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IFRS 19 - EFRAG's survey on the expected costs and benefits - Preparers

Introduction

IFRS 19

IFRS 19 is the response to stakeholder feedback to the IASB’s 2015 Agenda Consultation, allowing some eligible subsidiaries to apply IFRS Accounting Standards with reduced disclosure requirements – which are all listed in IFRS 19. IFRS 19 aims to simplify subsidiaries’ financial reporting when the parent company applies IFRS Accounting Standards for consolidated financial statements as:
  • Subsidiaries applying local GAAP (or the IFRS for SMEs Accounting Standards) have recognition and measurement differences between their own financial statements and the amounts reported to their parent for group consolidation purposes;
  • Subsidiaries applying IFRS Accounting Standards do not face recognition and measurement differences, however, they consider the disclosure requirements disproportionate to users’ information needs.
Therefore, on 9 May 2024 the IASB issued IFRS 19 Subsidiaries without Public Accountability: Disclosures. IFRS 19 is a voluntary Standard and has an effective date of 1 January 2027, with early application permitted. More information on IFRS 19 can be found here.
 
Reduction in disclosure requirements

Eligible subsidiaries are expected to benefit from reduced time, cost and effort in preparing and auditing disclosures in their financial statements, while meeting users’ information needs. However, the benefits for companies will vary based on specific factors (e.g., current reporting systems and processes).
The IASB’s Effects Analysis provides an overview of the expected effects for companies and users of financial statements.

For example, the diagram below illustrates the percentage reduction in disclosure requirements:

Source: IASB, 2024
 
The EU Perspective

For European entities to be able to apply IFRS 19 on a voluntary basis, the following conditions need to be met:
  • the EU decides to endorse IFRS 19;
  • the entity falls within the scope of the Standard; and
  • EU Member States permit or require the use of IFRS Accounting Standards[1]

Therefore, if endorsed in the EU, IFRS 19 will apply to entities located in EU Member States that permit or require the use of IFRS in the annual accounts and/or consolidated financial statements of non-publicly traded entities in regulated markets. Therefore, its application may vary among EU jurisdictions, and entities need to review the options used in their jurisdiction to assess their eligibility.

If not endorsed, IFRS 19 will still affect EU parent entities with eligible subsidiaries outside the EU where IFRS Accounting Standards apply.

More information about the application and scope of IFRS 19 in the EU landscape can be found here: Briefing - "AN EU PERSPECTIVE ON THE SCOPE OF IFRS 19"[2].

As part of its endorsement activities, EFRAG invites preparers to provide their views on the expected costs and benefits of the implementation of IFRS 19, by filling in this survey.

[1] in accordance with Article 5 of the EU Regulation 1606/2002.
[2] If you would like to know more about the differences between the disclosure requirements between IFRS 19 and the EU Accounting Directive, please refer to this link: Briefing - "STUDY ON COMPATIBILITY OF THE EU ACCOUNTING DIRECTIVE WITH IFRS 19".
 
Purpose and Content of the Survey

Objective
The objective of this survey is to support EFRAG in performing a cost-benefit assessment of the implementation of IFRS 19. The survey results will be used and play an important role in EFRAG’s cost-benefit assessment, which forms part of the EU endorsement process and the assessment of whether the Standard is ‘conducive to the European public good’.

Structure
The survey consists of 24 questions, sorted into the following sections:
  • Section 0 – General Information – (Questions 1-2)
  • Section 1 – Accounting practices (Questions 3-5)
  • Section 2 – Application of IFRS 19 (Questions 6-12)
  • Section 3 – Cost and benefit assessment (Questions 13-23)
  • Section 4 – Other information (Question 24)
The completion of this survey should take up to 20 minutes.

Deadline and relevant information
Please submit your answers by 28 February 2025 by clicking on the ‘Submit’ button at the end of the survey.

Please note that you can save the draft questionnaire and go back to it at a later time by clicking on the button ‘Save and continue later’ in the right top corner of the page. EFRAG will only consider completed surveys.
 
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