Publishing separate financial statements without consolidated financial (not simultaneously)

IAS 27 does not directly address the publication requirements for separate financial statements. In some jurisdictions, an entity that prepares consolidated financial statements is prohibited from publishing its separate financial statements without also publishing its consolidated financial statements. This is the issue that seems to create many issues in South Africa.

IAS 27 does not prohibit an entity that prepares consolidated financial statements from publishing its separate financial statements without also publishing its consolidated financial statements, unless:

•     the separate financial statements identify the consolidated financial statements prepared under IFRS 10 to which they relate. [IAS 27.17]. In other words, they must draw attention to the fact that the entity also prepares consolidated financial statements and disclose the address from where the consolidated financial statements are available.
•    the consolidated financial statements have been prepared and approved no later than the date on which the separate financial statements have been approved. Thus, it is not possible to publish the separate financial statements before the consolidated financial statements have been finalized.

The matter of whether separate financial statements could be issued before the respective consolidated financial statements was explicitly considered by the Interpretations Committee in March 2006. The Interpretations Committee concluded that separate financial statements issued before consolidated financial statements could not comply with IFRS as issued by the IASB, because ‘separate financial statements should identify the financial statements prepared in accordance with paragraph 9 of IAS 27 to which they relate (the consolidated financial statements), unless one of the exemptions provided by paragraph 10 is applicable.’

The above therefore implies that consolidated financial statements should be available before or at the same date as separate financial statements. However, the situation may be different if local requirements set specific rules relating to the timing of publication of financial statements.

In my view such requirements are harsh and represent a burden to the preparers of annual financial statements in South Africa, specifically those with minimum resources. The question arises as to how can an entire set of AFS be determined not to comply with IFRS simply because of a single disclosure not that identify another set of AFS. It does not seem to be congruent with the extremely onerous disclosures that are required by IFRS.

If a company preparing AFS left out such disclosure which I have yet find in South Africa, how could it be said that the AFS no longer comply with IFRS. It's only a reference note that more than likely will be ignored by any reader of the separate AFS. As stated prior South Africa does have specific rules regarding the timing of the publication of AFS. It's usually only a matter of months between the completion of Separate AFS and Consolidated AFS, a time period not really material in a South African contract.

What sort of probative value would such a note have eventually when the users have both sets of AFS in their hands. Which would have to happen in South Africa 6 months after the year-end.  If it's simply about identification would it not be easier for a company preparing AFS to invoke IAS 1 paragraph 19 and not identify the Consolidated AFS. What ‘harm’ (in the legal sense) could it cause?

I submit that the such disclosure is not qualitatively material in the larger scheme of IFRS and the many other complexities that accompanies its use. What could be said for separate AFS identifying the Consolidated AFS when already there is disclosure. as to its holding company and that it is then obviously part of a group.

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