Eliminating unnecessary disclosures for state-controlled entities

The International Accounting Standards Board has published a revised proposal to simplify the disclosure requirements that apply to state-controlled entities.

IAS 24, Related Party Disclosures, requires entities to provide disclosures about transactions with related parties. However, state-controlled entities may find it difficult and costly to provide all the required details for transactions with other state-controlled entities. The IASB believes that it is possible to omit some of the required details while still providing sufficient information to users of financial statements.

As a result, the IASB published in 2007 a proposal to exempt state-controlled entities from providing disclosures about transactions with other state-controlled entities if specified conditions were met. However, respondents were concerned about the complexity of the proposals. The IASB has therefore modified its proposed exemption for state-controlled entities and is publishing this revised proposal today.

Unlike the original proposal, the revised exemption would not require state-controlled entities to assess the extent of state influence. It would exempt such entities from providing full details about transactions with other state-controlled entities and the state. Instead (unlike the 2007 exposure draft), it would require general disclosures about the types and extent of significant transactions.

The IASB would particularly like to hear from respondents whether the proposals would give investors and analysts the information they need without imposing unnecessary burdens on preparers of financial statements.

The IASB invites comments on the exposure draft Relationships with the State (Proposed amendments to IAS 24) by March 13, 2009. For more details on the project or to view the exposure draft, visit the ‘Related party disclosures’ project page on http://www.iasb.org/.