IFRS 12: The Disclosure Triggered by What You Intend to Do

Most disclosure standards ask what you did. IFRS 12 paragraph 31 asks what you are thinking about doing: it requires disclosure of any current intentions to provide financial or other support to an unconsolidated structured entity. Paragraph 30 requires disclosure of support you have already provided with no contractual obligation to provide it. And paragraph 25 requires risk disclosure covering involvement you had in previous periods, even if you no longer have any contractual involvement at the reporting date.

Those three requirements are the post-2008 response to off-balance-sheet vehicles, and they are the most interesting thing in the standard. FRS 102 has nothing equivalent to any of them.

What IFRS 12 covers

The objective in paragraph 1 is to enable users to evaluate the nature of, and risks associated with, interests in other entities, and the effects of those interests on financial position, financial performance and cash flows. Paragraph 5 applies it to interests in subsidiaries, joint arrangements — being joint operations or joint ventures — associates, and unconsolidated structured entities.

Alone among the consolidation-family standards, it carries a genuine exclusion list. Paragraph 6 takes out post-employment and other long-term employee benefit plans within IAS 19; separate financial statements to which IAS 27 applies, though with two carve-backs; an interest held by a party that participates in but does not have joint control of a joint arrangement, unless that interest gives significant influence or is an interest in a structured entity; and an interest accounted for under IFRS 9, except where it is an associate or joint venture measured at fair value through profit or loss under IAS 28, or an interest in an unconsolidated structured entity.

Paragraph 5A then extends the requirements to interests classified as held for sale or as discontinued operations under IFRS 5 — except that paragraph B17 removes the summarised financial information requirements for those. That is a planning point rather than a technicality: classifying an interest as held for sale drops a real disclosure burden.

Structured entities: where the standard has teeth

A structured entity is defined as one designed so that voting or similar rights are not the dominant factor in deciding who controls it — such as where voting rights relate to administrative tasks only and the relevant activities are directed by contractual arrangements.

Paragraph 26 requires qualitative and quantitative information including, but not limited to, the nature, purpose, size and activities of the structured entity and how it is financed. Paragraph 27 deals with sponsored entities where the paragraph 29 information is not given: how the entity determined which entities it sponsored, income from them, and the carrying amount at the time of transfer of all assets transferred to those entities during the period. Paragraph 28 requires tabular format unless another is more appropriate.

Paragraph 29 is the substantive one, also in tabular form by default. It requires the carrying amounts of related assets and liabilities and the line items in which they sit; the amount that best represents the maximum exposure to loss, including how that maximum exposure is determined; a statement of the fact and the reasons where maximum exposure to loss cannot be quantified; and a comparison of the carrying amounts to the maximum exposure to loss.

That last item is the one that does the work. A carrying amount of nil against a maximum exposure to loss of a large number is exactly the pattern the standard was written to surface, and the comparison has to be presented rather than left to the reader.

Then paragraphs 30 and 31: non-contractual financial or other support provided, with type, amount and reasons; and any current intentions to provide such support. A disclosure triggered by voluntary action, and a disclosure triggered by intention. Note the investment entity reliefs in paragraphs 25A and 21A.

Three places the mainstream disclosures go wrong

Summarised information is gross, not your share

For each material joint venture and associate, paragraph 21(b) requires summarised financial information per paragraphs B12 and B13 — dividends received, then current and non-current assets and liabilities, revenue, profit or loss from continuing operations, post-tax profit or loss from discontinued operations, other comprehensive income and total comprehensive income. For each material joint venture only, B13 adds cash and cash equivalents, current financial liabilities excluding trade payables and provisions, and non-current financial liabilities.

Paragraph B14 is the technical crux: the amounts disclosed are those included in the IFRS financial statements of the joint venture or associate, and not the entity share of those amounts, adjusted for equity-method adjustments such as acquisition fair value adjustments and accounting policy differences, with a reconciliation of the summarised information to the carrying amount of the interest. Presenting your share is the common error, and it defeats the purpose: the reconciliation is what gets the reader from the gross figures to the single equity-method line. For the classification question that decides whether an arrangement reaches this disclosure at all, see our guide to IFRS 11 joint operations and joint ventures.

Material investees are disclosed individually, with no opt-out

The IFRIC closed the aggregation loophole in January 2015: paragraph 21(b)(ii) leads to disclosure of summarised information on an individual basis for each joint venture or associate material to the reporting entity, and that information should not be presented in aggregate. It went further and said there is no provision in IFRS 12 permitting non-disclosure of it — including where local rules would delay a listed investee publishing its own results.

That is a practical problem for group reporting teams rather than a drafting curiosity, and the answer is that the group discloses anyway.

Non-controlling interests: before eliminations, and accumulated not annual

Take a parent owning 80 per cent of a subsidiary with material non-controlling interests. The subsidiary earns profit of 500 for the year, pays a total dividend of 150, and has net assets of 2,000 at the year end. Its own figures are revenue 3,000, current assets 900, non-current assets 2,600, current liabilities 700 and non-current liabilities 800. Check the net: 900 plus 2,600 less 700 less 800 is 2,000.

The disclosures are the proportion held by non-controlling interests, 20 per cent; profit allocated to them, 500 at 20 per cent, or 100; accumulated non-controlling interests at the year end, 2,000 at 20 per cent, or 400; dividends paid to them, 150 at 20 per cent, or 30; and then the summarised financial information.

Two traps. The summarised figures are the subsidiary own 100 per cent amounts before inter-company eliminations, which paragraph B11 states expressly — not 20 per cent of them, and not the post-elimination consolidated contribution. And the 400 is the accumulated balance, not the year allocation of 100. Conflating the annual allocation with the accumulated balance is the most common error in this disclosure.

Paragraph 13 separately requires disclosure of significant restrictions on accessing or using group assets and settling group liabilities, paragraph 18 the effects of ownership changes that do not result in loss of control, and paragraph 19 the consequences of losing control.

What is changing

Very little. The amendment history runs to 2017, and the only item in the 2025 to 2027 window is a single consequential amendment from IFRS 18: paragraph C1E records that IFRS 18, issued in April 2024, amended paragraph B14, to be applied when IFRS 18 is applied — periods beginning on or after 1 January 2027. Annual Improvements Volume 11 does not touch IFRS 12 at all. Our guide to IFRS 18 covers the wider reform.

One adjacent development is worth tracking for groups: IFRS 19, effective 1 January 2027 and UK-adopted on 8 May 2026, provides reduced disclosures for eligible subsidiaries, which changes how IFRS 12 applies to those entities.

The FRS 102 gap, which is the real story

There is no FRS 102 equivalent of IFRS 12. The requirements are scattered across two sections and are far lighter.

Paragraph 9.23 gives six items for consolidated financial statements: that the statements are consolidated; the basis for concluding control exists where the parent does not own more than half the voting power; differences in reporting dates; the nature and extent of significant restrictions on subsidiaries transferring funds to the parent; subsidiaries excluded from consolidation and why; and the nature and extent of interests in unconsolidated special purpose entities and the risks associated with them.

Paragraphs 15.19 to 15.21A give the joint venture disclosures: accounting policy, carrying amount, fair value where quoted and equity-accounted, aggregate commitments including the share of those incurred jointly, and the share of profit or loss. Summarised financial information is required only in the individual financial statements of a venturer that is not a parent, with an exemption for entities exempt from consolidation.

Set against IFRS 12, what a UK GAAP reporter does not have to give is substantial: no significant-judgements disclosure at all, so no equivalent of the IFRS 12 paragraph 7 requirement to explain how a joint operation or joint venture conclusion was reached; no non-controlling interest disclosures; no summarised financial information for material joint ventures in consolidated financial statements; and no structured entity regime beyond that single reference in 9.23(f). Note the terminology too — FRS 102 still says special purpose entities, where IFRS has said structured entities since 2013.

The periodic review amendments effective for periods beginning on or after 1 January 2026 made no change here; Section 9 had minor clarifications only. Our guide to the FRS 102 periodic review sets out what actually moved.

So for a group moving from FRS 102 to IFRS, the disclosure step-up on interests in other entities is one of the larger ones in the transition, and the structured entity requirements are the part with no UK GAAP muscle memory at all.