Presentation of Individual Financial Statements
Must an entity whose loan portfolio is transferred to a financial trust in a transaction that does not meet the conditions for derecognition of the portfolio and in turn the entity holds the majority of the participation certificates of the aforementioned trust, present Consolidated Financial Statements even if there is no significant difference between the Individual Financial Statements and the Consolidated Financial Statements?
In accordance with the precepts of IFRS 10, it is established that a Financial Institution controls a subsidiary if and only if, it meets all the following elements:
(a) power over the investee (see paragraphs 10 to 14 of IFRS 10);
(b) exposure, or entitlement, to variable returns arising from its involvement in the investee (see paragraphs 15 and 16 of IFRS 10); and
(c) the ability to use its power over the investee to influence the amount of the investor’s returns (see paragraphs 17 and 18 of IFRS 10).
To the extent that the Financial Entity has “Control” over the financial trust in accordance with the terms of IFRS 10, Consolidated Financial Statements must be submitted unless all the conditions set forth in that standard are met so that this presentation is not mandatory (paragraph 4 of IFRS 10).
The arguments reported by the entity are not provided for in IFRS 10 as a reason for exception to the obligation to present consolidated financial statements.
Rules involved:
IFRS 10 – Consolidated Financial Statements
“The responses on the application of IFRS are not interpretations of these standards, which must be applied as they are issued by the IASB and adopted by the BCRA regulations. They represent solutions to specific cases analyzed in accordance with the available information and the accounting framework established by the BCRA through the Chart of Accounts, Complementary Provisions and other related regulations.”