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Statement on the Application of IFRS 19, Subsidiaries without Public Accountability: Disclosures, in Filings with the SEC [1]

Erik Gerding
Director, Division of Corporation Finance

Paul Munter

Paul Munter
Chief Accountant

May 17, 2024

In May 2024, the International Accounting Standards Board (“IASB”) issued International Financial Reporting Standard (“IFRS”) 19, Subsidiaries without Public Accountability: Disclosures (“IFRS 19”), which permits certain subsidiaries of reporting companies to provide reduced disclosures when applying recognition, measurement, and presentation requirements of IFRS Accounting Standards.[2] IFRS 19 also specifies that eligible subsidiaries that elect to apply the standard must provide additional material disclosures when it determines that information is necessary to enable financial statement users to understand the impact of transactions, events, and conditions on the subsidiary’s financial position and financial performance.[3] Although the scope of IFRS 19 is limited to entities that do not have public accountability[4] at the end of their financial statement reporting period, there may be situations when financial statements that apply IFRS 19 are included in filings with the Securities and Exchange Commission (the “SEC” or the “Commission”). In these situations, we believe that the requirements of IFRS 19 are likely to necessitate additional disclosures in financial statements filed with the SEC because such financial statements are intended for use by investors in our public capital markets for making investment and voting decisions.

Under SEC rules, registrants are generally required to file certain financial statements prepared in accordance with U.S. GAAP.[5] Foreign private issuers,[6] however, are permitted to file financial statements that are prepared in accordance with IFRS as issued by the IASB, or, alternatively, in accordance with their home country GAAP with reconciliation to U.S. GAAP.[7] High quality financial information provided to investors is foundational to the integrity of our capital markets system. SEC rules specify that financial statements prepared in accordance with the applicable financial reporting framework (i.e., U.S. GAAP or IFRS as issued by the IASB) is the minimum requirement and registrants are required to consider whether additional material information is needed so that the required financial statements are not misleading.[8] This principle guides our interpretation of the application of IFRS 19 to the U.S. public securities markets.

In establishing the rules governing disclosure by foreign private issuers with securities trading in U.S. public securities markets, the Commission has recognized the importance of balancing the information needs of investors with the public interest served by opportunities to invest in a variety of securities. Historically, the Commission has supported initiatives to reduce regulatory burdens on foreign private issuers that are consistent with the Commission’s investor protection mandate.[9] We acknowledge the IASB’s efforts in promulgating IFRS 19 to promote efficiency for subsidiaries that do not have public accountability, whose parent company issues consolidated financial statements, inclusive of all disclosure requirements, in accordance with IFRS Accounting Standards,[10] while maintaining decision-useful information for users of financial statements in certain contexts. We also believe the requirement in IFRS 19 for entities to consider whether additional disclosures are necessary to provide an understanding of particular events or circumstances is critical for investor protection purposes in U.S. public securities markets. Disclosures that are fit for other purposes for entities without public accountability may not be sufficient to satisfy the needs of investors in the U.S. public securities markets.[11]

As just one example, if a foreign private issuer files documents with the SEC related to a merger with a foreign business that qualifies for and elects to apply IFRS 19, and the registrant is required to provide financial statements of the foreign business, the foreign business is required by IFRS 19 to consider whether additional material disclosures need to be included in its financial statements to enable investors to understand the impact of transactions, other events, and conditions on the foreign business’s financial position and financial performance. The purpose of including the foreign business’s financial statements in the SEC filing at the time of the transaction is to help investors better understand the nature and extent of the business being acquired and the resulting combined entity when making their voting or investment decisions. Given the purpose of inclusion of the foreign business’s financial statements in the registration statement, the needs of investors would likely be similar to the needs of investors in an entity with public accountability.[12] In such a scenario, even though the foreign business may be eligible to and has elected to apply IFRS 19 in order to benefit from reduced disclosures, it should carefully consider whether it is nevertheless required to include additional material disclosures from other IFRS Accounting Standards to achieve the objectives of financial reporting given the use of those financial statements in a filing with the SEC.[13]

We are committed to assisting registrants in fulfilling their responsibilities related to providing high-quality financial information to investors and other users of financial statements, and we remain available for consultation on issues related to the form and content of financial statements[14] and technical accounting matters,[15] including application of IFRS 19 in Commission filings.

[1] This statement is provided in the authors’ respective official capacities as the Director of the Division of Corporation Finance and the Commission’s Chief Accountant but does not necessarily reflect the views of the Commission, the Commissioners, or other members of the staff. It is not a rule, regulation, or statement of the Commission. The Commission has neither approved nor disapproved its content. This statement, like all staff statements, has no legal force or effect. It does not alter or amend applicable law, and it creates no new or additional obligations for any person. “Our” and “we” are used throughout this statement to refer to the staff of the Division of Corporation Finance and the Office of the Chief Accountant.

[2] See paragraph 2 of IFRS 19.

[3] See paragraph 6 of IFRS 19.

[4] See paragraph 11 of IFRS 19 (providing “[a]n entity has public accountability if: (a) its debt or equity instruments are traded in a public market or it is in the process of issuing such instruments for trading in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets); or (b) it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses (for example, banks, credit unions, insurance companies, securities brokers/dealers, mutual funds and investment banks often meet this second criterion”).

[5] See Regulation S-X Rule 4-01(a)(1) (stating that financial statements not prepared in accordance with “generally accepted accounting principles” are presumed to be misleading or inaccurate) [17 CFR 210.4-01(a)(1)]; see also Securities Act of 1933 (the “Securities Act”) and Commission Statement of Policy Reaffirming the Status of the FASB as a Designed Private-Sector Standard Setter, Release No. 33-8221 (together, designating the financial accounting and reporting standards promulgated by the Financial Accounting Standards Board to be “generally accepted” for purposes of the securities laws).

[6] See Rule 405 of Regulation C under the Securities Act and Rule 3b-4 of the Securities Exchange Act of 1934 (the “Exchange Act”) (defining “foreign private issuer”).

[7] See Rule 4-01(a)(2) of Regulation S-X [17 CFR 210.4-01(a)(2)].

[8] See Rule 4-01(a) of Regulation S-X [17 CFR 210.4-01].

[9] Securities Act Release No. 33-7745 (Sept. 28, 1999) [64 FR 53900] (citing Securities Act Release No. 6360 (Nov. 20, 1981) [46 FR 58511]).

[10] See paragraphs 7 to 12 of IFRS 19.

[11] See, e.g., Financial Accounting Standards Board Accounting Standards Update No. 2013-12, Definition of a Public Business Entity, at paragraph BC11. See also Chair Gary Gensler, Prepared Remarks Before the Investor Advisory Committee, available at (noting that Congress and the Commission have recognized that certain transactions or issuers should be exempt from the typical disclosure requirements, giving rise to the private markets, which have exemptions to certain disclosure requirements).

[12] See, e.g., Item 17(b) of Form 20-F (providing that, “[t]he financial statements shall disclose an information content substantially similar to financial statements that comply with U.S. generally accepted accounting principles and Regulation S-X”).

[13] See International Accounting Standards Board, The Conceptual Framework of Financial Reporting, at para. 1.2 (the objective of general purpose financial reporting is to provide information that is useful to investors in making decisions about (a) buying, selling, or holding securities, (b) providing or settling loans and other forms of credit, or (c) exercising rights to vote on management’s actions that affect the use of the entity’s economic resources).

[14] More information about how to submit requests for no-action, interpretive, or exemptive letters regarding the form and content of financial statements and other financial information required to be included in Commission filings is available on the Division of Corporation Finance’s webpage, available at

[15] More information about how to initiate a dialogue with OCA, what to expect from the consultation process, and what information should be included in a consultation submission in order for OCA to most quickly address a company’s or auditor’s question is available on OCA’s webpage, available at

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