Consolidation
In June 2003, the IASB added a project on consolidation to its agenda. The consolidated financial statements of a reporting 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.
In February 2010, the IASB tentatively decided to combine the disclosure requirements for subsidiaries, joint ventures and associates within a comprehensive disclosure standard that will address a reporting entity's involvement with other entities. This comprehensive disclosure standard will also include disclosures related to risks associated with structured entities that the reporting entity does not control.
Tentative decisions taken by the boards are included in the full project report.
What will happen next?
In March and April, the boards will continue their deliberations, discussing:
- The control model
- Agency relationships
- Structured entities
- Disclosures
- Investment companies
- Transition
Estimated project completion
The current project plan envisages the issue of the comprehensive disclosure standard in the second quarter of 2010 and a revised consolidation standard in the fourth quarter of 2010.