IFRS 19 – Reducing Disclosures for Subsidiaries
- Sergio Montebello
- Aug 8
- 3 min read
IFRS 19 is a disclosure-only standard that permits eligible entities to apply IFRS Accounting Standards with reduced disclosure burden. The International Accounting Standards Board (IASB) has published an Exposure Draft proposing amendments to its newest standard of IFRS 19 which would reduce disclosure requirements.
Who can apply it?
A company may elect to apply IFRS 19 in its consolidated, separate or individual financial statements provided that at the reporting date it meets the following three criteria:
It is a subsidiary;
it does not have public accountability; and
its ultimate parent produces consolidated financial statements that are available for public use that comply with IFRS Accounting Standards.
A subsidiary is deemed to have 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; or
it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses (e.g. Banks, credit unions, insurance companies, securities brokers/dealers, mutual funds and investment banks etc.).
The IFRS 19 disclosures are a reduced version of the disclosures set out in other IFRS accounting standards. Some of them are included below;
IFRS 7 – Financial Instruments: Disclosures
IFRS requires certain disclosures to be presented by category of instrument based on the IAS 39 measurement categories. Certain other disclosures are required by class of financial instrument. For those disclosures an entity must group its financial instruments into classes of similar instruments as appropriate to the nature of the information presented.
The two main categories of disclosures required by IFRS 7 are:
information about the significance of financial instruments.
information about the nature and extent of risks arising from financial instruments
IFRS 13 – Fair Value Measurement
The Board proposes an overall disclosure objective that requires an entity to disclose information that shows:
the significance of the assets and liabilities measured at fair value;
how the fair value measurements have been determined; and
how changes in those measurements affect the entity’s financial statements.
Specific disclosure objectives would then regard the fair value hierarchy, measurement uncertainties, possible alternative fair value measurements, and drivers of change in fair value measurements. The proposed amendments also note the kind of information needed to meet the disclosure objectives. In addition, the specific disclosure requirements also cover disclosures regarding assets and liabilities not measured at fair value in the statement of financial position but for which fair value is disclosed in the notes.
What are the benefits?
The application of IFRS 19 could bring cost savings to both the entity and the group as a result of the following;
This will save eligible subsidiaries time and effort in preparing their financial statements disclosures leading to more efficient preparation process.
It will eliminate the need for keeping dual accounting records.
It will reduce costs as there is no need for keeping a second set of accounting records for group reporting purposes.
IFRS 19 Disclosure tracker
The IASB has issued a disclosure tracker in December 2024 which requires free registration to access.
The IFRS 19 disclosure tracker lists the disclosure requirements in IFRS 19 and maps them to their equivalents in other IFRS Accounting Standards. An ‘x’ mark is given for disclosure requirements in other IFRS Accounting Standards that have no equivalents in IFRS 19.
It is intended to be a ‘living document’ that will be updated with changes to disclosure requirements in other IFRS and the corresponding changes to IFRS 19 itself.
Effective date and transition
The application of the new standard is optional for eligible entities. It is effective for reporting periods beginning on or after 1 January 2027 with earlier application permitted. If an entity chooses to apply IFRS 19 earlier, it is required to disclose that fact.
IFRS 19 has not been endorsed yet in the EU.
Get in Touch with Quazar
If you need further information or wish to understand how these amendments and new standards might have an impact on your organisation, contact us today. Our experienced team is here to help your organisation.
Get in Touch:
Rodianne Cutajar
rcutajar@quazar.mt / +356 2388 4600
