Following the release of IFRS 19 (Subsidiaries without Public Accountability: Disclosures) by the International Accounting Standards Board (IASB), eligible subsidiaries can now significantly reduce their disclosure burden while remaining fully compliant with IFRS Accounting Standards.
Below, we break down what IFRS 19 entails, how it compares to the UK’s existing reduced disclosure framework (FRS 101), and how to decide which route best serves your group structure. content here.
IFRS 19 allows qualifying subsidiaries to prepare financial statements using full IFRS recognition and measurement principles, but with reduced disclosure requirements.
Historically, subsidiaries reporting under IFRS had to meet the same extensive disclosure standards as listed entities, resulting in disproportionate preparation costs and detailed notes that often added little practical value for group stakeholders. IFRS 19 bridges this gap by tailoring disclosures specifically to the needs of users of non-publicly accountable entity accounts.
A subsidiary may choose to adopt IFRS 19 in its consolidated or separate financial statements provided that, at the reporting date:
It does not have public accountability (i.e., its debt or equity is not publicly traded, and it does not hold assets in a fiduciary capacity, such as a bank or insurer).
Its parent produces consolidated financial statements available for public use that are prepared in accordance with IFRS Accounting Standards.
Entities transitioning to IFRS 19 from UK GAAP (FRS 101 or FRS 102) will follow the first-time adoption rules under IFRS 1, using IFRS 19’s reduced disclosure framework.
Subsidiaries adopting IFRS 19 must include an explicit statement of compliance within their accounting policies. While the standard does not prescribe rigid wording, the following templates provide appropriate baseline language (subject to management review):
“These [consolidated/separate] financial statements have been prepared in accordance with IFRS Accounting Standards and the reduced disclosure requirements of IFRS 19 (Subsidiaries without Public Accountability: Disclosures).”
“These [consolidated/separate] financial statements have been prepared in accordance with UK-adopted international accounting standards (“UK-adopted IFRS”) and the reduced disclosure requirements of IFRS 19 (Subsidiaries without Public Accountability: Disclosures).”
For UK subsidiaries, reduced disclosure options are not new – FRS 101 (Reduced Disclosure Framework) has long served as the standard choice. However, key technical differences dictate which framework is permissible or advantageous for your business.
| Feature/ Requirement | FRS 101 (UK GAAP) | IFRS 19 (IFRS Framework) |
| Parent accounting standard | Ultimate parent’s consolidated accounts can be under any recognised GAAP giving a true & fair view (e.g., US GAAP, UK GAAP, IFRS). | Parent’s consolidated accounts must be prepared under full IFRS Accounting Standards. |
| Scope of application | Available only for individual (standalone) financial statements of qualifying entities. | Available for both individual standalone accounts and sub-group consolidated financial statements. |
| Parent company use | Ultimate or intermediate parent entities can use FRS 101 for their own individual accounts. | Strictly restricted to subsidiary entities. |
| Cash flow statement | Full exemption from presenting a Statement of Cash Flows (IAS 7). | Cash Flow Statement is required, though with reduced note disclosures. |
| Accounting standard basis | Applies UK GAAP (Companies Act format and minor UK modifications applied to IFRS rules). | Applies pure IFRS Accounting Standards for recognition and measurement. |
| First-time adoption | Regulated by FRS 101 Reduced Disclosure Framework. | Regulated by IFRS 1 (First-time Adoption of IFRS). |
Evaluating the options: Pros & cons
Choosing the right financial reporting framework is a balance between regulatory compliance, cost efficiency, and practical group reporting.
Whether you are considering adopting IFRS 19, reviewing the continued suitability of FRS 101, or assessing reporting requirements across a complex group structure, Affinia’s Audit and Accounting Advisory team can help you evaluate the most appropriate approach.
