IASB proposes reduced disclosures for certain subsidiaries

The International Accounting Standards Board (IASB) recently proposed a new International Financial Reporting Standard (IFRS), which, if finalized, would permit a subsidiary to apply reduced disclosure requirements when applying IFRS in its financial statements provided that, at the end of its reporting period:

• The subsidiary does not have public accountability; and
• Its ultimate or any intermediate parent produces consolidated financial statements available for public use that comply with IFRS.

An entity has public accountability if (a) 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 (b) it holds assets in a fiduciary capacity for a broad group of outsiders (i.e., clients, customers or members not involved in the management of the entity) as one of its primary businesses (i.e., most banks, credit unions, insurance companies, securities brokers/dealers, mutual funds and investment banks).

An eligible subsidiary that elects to apply the proposed standard would apply IFRS except that the reduced disclosure requirements within the proposed standard would replace certain disclosures currently required by IFRS.

The Exposure Draft, Subsidiaries without Public Accountability: Disclosures, is available for comment until January 31, 2022.

This content was originally published on RSMUS.com.