In October 2012, the International Accounting Standards Board issued Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27), which defined an investment entity and introduced an exception to the consolidation requirements in IFRS 10 for particular subsidiaries of investment entities. It also introduced the requirement that an investment entity measures those subsidiaries at fair value through profit or loss in accordance with IFRS 9 Financial Instruments in its consolidated and separate financial statements. In addition, the amendments introduced new disclosure requirements for investment entities in IFRS 12 and IAS 27. The amendments have an effective date of 1 January 2014.
The Board added a project on consolidation to its agenda to deal with divergence in practice in applying IAS 27 Consolidated and Separate Financial Statements and SIC-12 Consolidation—Special Purpose Entities. The Board published an exposure draft in December 2008, ED 10 Consolidated Financial Statements. In ED10 the Board proposed to clarify the definition of control to be applied to all entities and to require enhanced disclosures about consolidated and unconsolidated entities. The Board proposed to retain the scope of IAS 27 and to emphasise the principle that a reporting entity’s consolidated financial statements should include all entities that the reporting entity controls.
In response to feedback on ED10, the Board decided in February 2010 to develop proposals for an exception to consolidation for investment entities. The Board published the proposals in an exposure draft in August 2011.