Risks of consolidated structured entities

Learning objectives

• Assess the disclosures about the risks associated with a consolidated structured entity, in particular financial support.L3

Normative references

• IFRS 12 §14The entity discloses the terms of any contractual arrangements that could require the parent or its subsidiaries to provide financial support to a consolidated structured entity, including events or circumstances that could expose the reporting entity to a loss (for example, liquidity arrangements or credit rating triggers). Paras. 15 to 17 deal with support provided without a contractual obligation and with intentions to provide support.
• IFRS 12 §15If, during the period, the parent or any of its subsidiaries has, without a contractual obligation, provided financial or other support to a consolidated structured entity (for example, purchasing assets of or instruments issued by it), the entity discloses the type and amount of support provided, including situations in which it assisted in obtaining financial support, and the reasons for providing the support.
• IFRS 12 §16If support provided without a contractual obligation to a previously unconsolidated structured entity resulted in the entity controlling it, the entity explains the relevant factors in reaching that decision.
• IFRS 12 §17The entity discloses any current intentions to provide financial or other support to a consolidated structured entity, including intentions to assist it in obtaining financial support.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

1 question

• Delta Group consolidates Titri, a structured entity, and has provided it with financial support without being contractually required to (case facts). What must it provide under IFRS 12?L3