Alert: Exposure Draft – Subsidiaries without Public Accountability: Disclosures (July 2021)

Date: July 26, 2021
Type: IFRS
Category: Alerts

Alert: Exposure Draft – Subsidiaries without Public Accountability: Disclosures (July 2021)

In July 2021, the International Accounting Standards Board (“IASB”) issued for public comment the Exposure Draft, Subsidiaries without Public Accountability: Disclosures proposing a new, optional IFRS standard that would allow eligible subsidiaries to apply IFRS standards with a reduced set of disclosure requirements.


When reporting to a parent company for the purpose of consolidation in accordance with IFRS, a subsidiary generally applies the recognition and measurement requirements in IFRS standards. If the subsidiary does not apply IFRS standards in its own financial statements, it would have to maintain additional accounting records to comply with IFRS for the purpose of reporting to its parent company. The Exposure Draft was developed in response to requests for the IASB to develop an IFRS standard that would allow subsidiaries without public accountability to apply IFRS standards, but with reduced disclosure requirements, to reduce the cost of preparing financial information.

Proposed Standard

The proposed standard would permit an eligible subsidiary to elect to use the recognition, measurement and presentation requirements of the IFRS Standards when preparing its own financial statements, while providing reduced disclosures. The proposed standard specifies which disclosure requirements an entity would apply when following the new standard, as well as which disclosure requirements in other IFRS standards would be replaced by the disclosure requirements in the proposed standard.

A subsidiary would be eligible to apply the proposed standard if it meets the following requirements at the end of its reporting period:

  • The subsidiary does not have public accountability (i.e., its debt or equity instruments are not traded in a public market or is not in the process of issuing such instruments for trading in a public market; or does not hold assets in a fiduciary capacity for a broad group of outsiders as its primary businesses), and
  • Its ultimate or immediate parent company prepares consolidated financial statements available for public use by applying IFRS standards.

An eligible subsidiary may elect to apply the proposed standard and may later revoke that election. In addition, this election could be applied more than once.

The proposal would not affect the information disclosed in the parent’s consolidated financial statements.

The Exposure Draft does not propose an effective date; however, earlier application would be permitted.

The Exposure Draft is open for public comment until January 31, 2022.


The full history of the IASB’s project on Disclosure Initiative – Subsidiaries without Public Accountability: Disclosures is available here.

The Accounting Standards Board (“AcSB”) is currently monitoring the IASB’s project. A full history of the AcSB’s corresponding project is available here.

This communication contains a general overview of the topic and is current as of July 26, 2021. This information is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional. Contact your local MNP representative for customized assistance with the application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2021. All rights reserved.

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Michelle Balmer CPA, CA

Vice President, Assurance

Michelle Balmer, CPA, CA, is a Senior Assurance Services Partner with MNP. With 14 years of experience in public practice, Michelle helps a broad range of public and privately held companies in a variety of industries. She also works on special projects, including costing studies, benchmarking and best-practice studies, operational analyses, litigation support and due diligence.

As a key member of MNP's Assurance team, Michelle has played an instrumental role in assurance policy development, implementing accounting and assurance standards firm-wide and educating assurance practitioners regarding methodologies and new pronouncements. She also provides technical advice and consultation on accounting and assurance issues, as well as on rules of professional conduct issues, to all MNP practitioners.

Michelle was certified a Chartered Accountant (CA) after obtaining a Bachelor of Commerce degree from the University of Alberta. She has been actively involved with the Institute of Chartered Accountants of Alberta, including the Chartered Accountants School of Business, in an instructional and marketing capacity. An avid volunteer, she has assisted numerous groups such as the Easter Seals of Alberta, Paralympic Sports Association and Junior Achievement of Northern Alberta.