Reduced disclosures for subsidiaries without public accountability, but not in Australia

On 9 May 2024, the International Accounting Standards Board (IASB) issued IFRS 19 Subsidiaries without Public Accountability: Disclosures, which permits eligible subsidiaries to apply reduced disclosure requirements while applying the recognition, measurement and presentation requirements in IFRS® Accounting Standards. IFRS 19 is effective for annual reporting periods beginning on or after 1 January 2027, with earlier application permitted.

If Australia adopts IFRS 19, it will require more disclosures than those currently mandated for Tier 2 entities under AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities.

Which subsidiaries are eligible?

An entity is eligible to apply IFRS 19 in its consolidated, separate or individual financial statements if it meets all of the following eligibility criteria at the end of the reporting period:

The entity is a subsidiary (as defined in Appendix A of IFRS 10 Consolidated Financial Statements)
The entity does not have public accountability
The entity has an ultimate or intermediate parent that produces consolidated financial statements available for public use that comply with IFRS Accounting Standards.

An intermediate parent that does not have public accountability and meets the above eligibility conditions is permitted to apply IFRS 19 in its separate financial statements even if it does not apply IFRS 19 in its consolidated financial statements.

An entity has 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.

Can IFRS 19 be applied in Australia now?

No. IFRS 19 can only be applied in Australia once it is approved by the Australian Accounting Standards Board (AASB). We do not expect this to happen soon because the AASB will take time to consider IFRS 19 in the context of AASB 1060, which will be subject to a post-implementation review.

What does this mean for Simplified Disclosures?

If IFRS 19 is adopted in Australia without amendment and AASB 1060 is withdrawn, many Tier 2 entities will be disadvantaged because IFRS 19 contains more extensive disclosures than AASB 1060. Australian Tier 2 entities had to change reporting templates just two years ago to comply with AASB 1060, and many would not welcome having to transition to another reporting framework within such a short period.

Another disadvantage is that IFRS 19 can only be applied by eligible subsidiaries, resulting in some Tier 2 entities applying IFRS Accounting Standards as if they were a Tier 1 entity. This could apply, for example, if the Tier 2 entity in Australia:

Is not a subsidiary (the Tier 2 entity is an Australian entity or group)
Is a subsidiary, but its ultimate or intermediate parent does not produce consolidated financial statements available for public use that comply with IFRS Accounting Standards.

There could be some advantages though. Australian subsidiaries of global multinational groups would be able to apply the same financial reporting framework (IFRS 19) as subsidiaries in other overseas jurisdictions.

More information

Please refer to our article and publication for more information about IFRS 19.

Need help?

Please contact our IFRS & Corporate Reporting team if you have questions or require assistance preparing your Simplified Disclosures financial reports.