On 9 May 2024, the International Accounting Standards Board (IASB) published its new standard IFRS 19 Subsidiaries without Public Accountability: Disclosures. The new standard will be effective for annual periods beginning on or after 1 January 2027.
When their parent applies IFRS Accounting Standards, subsidiaries generally apply the recognition and measurement requirements in IFRS Accounting Standards when reporting to their parent for consolidation purposes.
The IASB received feedback that some of these subsidiaries would like to prepare their own financial statements by applying IFRS Accounting Standards with reduced disclosure requirements. To address this issue, the IASB published an exposure draft (ED) in July 2021 and finalised this project by publishing IFRS 19.
IFRS 19 specifies the disclosure requirements an entity is permitted to apply instead of the disclosure requirements in the other IFRS Accounting Standards.
An entity is only permitted to apply IFRS 19 when:
A subsidiary has public accountability if:
Eligible entities can, but are not required to, apply IFRS 19 in its consolidated, separate or individual financial statements. An eligible intermediate parent that does not apply IFRS 19 in its consolidated financial statement may do so in its separate financial statements (these are presented in addition to consolidated financial statements or in addition to the financial statements of an investor that does not have investments in subsidiaries but has investments in associates or joint ventures in which the investments in associates or joint ventures are required by IAS 28 to be accounted for using the equity method).
The disclosure requirements in IFRS 19 are a reduced version of the disclosure requirements set out in other IFRS Accounting Standards.
IFRS 19 is a disclosure-only standard. An eligible subsidiary that applies IFRS 19 is required to apply the requirements in other IFRS Accounting Standards for recognition, measurement and presentation requirements. For disclosure requirements, it applies IFRS 19 instead of the disclosure requirements in other IFRS Accounting Standards, except in specified circumstances.
In accordance with IFRS 18 Presentation and Disclosure in Financial Statements, an entity applying IFRS 19 is not required to provide a specific disclosure required by IFRS 19 if the information resulting from that disclosure would not be material.
An entity is required to consider whether to provide additional disclosures when compliance with the specific requirements in IFRS 19 is insufficient to enable users of financial statements to understand the effect of transactions and other events and conditions on the entity’s financial position and financial performance.
IFRS 19 is effective for reporting periods beginning on or after 1 January 2027. Earlier application is permitted. If an entity chooses to apply IFRS 19 earlier, it is required to disclose that fact. Please note that IFRS 19 will not be applicable in the EU until it is endorsed by the European Commission, which is not expected to be before one year.
If an entity applies IFRS 19 in the current reporting period but not in the immediately preceding period, it is required to provide comparative information (that is, information for the preceding period) for all amounts reported in the current period’s financial statements, unless IFRS 19 or another IFRS Accounting Standard permits or requires otherwise.
An entity that elects to apply IFRS 19 for a reporting period earlier than the reporting period in which it first applies IFRS 18 is required to apply a modified set of disclosure requirements set out in an appendix to IFRS 19.
You can find more information in iGAAP in Focus — Financial reporting: IASB introduces reduced disclosure framework for subsidiaries.
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