to apply IFRS 19 in its consolidated, separate or individual financial statements if, and only if, at the end of the reporting period:

• it is a subsidiary;
• it does not have public accountability; and
• it has an ultimate or intermediate parent that produces consolidated financial statements available for public use that comply with IFRS Accounting Standards.

An entity has public accountability if:

• its debt or equity instruments are traded in a public market or it is in the process of issuing such instruments for trading in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets); or
• it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses (for example, banks, credit unions, insurance companies, securities brokers/dealers, mutual funds and investment banks often meet this second criterion).

The disclosure requirements in IFRS 19 are organised by IFRS Accounting Standard. A subsidiary applying IFRS 19 will apply the recognition, measurement and presentation requirements of an IFRS Accounting Standard to a transaction, other event or condition and then apply the disclosure requirements set out under the subheading of that IFRS Accounting Standard in IFRS 19. For example, the disclosure requirements for inventories are set out under the heading IAS 2 Inventories.

Transition Requirements

IFRS 19 also includes guidance on comparative information to be provided by an eligible subsidiary when:

• it applies the standard in the current period but not in the immediately preceding period; and
• when it applied the standard in the preceding period but elects not to (or is no longer eligible to) apply the standard in the current period and continues applying IFRS Accounting Standards.

The requirements for changes in accounting policies in IAS 8 Basis of Preparation of Financial Statements do not apply to the electing or revoking of an election to apply IFRS 19.

Maintenance of IFRS 19 

Approach

When the IASB develops a new or amended IFRS Accounting Standard that includes new or amended disclosure requirements, the exposure draft will also include proposed changes to IFRS 19.

In deciding whether to make amendments to IFRS 19 the IASB will apply the same broad principles for reducing disclosures it used in developing the standard. Users of financial statements of subsidiaries without public accountability are interested primarily in short-term cash flows, liquidity, measurement uncertainty, disaggregation and accounting policy choices.

‘Catch-up’ Exposure Draft

IFRS 19, published in May 2024, includes reduced disclosure requirements from IFRS Accounting Standards issued up to 28 February 2021.

Disclosure requirements in new and amended IFRS Accounting Standards issued between 28 February 2021 and May 2024 were included in IFRS 19 without reductions when IFRS 19 was issued in May 2024.

In July 2024, the IASB published the Exposure Draft Amendments to IFRS 19 Subsidiaries without Public Accountability: Disclosures (ED). The UKEB submitted its final comment letter on 28 November 2024. The UKEB Feedback Statement (published on 28 November 2024) summarises the outreach activities undertaken, stakeholder views, and the UKEB’s final position on the ED proposals.

Refer to this project webpage for details of the UKEB’s influencing project on the ‘catch-up ED’.

Endorsement project

At this stage the Secretariat is undertaking research and preparatory work ahead of the endorsement project to adopt IFRS 19 for use in the UK. The UKEB plans to start the formal endorsement project in early 2025 to assess both IFRS 19 and the final amendments resulting from the catch-up ED as a package for adoption. 

More detailed information on planned outreach activities will be published in due course.