Saudi subsidiaries that prepare financial statements under IFRS may have to manage a large number of disclosure requirements each year. IFRS 19 gives eligible subsidiaries a way to use reduced disclosures while continuing to apply the relevant IFRS requirements for recognition, measurement, and presentation. For companies reviewing their reporting approach ahead of 2027, IFRS 19 services can help assess eligibility, review existing notes, and plan the required changes as part of the implementation of IFRS 19.
Accounting Services KSA supports Saudi subsidiaries through this review process. Our team can assess the company’s ownership structure, public accountability status, parent reporting framework, and current financial statement disclosures. We also help companies understand how SOCPA adoption affects their reporting approach and prepare for the standard’s effective date of 1 January 2027.
What IFRS 19 Changes for Subsidiaries in Saudi Arabia
IFRS 19 mainly changes the disclosure requirements for qualifying subsidiaries. It does not create a separate accounting basis for recognition and measurement. An eligible subsidiary continues to apply the relevant IFRS requirements for accounting for its transactions and balances, but can use the reduced disclosures set out in the standard.
This can reduce the amount of information included in certain financial statement notes and may reduce repeated reporting work for subsidiaries that already report to an IFRS-based parent company. In Saudi Arabia, companies also need to consider the local adoption of the standard and applicable SOCPA requirements. The standard is available for eligible entities for annual reporting periods beginning on or after 1 January 2027, with early application permitted.
Is Your Subsidiary Eligible for IFRS 19?
Before adopting the standard, a Saudi subsidiary should review its legal structure, activities, parent reporting arrangements, and public accountability status. Eligibility should be confirmed before changes are made to financial statement disclosures.
The Public Accountability Test
A subsidiary cannot use the standard if it has public accountability. This generally includes entities whose debt or equity is traded, or is being prepared for trading, in a public market. It can also include entities that hold assets in a fiduciary capacity for a broad group of outsiders as one of their main business activities. Banks, insurers, brokers, and certain investment entities may fall into this category. A company should assess its actual activities rather than assume that being privately owned automatically makes it eligible.
What Does "Parent Applies Full IFRS" Require?
The subsidiary must also have a parent that prepares consolidated financial statements available for public use and prepared in accordance with IFRS Accounting Standards. The relationship between the subsidiary and parent should be reviewed carefully, particularly where there are intermediate holding companies or different reporting frameworks within a group. A proper eligibility review should document the group structure, parent's reporting basis, public accountability assessment, and other relevant facts before the company decides to adopt it.
Our IFRS 19 Advisory Services in Saudi Arabia
Accounting Services KSA helps eligible subsidiaries assess, plan, and manage their reporting requirements through a structured review, whether they are approaching this for the first time or refining an existing process.
Eligibility Assessment
We review ownership structure, subsidiary status, public accountability, and the parent's reporting framework.
Disclosure Gap Analysis
We compare existing financial statement disclosures with the applicable disclosure requirements.
Disclosure Mapping
We connect each reporting requirement with available company data, responsible teams, and relevant financial statement notes.
Financial Statement Support
We assist in preparing, reviewing, or updating financial statement notes and supporting documentation.
Parent Reporting Alignment
We help coordinate subsidiary reporting requirements with the parent's group reporting process and deadlines.
Auditor Coordination Support
We prepare supporting explanations and documentation for discussions with external auditors.
Our Implementation Process
Our process focuses on the company’s existing reporting position and the changes required for the new disclosure approach, giving companies a practical path for implementing IFRS 19 in stages.
Initial Reporting Review
We review the current financial statements, reporting structure, existing disclosures, and parent-company requirements.
Eligibility Assessment
We assess the subsidiary’s status, public accountability, and parent reporting arrangements against the eligibility conditions.
Disclosure Gap Analysis
We review current notes and identify disclosures that may change under the new disclosure approach.
Disclosure Mapping
We map the applicable requirements to company information, financial statement notes, and internal reporting responsibilities.
Financial Statement Note Preparation
We assist in revising or preparing the relevant notes and supporting working papers.
Parent and Auditor Review
We support discussions with the parent reporting team and external auditor and address relevant review comments.
Benefits of IFRS 19 for Eligible Saudi Subsidiaries
For an eligible subsidiary, the standard may reduce the amount of disclosure work required in its financial statements.
- Reduced Disclosure Work: Fewer applicable disclosure requirements can reduce the amount of note preparation.
- Less Repetitive Reporting: Subsidiaries may spend less time preparing information already available through group reporting.
- Better Group Reporting Alignment: A reduced disclosure approach can fit more effectively into certain parent-company reporting structures.
- Shorter Financial Statement Notes: The notes may become less extensive where the standard permits reduced disclosures.
- Lower Reporting Workload: Finance teams may have fewer disclosure items to collect, review, and update.
- Easier Financial Statement Review: A focused disclosure set can make the review process more manageable for finance teams and auditors.
Does Your Saudi Subsidiary Qualify for IFRS 19?
A company should not assume eligibility only because it is privately held or operates as a subsidiary.
- Is the entity legally a subsidiary?
- Does it have public accountability?
- Does its parent prepare publicly available IFRS consolidated financial statements?
- Does the group structure include an intermediate parent?
- Are there Saudi reporting requirements that need separate consideration?
- Has the eligibility assessment been documented before adoption?
Common IFRS 19 Implementation Challenges
Companies may face reporting problems when they treat the standard as a simple reduction in the number of financial statement notes.
- Incorrect Eligibility Assumptions: A private company may still have public accountability based on its activities.
- Confusing Reduced Disclosures With Simplified Accounting: The standard does not replace the underlying recognition and measurement requirements of applicable IFRS Standards.
- Missing SOCPA Requirements: Saudi companies need to consider the locally adopted requirements when reviewing their reporting position.
- Incomplete Disclosure Mapping: Removing or changing notes without a requirement-by-requirement review can lead to gaps.
- Poor Parent-Group Coordination: Local and group reporting teams may work from different disclosure expectations.
- Failure to Update Financial Statement Notes: Old disclosure templates may continue to be used after the company changes its reporting approach.
What Are the Disclosure Requirements?
The reduced disclosure framework needs to be reviewed against the company’s actual transactions and financial statements rather than treated as a fixed checklist.
- Reduced Disclosures: Eligible subsidiaries can use the specific reduced disclosures set out in the standard.
- Disclosures Retained: Certain information remains required because it is included in the disclosure requirements.
- Financial Statement Notes: Existing notes should be reviewed and updated based on the applicable requirements.
- Material Information: Companies still need to provide information required to help users understand their financial statements.
- Additional Information Where Required: Other applicable requirements and Saudi reporting considerations should be reviewed.
- Disclosure Mapping: Each relevant requirement should be linked to the company’s data and financial statement presentation.
IFRS 19 Timeline and Scope of Adoption in Saudi Arabia
Saudi companies preparing for the new reporting period should work toward readiness before the effective date rather than waiting until the first set of financial statements is due. Companies planning for IFRS 19 for implementation in Saudi Arabia should treat this as a multi-step process rather than a single year-end task.
- May 2024: The IASB issued the standard, titled Subsidiaries without Public Accountability: Disclosures.
- 2024: The standard became available for jurisdictions and standard-setters to consider for local adoption.
- 1 January 2027: It becomes applicable for annual reporting periods beginning on or after this date.
- Before 1 January 2027: Eligible Saudi subsidiaries can assess their reporting position, review disclosures, and prepare internal documentation.
- Early Application: Eligible entities may apply it before the mandatory effective date, subject to the applicable reporting framework.
- Saudi Adoption: SOCPA has adopted IFRS 19 as issued by the IASB, with the Saudi endorsement document also setting out relevant additional disclosure requirements.
IFRS 19 Amendments and Future Updates
As with any newly issued standard, the IASB and SOCPA may revisit and refine specific requirements over time. Saudi subsidiaries should keep an eye on any IFRS 19 amendments in Saudi Arabia and, where relevant, IFRS 19 amendments in KSA introduced through updates to the local endorsement document, so that reporting stays aligned with the current version of the standard. Any amendments to IFRS 19 issued by the IASB, along with a related IFRS 19 amendment reflected in SOCPA guidance, should be reviewed against the subsidiary’s existing disclosure approach. Accounting Services KSA can help track upcoming IFRS 19 amendments and assess how a future amendments to IFRS 19 announcement might affect a subsidiary’s reporting position.
Why Choose Our IFRS 19 Services in Saudi Arabia?
Accounting Services KSA provides support for companies that need a clear review of their IFRS 19 position before changing their financial statement disclosures.
- IFRS Technical Accounting Knowledge: Review its requirements and their application to your subsidiary’s reporting and disclosure process.
- Saudi Financial Reporting Experience: Assess disclosure requirements within the Saudi financial reporting environment and applicable local practices.
- SOCPA Requirements: Review relevant SOCPA requirements alongside the standard to identify applicable reporting and disclosure obligations.
- Structured Disclosure Review: Compare existing financial statement notes with the applicable requirements and identify areas that require changes.
- Eligibility Assessment Support: Review your subsidiary structure, public accountability status, and parent reporting framework to assess eligibility under the standard.
- Parent and Auditor Coordination: Support communication with parent-company reporting teams and external auditors throughout the review process.
Need to Know if Your Saudi Subsidiary Qualifies?
Preparing for the implementation of IFRS 19 can be easier when eligibility and disclosure requirements are reviewed before the reporting period begins. Accounting Services KSA can assess your subsidiary’s structure, parent reporting framework, public accountability status, and existing financial statement notes.
Our team can also help identify disclosure changes, prepare a reporting plan, and support discussions with your parent company and auditor. If you are implementing IFRS 19 for the first time or reviewing your existing reporting approach, speak with our team to discuss your requirements and the steps needed before 1 January 2027.
FAQs
What Is IFRS 19?
IFRS 19 is an IFRS Accounting Standard that permits eligible subsidiaries without public accountability to use reduced disclosure requirements while continuing to apply the relevant IFRS requirements for recognition, measurement, and presentation.
When Does It Become Effective in Saudi Arabia?
It applies to annual reporting periods beginning on or after 1 January 2027. Eligible entities can also choose early application, subject to the applicable reporting framework and local requirements.
Who Can Apply It?
A subsidiary may apply the standard when it does not have public accountability and its parent prepares consolidated financial statements available for public use under IFRS Accounting Standards.
Does It Change Recognition and Measurement?
No. IFRS 19 mainly changes the disclosure requirements for qualifying subsidiaries. The underlying recognition and measurement requirements of the applicable IFRS Accounting Standards continue to apply.
What Is the Difference Between IFRS 19 and IFRS for SMEs?
It is designed for eligible subsidiaries that continue to apply full IFRS recognition and measurement requirements. IFRS for SMEs is a separate accounting standard with its own recognition, measurement, presentation, and disclosure framework.