Document ID: chunk:federal_register_of_legislation:F2025C00172:body:0:p87
Version: federal_register_of_legislation:F2025C00172
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of relevant information for users of financial statements;
(b) the basis of the exception to consolidation is the type of entity, rather than the underlying relationship between investors and investees; and
(c) there are no clear principles underpinning the classification of entities as investment entities and the criteria for identifying investment entities are rule-based and open to opportunistic behaviour.
BC4 As evident from the responses to ED 220, views were divided among Australian constituents.  Some expressed concerns similar to those of the AASB members.  However, others expressed broad support for requiring some types of entities to account for controlled investees at fair value through profit or loss, rather than having them consolidate such entities.
BC5 The AASB expressed its concerns in its submission to the IASB on IASB ED/2011/4.
BC6 In October 2012, the IASB amended IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosures of Interest in Other Entities and IAS 27 Separate Financial Statements for investment entities to provide an exception to consolidating particular subsidiaries for investment entities, requiring them instead to measure their investments in unconsolidated subsidiaries at fair value through profit or loss.
BC7 The AASB noted that its concerns with the ED/2011/4 proposals were not adequately addressed in the IASB amendments. The AASB also considered the disclosures required by the IASB amendments and noted that they require an investment entity to provide information about the exception to consolidation rather than addressing the loss of consolidation information that preparing a complete set of consolidated general purpose financial statements would provide.
BC8 Because of its concerns with the IASB amendments, the AASB decided to undertake further due process. After considering a number of different possible approaches to the recognition and measurement of controlled investees of investment entities, including (i) consolidation and (ii) fair value measurement with compensating disclosures, the AASB issued ED 233 Australian Additional Disclosures – Investment Entities in December 2012. It proposed to introduce the exception to consolidation for investment entities (as per the IASB amendments) and to require Australian additional disclosures for Australian entities that meet the IASB's investment entity criteria. The Australian additional disclosures proposed in ED 233 were in the form of:
• consolidated financial statements prepared in a manner consistent with the definition of consolidated financial statements in Appendix A of AASB 10 Consolidated Financial Statements; and
• a summary of the significant accounting policies used in preparing those consolidated financial statements that are not otherwise disclosed in accordance with AASB 101 Presentation of Financial Statements.
BC9 ED 233 also specifically asked respondents whether they have any alternative approaches/disclosure strategies that can be employed to minimise the adverse impact on the decision-making of the loss of consolidation information.
BC10 The AASB received