The IASB and FASB discussed the disclosure requirements for consolidated subsidiaries and unconsolidated structured entities. The boards tentatively decided that the final disclosure requirements should include a list of disclosure objectives. Specifically, the boards decided that a reporting entity should disclose information that helps users of financial statements to understand:
- the significant judgements and assumptions (and changes to those judgements and assumptions) made by the reporting entity in determining whether it controls (or does not control) another entity, and/or in determining the reporting entity's involvement with structured entities;
- the interest that the non-controlling interests have in the group's activities;
- the effect of restrictions on the reporting entity's ability to access and use assets, or to settle liabilities of consolidated entities, when these restrictions are as a result of where the assets or liabilities are held in the group;
- the nature of, and changes in, the risks associated with the reporting entity's control of consolidated structured entities or from its involvement with unconsolidated structured entities.
To achieve these objectives, in addition to the disclosures discussed at previous meetings, the boards tentatively decided to require a reporting entity to disclose the following information:
- When a reporting entity has an arrangement that might require the reporting entity to provide financial support to a consolidated structured entity (for example, liquidity arrangements and obligations to purchase assets), the reporting entity should disclose the terms of the arrangement, including any possible events or circumstances that could expose the reporting entity to a loss.
- When a reporting entity is involved with unconsolidated structured entities, the reporting entity should disclose:
- the carrying amount of the assets and liabilities recognised in the reporting entity's consolidated financial statements relating to the involvement;
- the line items in the consolidated statement of financial position in which those assets and liabilities are recognised;
- the amount that best represents the reporting entity's maximum exposure to loss from that involvement, including how the maximum exposure to loss is determined. (If a reporting entity cannot quantify its maximum exposure to loss from its involvement with unconsolidated structured entities it must disclose that fact); and
- a comparison of the carrying amount of the assets and liabilities of the reporting entity that relate to the reporting entity's involvement with unconsolidated structured entities with the reporting entity's maximum exposure to loss.
The boards asked the staff to conduct further research on the scope of these disclosure requirements for involvement with structured entities, and asked the staff to determine whether the disclosures required for involvement with structured entities should apply to involvement with all entities.
The IASB completed discussions about the disclosure requirements for a reporting entity that meets the proposed definition of an investment company.
The Board tentatively decided to include a requirement for an investment company to present a financial highlights schedule in the notes to the financial statements. This schedule would present per share investment income or loss, realised and unrealised gains and losses per share, distributions to shareholders, purchase premiums, redemption fees, payments by affiliates, expense and net investment income ratios, total return and capital commitments.