Subsidiaries without Public Accountability: Disclosures


The IASB’s comment deadline is 31 January 2022


The objective of this project is to develop an IFRS Standard that permits eligible subsidiaries to apply reduced disclosure requirements with the recognition, measurement and presentation requirements in IFRS Standards.

IASB proposals 

The IASB added this project to its research pipeline in response to feedback on the Request for Views—2015 Agenda Consultation. Stakeholders asked the IASB to permit a subsidiary that reports to a parent applying IFRS Standards in its consolidated financial statements to apply IFRS Standards with reduced disclosure requirements.

The ED proposes a voluntary IFRS Standard for eligible subsidiaries that sets out:

  1. the disclosure requirements for a subsidiary electing to apply it; and
  2. the disclosure requirements in IFRS Standards that it would replace.

The IASB proposes that a subsidiary would be eligible to apply the draft Standard if, at the end of its reporting period, that subsidiary:

  1. does not have public accountability; and
  2. has a parent that produces consolidated financial statements available for public use applying IFRS Standards.

A company has public accountability if its debt or equity instruments are traded in a public market or if it holds assets in a fiduciary capacity for a broad group of outsiders.

The draft Standard uses the disclosure requirements in the IFRS for SMEs Standard as a starting point because they are already tailored to the needs of the users of the financial statements of companies without public accountability and incorporate cost–benefit considerations for those companies but:

  1. align terms and language with IFRS Standards
  2. update paragraph cross-references

In addition, the IASB compared the recognition and measurement requirements in IFRS Standards and in the IFRS for SMEs Standard to identify any differences. Where differences are identified, the draft Standard tailor the disclosure requirements in IFRS Standards considering users’ information needs by applying the five principles used when it developed the disclosure requirements in the IFRS for SMEs Standard. These principles are summarised below:

  1. Short-term cash flows, obligations, commitments and contingencies 
  2. Measurement uncertainty 
  3. Disaggregation of amounts
  4. Accounting policy choices
  5. Liquidity and solvency

A subsidiary would be required to state that it has applied the draft Standard. This statement would be located with the subsidiary’s statement of compliance with IFRS Standards (required by IAS 1 Presentation of Financial Statements).

The IASB aims to reduce the cost of financial reporting for subsidiaries that report to a parent applying IFRS Standards while maintaining the usefulness of the subsidiary’s financial statements to users.