On 13 May 2026, the UK Endorsement Board endorsed IFRS 19 Subsidiaries without Public Accountability: Disclosures, effective for annual periods beginning on or after 1 January 2027, with EU endorsement expected later this year.

For multinational groups reporting under International Financial Reporting Standards (IFRS), this standard potentially introduces a great opportunity to align the accounting framework applied to local subsidiaries with that applied in the Group accounts. This is because it facilitates the use of IFRS in the statutory accounts of subsidiaries by providing a reduced disclosure framework for those accounts.

What is IFRS 19?

IFRS 19 is a voluntary standard, issued by the International Accounting Standards Board, that lets eligible subsidiaries apply the recognition and measurement of full IFRS, with reduced disclosure requirements, which mainly follow the disclosures required by the IFRS for SMEs. It is based on a similar concept that we have had in the UK since November 2012, under the accounting standard, FRS 101 Reduced Disclosure Framework.

What problem does this solve?

At the moment, finance teams in international groups often need to complete a time-consuming GAAP reconciliation process at year end, because the Group uses full IFRS for the parent’s consolidated group reporting but local GAAP for each subsidiary’s statutory financial statements.

This is the norm, even where IFRS is available for use locally, simply because the disclosures in full IFRS financial statements are so extensive.

Removing the need to produce all the extra disclosures required by IFRS opens the door to aligning the local accounting policies with the Group policies, thereby entirely removing the need to prepare statutory accounts under local GAAP.

Who is eligible?

A subsidiary can apply IFRS 19 if:

• It does not have public accountability, which means it does not have publicly traded debt or equity instruments (generally, it is not listed), nor does it hold assets in a fiduciary capacity for a broad group of outsiders (eg it is not a bank).
• Its ultimate or intermediate parent produces consolidated financial statements available for public use that comply with IFRS Accounting Standards.

Key changes and benefits

IFRS 19 introduces a ‘best of both worlds’ approach for compliance:

• One set of accounting records: Subsidiaries no longer need to juggle adjustments between local statutory accounts and group reporting packs. The numbers remain consistent; only the disclosures change.
• Cost and efficiency: International groups have to produce local accounts in each jurisdiction for statutory filing and tax purposes. Some groups produce IFRS accounts for their local entities then convert them to local GAAP, others take the local GAAP accounts and convert them to IFRS for Group reporting. By introducing the possibility of having one set of numbers, IFRS 19 can streamline the year-end close process and potentially reduce external audit costs by avoiding the need to identify differences between local GAAP and IFRS, a process that many businesses currently spend a lot of time (and money) getting right.

Preparing for IFRS 19 adoption

While IFRS 19 simplifies disclosures, the initial transition requires a strategic assessment of your global footprint and local reporting requirements.

There are many factors to consider, starting with a review of the regulatory regime in each country and assessing how statutory accounts might be impacted by local laws and regulations, and further considerations around tax and other compliance activities in-country which may require some element of GAAP conversion to still be required.

Our Global Financial Statements team specialises in managing complex multi-jurisdictional reporting. At this point we can support you with impact assessments to help determine which entities are eligible, assist with the transition and manage the ongoing preparation of your global statutory accounts.

If you would like to discuss how IFRS 19 could streamline your group reporting, please contact Liam Dawe or your usual RSM contact.

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