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EFRAG is not convinced that the consolidation principle proposed in the ED is an improvement on the principles in existing IFRS. The proposed approach is unclear as to whether it incorporates risks and rewards into the proposed control-based model.
EFRAG believes that the ED should incorporate risks and rewards as part of the proposed control based model.
EFRAG is also concerned that the actual draft will not always result in the right entities being consolidated and the right ones remaining off-balance sheet.
There are also a number of concerns about the clarity, consistency and/or appropriateness of the ED‟s material on the control model, the treatment of options and convertible instruments, agency relationships, and reporting entities with dual roles.
EFRAG believes that the IASB should divide the project in two and address the urgent need for disclosures and greater clarity as a matter of high priority. This would allow much needed time to be spent on a single universally-applied consolidation principle.