IFRS 19 is the latest IFRS accounting standard issued in May 2024. It is a disclosure-only standard that will significantly benefit many organisations and increase the pace of the adoption of global financial reporting standards such as IFRS accounting standards.
IFRS 19 results from feedback on permitting certain subsidiaries that meet specific eligibility criteria to have reduced disclosure requirements. It will ensure that eligible subsidiaries provide information that is proportional to the information needs of the users of their financial statements.
The new standard is also effective for reporting periods beginning on or after January 1, 2027; earlier application is also permitted. Organisations that apply IFRS 19 would also benefit from simplified reporting systems and processes without compromising the overall utility of the financial statements.
The new standard will be used alongside existing IFRS accounting standards, as eligible subsidiaries apply the requirements of other IFRS accounting standards except for the disclosure requirements and instead would apply the reduced disclosure guidance of IFRS 19.
IFRS 19 is a voluntary standard for eligible subsidiaries that do not have public accountability and whose ultimate or intermediate parent produces consolidated financial statements available for public use that comply with IFRS accounting standards. A subsidiary is defined as having public accountability if its debt or equity instruments are traded in a public market or if it holds assets in a fiduciary capacity (e.g. banks and insurance companies).
Since the IFRS 19 disclosures are a reduced version of other IFRS accounting standards, the IASB (International Accounting Standards Board) leveraged principles earlier applied while developing the IFRS for SMEs accounting standard when developing IFRS 19, making the process efficient.
IFRS 19 is bound to reduce the complexities experienced by groups that have subsidiaries reporting using local GAAP or IFRS for SMEs, including subsidiaries applying IFRS accounting standards.
Indications from stakeholder engagements by the IASB show that the disclosure requirements for some standards under IFRS 19 would be reduced by as much as 68 percent which is a welcome development for preparers and users of these financial statements. Groups with eligible subsidiaries should take advantage of the benefits of IFRS 19 to improve their financial reporting.
Akinyemi Awodumila is a Partner at Deloitte East Africa. He is an author who writes and speaks widely on corporate reporting topics.
