BCZ12 Paragraph 7 of IAS 27 (as revised in 2000) required consolidated financial statements to be presented. However, paragraph 8 permitted a parent that was awholly‑owned or virtually wholly‑owned subsidiary not to prepare consolidated financial statements. In 2003 the Board considered whether to withdraw or amend this exemption from the general requirement.

BCZ13 The Board decided to retain an exemption, so that entities in a group that are required by law to produce financial statements available for public use in accordance with International Financial Reporting Standards, in addition to consolidated financial statements, would not be unduly burdened.

BCZ14 The Board noted that in some circumstances users can find sufficient information for their purposes about a subsidiary from either its separate financial statements or the consolidated financial statements. In addition, the users of financial statements of a subsidiary often have, or can get access to, more information.

BCZ15 Having concluded that it should retain an exemption, the Board decided to modify the circumstances in which an entity would be exempt and considered the following criteria.