Another one! IASB releases a new standard, IFRS 19

Home » IFRS » Another one! IASB releases a new standard, IFRS 19

Another one! IASB releases a new standard, IFRS 19

May 9, 2024 | IFRS

Hot on the heels of IFRS 18 Presentation and Disclosure in Financial Statements, the IASB has released the next standard in the IFRS series. IFRS 19 Subsidiaries without Public Accountability: Disclosures was officially published on 9 May 2024 and is set to be a game changer for certain entities as the standard-setting body continues to pursue the objective of limiting financial statements to what is relevant for primary users of financial statements.

The standard is an optional standard for a subsidiary to apply in its consolidated, separate or individual financial statements if it does not have public accountability and has an ultimate parent that consolidates in accordance with IFRS. An entity does not have public accountability if it does not have debt or equity traded in a public market or hold assets in a fiduciary capacity. Sound familiar?

The public accountability definition may be familiar to you because it applies to entities eligible to apply IFRS For SME’s. This standard may have been unattractive for entities to apply for a variety of reasons. Whereas IFRS For SME’s has reduced disclosures, the standard has certain requirements such as the amortisation of goodwill which preparers of financial statements may find unattractive.

Extent of reduction

This is the problem that IFRS 19 will look to solve; allow entities to apply the requirements of full IFRS while reducing the amount of disclosure that they would have in their financial statements. If an entity elects to apply IFRS 19, it is permitted to revoke that election in subsequent financial periods.

A good illustration of the reduction in disclosures relates to the requirements for financial instruments under IFRS 7 which make up a whopping 29 pages covering qualitative and quantitative disclosures for financial assets and liabilities as well as hedging. Under IFRS 19, these disclosures are now only 9 pages meaning that the requirements have been reduced by approximately 70%.

The standard is applicable for financial statements beginning on or after 1 January 2027 with earlier application permitted meaning that the standard can be applied in your current financial statements. Entities also have the option of applying the standard to the current period but not the immediately preceding period.

Written by KC Rottok Chesaina, Chief IFRS Officer at Financial Minds. For IFRS training and consulting, email us on ask@fineminds.co.za 

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