Annual Improvements to IFRS Accounting Standards—Determination of a ‘De Facto Agent’ (Amendments to IFRS 10)

In July 2024, the IASB issued Annual Improvements to IFRS Accounting Standards—Volume 11, which amended paragraph B74 of IFRS 10 Consolidated Financial Statements to resolve an inconsistency between paragraphs B73 and B74.

Stakeholders informed the IASB that the requirements in paragraphs B73 and B74 could have been contradictory in some situations. Paragraph B73 refers to ‘de facto agents’ as parties acting on the investor’s behalf and states that the determination of whether other parties are acting as de facto agents requires judgement. However, the second sentence of paragraph B74 used more conclusive language by stating that a party is a de facto agent when those that direct the activities of the investor have the ability to direct that party to act on the investor’s behalf.

Therefore, the IASB amended paragraph B74 to use less conclusive language and to clarify that the relationship described in paragraph B74 is just one example of a circumstance in which judgement is required to determine whether a party is acting as a de facto agent.