Consolidation – Potential voting rights when assessing significant influence
As part of the drafting of IFRS 10 (the forthcoming Consolidation Standard), Board members questioned whether the language in paragraphs 8 and 9 of IAS 28 regarding potential voting rights when assessing significant influence should be amended so that it is consistent with IFRS 10. The inconsistency results from the fact that IAS 28 discusses consideration of potential voting rights which is consistent with the current guidance in IAS 27 but would no longer be consistent with the amended consolidation guidance in IFRS 10.
The Board has intentions of re-examining the guidance in IAS 28 in the near future and therefore the Board tentatively agreed to wait until a decision has been made on if and how to amend IAS 28 rather than conforming IAS 28 now in order to be consistent with IFRS 10.
One Board member expressed significant reservations with the decision and thought the Board should address these inconsistencies now rather than waiting for future agenda decisions but stated he would not dissent from the forthcoming Consolidation and Joint Arrangements Standards as a result.