Webcast 9: Overview of Updated Sections 9 and 15

Why It Matters

Aligning SME standards with IFRS 10 and IFRS 11 enhances transparency and comparability, helping SMEs and their stakeholders navigate consolidation and joint‑arrangement reporting with greater confidence.

Key Takeaways

• Section 9 adopts IFRS 10 single‑control model in SMEs financial reporting
• New control definition requires power, variable returns, and link
• Rebuttable presumption of control can be challenged by contractual rights
• Loss of control triggers derecognition, fair‑value measurement, and disclosures
• Section 15 aligns joint‑control definition with IFRS 11, clarifies non‑controlling parties

Summary

The webcast introduced the third edition of the IFRS for SMEs, focusing on the revised Section 9 – Consolidated and Separate Financial Statements – and Section 15 – Joint Arrangements. Both sections have been realigned with the full‑IFRS standards IFRS 10 and IFRS 11 to bring SME reporting closer to the global framework.

Section 9 now adopts the IFRS 10 single‑control model, replacing the previous mixed approach. The new definition of control requires three elements – power over the investee, exposure to variable returns, and the ability to use that power to affect those returns – and retains a rebuttable presumption that majority voting rights imply control unless contradicted by contractual arrangements. It also adds explicit guidance for derecognising a subsidiary when control is lost, including fair‑value measurement of consideration received and detailed disclosure requirements. Section 15 mirrors IFRS 11 by redefining joint control, keeping the three classifications of joint arrangements, and specifying accounting treatment for parties that lack joint control.

The presenter illustrated the control assessment with a decision‑tree flowchart, showing how an investor first checks voting‑right ownership and then evaluates the three control elements. An example highlighted that a majority shareholder may be rebutted if another party holds contractual rights to direct relevant activities. For loss of control, the parent must derecognise the subsidiary’s assets and liabilities, recognise any retained interest at fair value, and record the resulting gain or loss in profit or loss. Joint‑arrangement examples clarified that a party without joint control accounts for its interest using either IFRS 11‑type financial‑instrument rules or associate‑investment guidance, depending on the arrangement type.

These changes give SMEs a single, consistent basis for consolidation and joint‑arrangement accounting, reducing ambiguity and improving comparability across entities. The retrospective transition approach, with relief provisions, eases implementation, while the IASB’s supporting modules, newsletters and podcasts provide practical guidance for preparers and auditors.

Original Description

This webcast provides an overview of the updates to Section 9 Consolidated and Separate Financial Statements and Section 15 Joint Arrangements in the third edition of the IFRS for SMEs Accounting Standard.