The International Accounting Standards Board (IASB) has published an Exposure Draft proposing a narrow amendment to the IFRS (International Financial Reporting Standards) for SMEs (small and medium-sized enterprises) Accounting Standard.
The proposal would introduce a consolidation exemption for certain intermediate parent entities.
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Under the draft, the exemption would apply where a parent or ultimate parent is an investment entity that does not prepare consolidated financial statements.
Instead, that parent would present financial statements in which its subsidiaries are measured at fair value through profit or loss under IFRS 10 Consolidated Financial Statements.
The proposal follows a recommendation from the SME Implementation Group. The issue was raised after the group received a question about the application of the exemption from presenting consolidated financial statements in paragraph 9.3 of the IFRS for SMEs.
That question asked whether SMEs could use the exemption when their ultimate or intermediary parent is an investment entity that does not present consolidated financial statements.
The SME Implementation Group then referred the matter to the IASB, which decided to propose a targeted amendment to the standard.
According to the IASB, the change is intended to give eligible SMEs the same cost savings available to similar entities applying full IFRS Accounting Standards.
The consultation is open for comment until 9 September 2026.
If approved, the amendment would take effect for periods beginning on or after 1 January 2027.
The IASB has also proposed that SMEs apply the amendment at the same time, and on the same basis, as they apply the third edition of the standard.
