IFRS 12, Disclosure of Interests in Other Entities, applies to entities that have an interest in a subsidiary, a joint arrangement, an associate or an unconsolidated structured entity. The global financial crisis that started in 2007 highlighted a lack of transparency about the risks to which a reporting entity was exposed as a consequence of its involvement with structured entities, including those that it had sponsored.
IFRS 12 requires an entity to disclose information that enables users of financial statements to evaluate
- the nature of, and risks associated with, its interests in other entities;
- the effects of those interests on its financial position, financial performance, and cash flows.
The objective of IFRS 12 is to mandate disclosures such that users of financial statements can evaluate the nature of, and risks associated with, an entity’s interests in other entities, and the effects of those interests on its financial position, financial performance, and cash flows.
IFRS 12 Disclosure of Interests in Other Entities — 2011
For a more comprehensive introduction to the adoption of IFRSs, see the online course, IFRS 11/12 and IAS 28 — 2011. You must be registered to access and purchase the course.
Further resources on IFRS/IAS
Other IFRS/IAS articles and Professional Development Courses on PD Net