The International Accounting Standards Board (IASB) is seeking feedback on three IFRS standards for group accounting, in order to assess their usefulness to users of financial statements, the ease of implementation and any unexpected costs of application
The move forms part of the post-implementation review of IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities.
IFRS 10 sets out requirements for the preparation of group financial statements; IFRS 11 addresses how to account for interests in joint arrangements; and IFRS 12 sets out the information to be disclosed in the notes to the financial statements about interests in other companies.
These IFRS standards have been effective for annual reporting periods beginning on or after 1 January 2013.
IFRS 10 provides a single consolidation model that identifies control as the basis for consolidation for all types of entities. Possible areas for investigation include power over an investee; the link between power and returns; investment entities; and accounting requirements for transactions that give rise to a change in ownership and the partial acquisition of a subsidiary that does not constitute a business.
IFRS 11 establishes a principles-based approach for the accounting for joint arrangements, in which the parties recognise their rights and obligations arising from these arrangements. Possible areas for investigation include collaborative arrangements outside the scope of the standard; classification of joint arrangements; and accounting requirements for joint operations.
IFRS 12 combines, enhances and replaces the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. The IASB is seeking views on the extent to which the requirements assist an entity to meet the objective of the standard.
Hans Hoogervorst, IASB chair, said: ‘Post-implementation reviews are an opportunity to check that our standards do the job they were intended to do. I encourage all stakeholders to help us in the process by providing relevant feedback.
Following this exercise, IASB says it will summarise its findings and state what steps, if any, it plans to take as a result of the review. It could decide to add a standard-setting project to its agenda, consider one or more matters further as part of its research programme, or both. The board could also decide to take no action.
The deadline for comments is 10 May 2021.