Elimination of the proportionate consolidation method: analysis of the adequacy of the IASB’ decision

Abstract

The purpose is to analyze the arguments of the respondents who sent letters during the public consultation period of the Exposure Draft 09 – Joint Arrangements, in order to infer about the adequacy of the IASB’s decision to eliminate proportionate consolidation. Using the Content Analysis technique, the 111 letters sent to the IASB were analyzed. Of the 107 respondents who commented about the elimination of proportionate consolidation, 68 mentioned that they did not agree with the IASB decision, evidencing a high level of rejection. The countries with the highest rate of rejection are from Europe and with the highest level of acceptance are from Asia. The interest groups with the highest rate of rejection are audit firms and professional associations. This research argues that proportionate consolidation results in more relevant accounting information than the equity method and that the greater disclosure requirements will not compensate the information loss arising from the elimination of the proportionate consolidation.

Keywords

• Comment letters
• IFRS 11
• Joint ventures
• Consolidação proporcional