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IFRS 10 replaces IAS 27 'Consolidated and Separate Financial Statements' and SIC-12 'Consolidation — Special Purpose Entities' and sets out a single consolidation model that identifies control as the basis for consolidation for all types of entities. IFRS 11 establishes principles for the financial reporting by parties to a joint arrangement, and replaces IAS 31 'Interests in Joint Ventures' and SIC-13 — 'Jointly Controlled Entities–Non-monetary Contributions by Venturers'. IFRS 12 combines, enhances and replaces the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. As a consequence of these new IFRSs, the IASB also issued the amended IAS 27 (2011) and IAS 28 (2011). IFRS 10, IFRS 11, IFRS 12, IAS 27 and IAS 28 (the Standards) are effective for annual periods beginning on or after 1 January 2013, with earlier application permitted.
EFRAG has issued its Endorsement Advice and Effects Study Report relating to the Standards for use in the EU and EEA. EFRAG supports the adoption of the Standards and recommends its endorsement. Notwithstanding the positive recommendation that the Standards meet the endorsement criteria, EFRAG does not support the mandatory effective date of 1 January 2013; the field-tests it has conducted provided evidence that some financial institutions would need more time to implement IFRS 10, IFRS 11 and IFRS 12 in a manner that brings reliable financial reporting to capital markets. EFRAG recommends the mandatory effective date of the Standards to be 1 January 2014, with early adoption permitted. Given the interaction between the Standards, EFRAG believes that the mandatory effective date should be the same for all the Standards.
EFRAG’s recommendation is explained in the letter to the EC, and the accompanying Basis for Conclusions and the Effects Study Report on the costs and benefits of implementing the Standards.