Consolidation
In June 2003, the IASB added a project on consolidation to its agenda. The consolidated financial statements of an entity present its assets, liabilities, equity, income, expenses and cash flows together with those of the entities it controls.
The project objective is to publish a single IFRS on consolidation replacing the IAS 27 Consolidated and Separate Financial Statements and the interpretation SIC-12 Consolidation - Special Purpose Entities. The project addresses the following aspects:
- a revision of the definition of control and related application guidance so that a control model can be applied to all entities.
- enhanced disclosures about consolidated and unconsolidated entities.
Where are we in the project?
In response to the recommendations of the Financial Stability Board, the IASB’s Board has accelerated its consolidation project and published an exposure draft in December 2008. The exposure draft comment period ended on 20 March 2009.
To read comment letters, click here.
The IASB held round-table discussions in June 2009 on its proposals for consolidation and derecognition of financial instruments in North America, Asia and Europe. Round-tables were also held for the project in September 2008.
Click here for further information.
At the October joint meeting, the IASB and the FASB agreed to conduct their respective consolidation projects jointly.
The boards discussed the following topics in January 2010:
- Power with less than a majority of the voting rights in an entity
- Options and convertible instruments to obtain voting rights
- Agency relationships (including kick-out rights and remuneration)
Tentative decisions taken by the boards are included in the full project report.
What will happen next?
In February and March, the boards will continue their deliberations, discussing:
- Agency relationships (including kick-out rights and remuneration)
- Disclosures
- Investment companies
- Transition
Estimated project completion
The current project plan envisages the issue of a revised standard in the second half of 2010.