Purpose: The Standard allows qualifying subsidiaries to apply reduced disclosure requirements as per IFRS 19 while complying with the recognition, measurement and presentation requirements in other IFRS accounting standards.
- Parent companies and eligible subsidiaries can use the same accounting policies
- Fewer disclosures required for the subsidiary
- Balances information needs of users with cost savings for preparers
Eligible Subsidiary: A subsidiary is eligible if it does not have public accountability.
Public Accountability exists if:
- Public Trading: Equity or debt instruments are traded in a public market
- Financial Institutions: Banks, insurance companies, etc.
- Parent Compliance: Has an ultimate or intermediate parent that produces consolidated financial statements available for public use that comply with IFRS
Important Note: IFRS 19 is a disclosure-only standard and does not include recognition, measurement and presentation requirements.
- Works alongside other IFRS accounting standards
- Does not provide guidance on applying disclosure requirements
- Does not reduce disclosure requirements for IAS 33, IFRS 8 and IFRS 17
Simplified Disclosures: IFRS 19 requires a reduced set of disclosures compared to full IFRS standards.
Rationale: The IASB used its experience from the IFRS for SMEs Standard to develop principles identifying essential information needed by users of non-publicly accountable entities' financial statements.
Liquidity and Solvency: Information about generating cash flows and going concern.
Short-term Cash Flows, Obligations: Information about meeting financial commitments.
Measurement Uncertainty: Information about key assumptions and estimates in measuring amounts.
Disaggregation of Amounts: Breakdown of line items into meaningful components.
Accounting Policy Choices: Information about accounting policies applied, particularly where alternatives exist.
- Eligible entities are permitted but not required to apply IFRS 19 in their consolidated or individual financial statements
- A subsidiary can choose to revoke its election to apply IFRS 19 at any time
- May choose to apply the standard again in subsequent periods
- Any entity that applies IFRS 19 must make an explicit statement of that fact in the notes to the financial statements
| Entity | Status | IFRS 19 Application |
|---|---|---|
| Publicly Traded Subsidiary | Public Accountability | Not Eligible - Cannot apply |
| Bank Subsidiary | Financial Institution | Not Eligible - Cannot apply |
| Private Manufacturing Subsidiary | No Public Accountability | Eligible - May choose to apply |
- Determine if the subsidiary qualifies under eligibility criteria
- Make decision whether to apply IFRS 19
- Apply recognition, measurement and presentation requirements from other IFRS standards
- Apply reduced disclosure requirements from IFRS 19
- Include explicit statement of IFRS 19 application in financial statement notes
- Monitor for any changes in eligibility status