New standard – IFRS 19
IFRS 19 Subsidiaries without Public Accountability: Disclosures.
What’s the issue?
In May 2024, the International Accounting Standards Board (IASB) published IFRS 19 Subsidiaries without Public Accountability: Disclosures (IFRS 19). This new standardestablishes a reduced disclosure regime for eligible IFRS subsidiaries. An entity can choose to apply this new standard (i.e. it is not mandatory) and where it does so must apply the accounting recognition and measurement requirements in other IFRS Accounting Standards but may take certain disclosure exemptions.
What does this mean?
What is the scope of the new standard?
An entity may elect to apply this standard in its consolidated, separate or individual financial statements if, it is a subsidiary that:
- 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).
What are the aims and benefits of this new standard?
The main aim of IFRS 19 is to simplify the preparation of the financial statements of subsidiaries without public accountability, by allowing them to apply the accounting policies of their IFRS group when preparing their local financial statements.
Whilst the regime therefore sets out certain disclosure exemptions from the requirements of full IFRS Accounting Standards, there are exceptions in relation to IFRS 8 Operating Segments, IFRS 17 Insurance Contracts and IAS 33 Earnings per Share, where all the disclosure requirements in those standards must be applied.
How will this apply in the UK?
The UK Endorsement Board are reviewing the applicability of IFRS 19 for UK entities given that the UK accounting regime already includes FRS 101 Reduced Disclosure Framework as a permitted option for subsidiaries that fall within an IFRS-reporting group.
When is this effective?
IFRS 19 is optional for accounting periods beginning on or after 1 January 2027. Early application is permitted, subject to UK-adoption and EU-endorsement as relevant for your entity.
How can we help?
We are experts in assisting our clients with the preparation of their financial statements in all manner of scenarios.
Should you wish to apply the provisions of IFRS 19, we can assist in the preparation of the first-time IFRS 19 compliant financial statements, helping you to navigate the new disclosure requirements, and their interaction with UK legislative requirements.
Our approach is tailored to the needs of your business, so please get in touch with our Accounting advisory services team for a practical discussion on how this may impact you, and how we are able to assist.
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Companies face the ongoing, and ever-increasing, challenge of keeping up to date with the understanding, interpretation and implementation of new accounting requirements under UK GAAP and IFRS. However, accounting and financial reporting has become much more than just about compliance; it’s about transparency, being cohesive and striking the appropriate balance between being informative yet concise....