The International Accounting Standards Board
(IASB) has completed the process of improving accounting
requirements for off balance sheet activities and joint

The IASB issued IFRS 10 Consolidated Financial
Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of
Interests in Other Entities. 

The IASB said that the completion of this
review brings the accounting treatment for off balance sheet
activities under IFRSs and US GAAP broadly into alignment, and
concludes an important element of the IASB’s comprehensive response
to the financial crisis.

IASB chairman
David Tweedie
said the improvements tighten up the reporting
requirements for the consolidation of subsidiaries and special
purpose vehicles, and require the substance of joint arrangements
to be revealed.

“The comprehensive disclosure requirements
will help investors to understand better risks associated with the
creation or management of special purpose vehicles.

As a package, these changes will provide a
check on off balance sheet activities and give investors a much
clearer picture of the nature and extent of a company’s involvement
with other entities,” Tweedie

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Deloitte head of IFRS leadership team Veronica
Poole said the new standards are an improvement on current IFRSs
but as always, will create challenges for corporate
KPMG UK technical accounting partner Mike Metcalf said that
although IFRSs 10 and 11 are not effective immediately, companies
need to start assessing whether they will change their
consolidation conclusion, or the method of accounting for joint

“The introduction of IFRS 10 and 11 could
change the shape of the balance sheet for organisations in
industries such as the mining, property and financial sectors,
requiring preparers and investors to adjust to a new financial
reporting regime,” he added.