About IFRS 12

IFRS 12 is a standard that provides guidance on the disclosure of information about an entity’s interests in other entities, including subsidiaries, associates, joint ventures, and structured entities. The standard aims to improve transparency and comparability of financial information by providing users of financial statements with more information about an entity’s relationships with other entities.

One of the key features of IFRS 12 is its focus on the disclosure of the nature and extent of an entity’s interests in other entities. The standard requires entities to provide detailed information about their interests in subsidiaries, associates, joint ventures, and structured entities, including the nature of the relationship, the proportion of ownership, and the accounting policies used to account for the investment. This information helps users of financial statements to understand the risks and opportunities associated with an entity’s investments in other entities.

IFRS 12 also requires entities to provide information about their involvement in joint arrangements, including the nature and extent of their rights and obligations, and the accounting policies used to account for the arrangement. This information is particularly important in situations where joint arrangements involve significant risks or rewards, as it helps users of financial statements to understand the impact of these arrangements on an entity’s financial position and performance.

Another important aspect of IFRS 12 is its requirements for disclosures related to structured entities. The standard requires entities to provide information about their involvement in structured entities, including the nature of the entity, the risks and rewards associated with the entity, and the accounting policies used to account for the entity. This information is particularly important in situations where structured entities are used for financing or other purposes, as it helps users of financial statements to understand the risks associated with these entities.

Overall, IFRS 12 plays an important role in improving transparency and comparability of financial information by providing users of financial statements with more information about an entity’s relationships with other entities. The standard’s requirements for detailed disclosures about interests in subsidiaries, associates, joint ventures, and structured entities provide valuable insights into an entity’s investment strategies and risk management practices, helping users to make informed decisions about the entity’s financial health and performance.