IASB proposes to ease disclosure requirements for subsidiaries

The International Accounting Standards Board proposed Monday to reduce the disclosure requirements for eligible subsidiaries under International Financial Reporting Standards.

The proposal comes in response to feedback from constituents with the goal of easing financial reporting for subsidiaries while meeting the needs of users of their financial statements. The relaxed disclosure requirements would be available to subsidiaries without public accountability, companies that aren’t financial institutions or listed on a stock exchange, whose parent company prepares consolidated financial statements applying IFRS.

These subsidiaries report to their parent company for consolidation purposes applying IFRS. Opting to apply the proposed standard would allow them to also use IFRS when preparing their own financial statements but with reduced disclosures.

The standard would make disclosures easier for private companies. The IASB focused the disclosure requirements in the proposal to meet the needs of financial statement users of subsidiaries without public accountability. The proposals aim to save time and money for subsidiaries by reducing disclosures and getting rid of the need to keep an extra set of accounting records for reporting purposes if the subsidiary currently doesn’t apply IFRS in its own financial statements.

“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 IASB vice chair Sue Lloyd in a statement.

An exposure draft on the proposal is available here. The IASB has also created a snapshot overview of the proposal. The IASB is asking for comments on the proposal to be submitted by Jan. 31, 2022.