The Singapore Accounting Standards Committee (ASC) has publicly responded to the International Accounting Standards Board’s (IASB) July 2024 Exposure Draft proposing amendments to IFRS 19 ‘Subsidiaries without Public Accountability: Disclosures’. The ASC, operating under the Accounting and Corporate Regulatory Authority (ACRA), broadly supports the IASB’s efforts to reduce reporting burdens for eligible subsidiaries while ensuring critical information reaches stakeholders.
In its formal comment letter dated 15 November 2024, the ASC endorsed several key proposals but also provided specific recommendations to enhance clarity and avoid redundancy. Key points from the ASC’s feedback include:
- Support for Streamlining: The ASC agrees with the removal of disclosure requirements for management-defined performance measures (MPMs), noting their rare use by subsidiaries without public accountability. Referring users to IFRS 18 for MPMs is seen as simplifying the standard. The ASC also supports eliminating the specific disclosure objective (para 137) concerning covenants on non-current liabilities, believing the remaining requirements suffice.
- Essential Disclosures Retained: The ASC strongly supports retaining the disclosure requirements for supplier finance arrangements within IFRS 19, emphasizing their importance for understanding short-term liquidity. However, it recommends against adding the IAS 7 (SFRS(I) 1-7) definition of these arrangements into para 167A of IFRS 19. The ASC argues that as a standalone reduced disclosure standard, duplicating definitions from other IFRSs (like IFRS 2 or IFRS 3) risks inconsistencies and is unnecessary for clarity.
- Alignment with Recent Amendments: The ASC endorsed the proposals to retain within IFRS 19 the disclosure requirements stemming from recent amendments to other standards:
- IAS 12 (Income Tax) amendments related to Pillar Two model rules, including the temporary exception and targeted disclosures.
- The 2023 amendments concerning the ‘lack of exchangeability’ (assessing exchangeability, determining exchange rates, and disclosures).
- The 2024 amendments on financial instruments with ESG-linked or other contingent features. The ASC stressed that disclosures about contractual terms altering cash flows due to non-basic lending risks remain essential, particularly given the rise of sustainable finance.
- RARL Standard Alignment: The ASC supports the IASB’s position that entities applying both IFRS 19 and the Reduced Disclosure Requirements (RDR) within the forthcoming IFRS Accounting Standard for the Reporting of Financial Performance (RARL Standard) should comply with all RARL Standard disclosure requirements. The ASC concurs that limited reductions wouldn’t yield significant cost savings.
The ASC’s feedback underscores Singapore’s commitment to a globally consistent, high-quality financial reporting framework that balances the need for relevant information with the cost of preparation for smaller entities. The IASB will consider this and other global responses before finalizing the amendments to IFRS 19.
Source: ACRA, 15 November 2024.