The International Accounting Standards Board has introduced a new rather important standard that will permit eligible subsidiaries within a consolidated IFRS-compliant group to apply IFRS with reduced disclosure requirements. This is what many stakeholders have previously asked developers to do, emphasizing the need to reduce the burden, but so that it does not affect the quality of information disclosed in the financial statements.
The new disclosure standard is not for everyone, but for organizations that comply with IFRS and do not have public accountability.
With organizations without public accountability, everything is clear: these are companies that are not financial institutions or listed on stock exchange. The IASB adjusted its requirements to the information needs of users of the reporting of such organizations.
At the same time, their parent organizations must prepare consolidated financial statements based on the requirements of IFRS. If this is the case, then subsidiaries also report to their parent for consolidation purposes on the basis of IFRS. But if so far they have had to follow a full set of requirements, the optional choice of alternatives will make their lives much easier, in particular, by eliminating the need for additional reporting if they follow a different set of standards in their separate reporting.
"Our proposed standard aims to provide a solution that will simplify reporting and be cost-effective for subsidiaries while meeting the information needs of the users of their financial statements,” said Sue Lloyd, Vice -Chair of the Board.
You can express your opinion on the new disclosure standard by the end of January 2022.