The International Accounting Standards Board (IASB) has issued the new IFRS 19 standard, Subsidiaries without Public Accountability: Disclosures. Its main objective is to significantly reduce the volume of information (disclosures) that subsidiaries are required to provide in their financial statements, helping them save on administrative and audit costs.
What does IFRS 19 mean in practice?
The standard is based on the principle of “full accounting, simplified disclosures”:
- Accounting requirements remain unchanged: For the calculation and measurement of items (e.g. leases under IFRS 16), subsidiaries must continue to apply the full versions of all IFRS Accounting Standards.
- Disclosures are reduced: A company no longer needs to prepare dozens of pages of complex analyses. Instead, its financial statement notes will contain only a significantly reduced set of disclosures specified directly by IFRS 19.
Who does the standard apply to?
The application of IFRS 19 is entirely voluntary. A subsidiary can use it if it meets both of the following conditions:
- It does not have public accountability: Its shares or debt instruments are not publicly traded, and it is not a financial institution (such as a bank, insurance company or investment fund).
- It has an IFRS-reporting parent company: Its parent company prepares publicly available consolidated financial statements in full compliance with IFRS Accounting Standards.
When does the standard take effect?
The standard is officially effective for annual reporting periods beginning on or after 1 January 2027. However, the IASB permits early adoption, meaning it can be applied voluntarily to financial statements for 2026, for example.
Key benefits for companies
IFRS 19 addresses the issue of maintaining two sets of accounting data. Subsidiaries no longer necessarily need to maintain IFRS data for their parent company alongside separate local financial reporting for Czech authorities. They can align their accounting under IFRS, maintain a single set of accounting records, and at the same time use IFRS 19 to keep their local financial statements administratively lean.
