Document ID: chunk:federal_register_of_legislation:F2022C01110:reg:20:p18
Version: federal_register_of_legislation:F2022C01110
Segment Type: reg
Provision Reference: reg 20 (pt 18/40)
Character Range: 86653–89584

to prepare financial information based on the recognition and measurement requirements of full IFRSs for the purposes of the parent entity consolidation.  If such subsidiaries are not themselves publicly accountable but apply full IFRSs (as they are already applying full IFRS recognition and measurement for consolidation purposes), they are required to disclose information that is onerous to prepare and is often of no benefit to users.  If they were to adopt the IFRS for SMEs as proposed, they could choose to refer to a full IFRS for an option that is not included in the IFRS for SMEs.  However, they are then required to follow the disclosure requirements of that full IFRS.  A stand-alone IFRS for SMEs that includes only the absolute minimum necessary disclosures, more topics and more of the treatment options from full IFRSs may alleviate the problem.  However, it seems likely that subsidiaries within large groups would be involved in a wider range of activities and transactions than an equivalent SME that is not part of a group.  Accordingly, it may be necessary for the IASB to consider permitting subsidiaries of publicly accountable entities to prepare general purpose financial statements by applying all the recognition and measurement requirements of full IFRSs, but permitting reduced disclosures similar to those required by the IFRS for SMEs.
BC72            However, the IFRS for SMEs, published in July 2009, did not address many of the Australian constituents' concerns.  The IFRS for SMEs changes some of the full IFRS recognition and measurement accounting policy options by mandating or eliminating a particular option or introducing 'new' options.  That means some of the full IFRS recognition and measurement accounting policy options are not available to SMEs and there are some that differ from comparable full IFRS recognition and measurement requirements.
BC73            The AASB discussed the IFRS for SMEs with a view to assessing its suitability as Tier 2 requirements.  The AASB noted that there are concerns about adopting the IFRS for SMEs in Australia for the following reasons:
(a)                    some of the accounting policy options that have been removed would be the favoured accounting policies for many Australian entities;
(b)                   changes to full IFRS recognition and measurement requirements under the IFRS for SMEs and the absence of some accounting policy options from the IFRS for SMEs would force subsidiaries to adjust accounting policies for consolidation purposes when parents apply full IFRSs;
(c)                    entities applying the IFRS for SMEs would be deprived of improvements and simplifications as they become available at the full IFRS level because the IASB has stated that it will only update the IFRS for SMEs once there have been two years of broad adoption and, thereafter, every three years;
(d)                   possible benefits