According to the International Financial Reporting Standards (IFRS), IFRS 12 requires entities to disclose information that enables users of financial statements to evaluate the nature and financial impact of the entity's involvement with other entities, such as subsidiaries, joint ventures, associates, or structured entities. For instance, a company with an investment in a joint venture must disclose information about the financial and strategic significance of that investment.

The information disclosed under IFRS 12 includes descriptions of interests in other entities, the nature of risks associated with these interests, and their financial implications. Detailed disclosure assists stakeholders in understanding the composition of the reporting entity, including how it integrates or interacts with associated or structured entities. For example, a manufacturing company might disclose its joint arrangement with a specialized logistics firm, explaining how this relationship impacts its supply chain and financial results.

These disclosures are crucial for providing transparency regarding an entity's financial position and how it is influenced by relationships with other entities. This enhances comparability and consistency within financial reporting.