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IASB: Consolidation exception for eligible SMEs
- 05 June 2026
- Accounting
- South African Accounting Academy
Summary:
The International Accounting Standards Board (IASB) has introduced a consolidation exception for intermediate parents that have a parent or ultimate parent that is an investment entity and that does not produce consolidated financial statements.
Article:
Via this Exposure Draft Consolidation Exception, the IASB is proposing amendments to the IFRS for SMEs Accounting Standard to introduce an exception from presenting consolidated financial statements for an SME with an ultimate (or intermediary) parent that is an investment entity and that does not present consolidated financial statements. Instead, the investment entity parent presents financial statements in which its subsidiaries are measured at fair value through profit or loss in accordance with IFRS 10 Consolidated Financial Statements.
The proposed amendments would affect any SME that is an intermediate parent and whose ultimate parent (or any intermediate parent) presents financial statements that comply with full IFRS Accounting Standards, in which all its subsidiaries are measured at fair value through profit or loss. Those SMEs would be permitted but not required to apply the exception.
Deadline for comments is 9 September 2026.
The IASB plans to issue any resulting amendments by the end of 2026.
Click here to download the 19-page Exposure Draft:
Relevance to Auditors, Independent Reviewers & Accountants:
- As an auditor and independent reviewer, you need to consider your clients’ compliance with accounting standards.
- Auditors, Independent Reviewers and Accountants should be aware of the latest publications and guidance issued by regulators and standard-setting boards, such as the IASB.
- As an accountant and compiler of financial statements, you need to consider amendments and proposed amendments to standards that are issued by the standard-setting bodies, e.g. IASB, IAASB, etc.
- The proposed amendments would affect any SME that is an intermediate parent and whose ultimate parent (or any intermediate parent) presents financial statements that comply with full IFRS Accounting Standards, in which all its subsidiaries are measured at fair value through profit or loss. Those SMEs would be permitted but not required to apply the exception.
Relevance to Your clients:
- An entity compiling filing financials need to consider amendments and proposed amendments to standards that are issued by the standard-setting bodies, e.g. IASB, IAASB, etc.
- The proposed amendments would affect any SME that is an intermediate parent and whose ultimate parent (or any intermediate parent) presents financial statements that comply with full IFRS Accounting Standards, in which all its subsidiaries are measured at fair value through profit or loss. Those SMEs would be permitted but not required to apply the exception.