IPSAS 38
Active
Disclosure of Interests in Other Entities
Requires disclosures about an entity's interests in controlled entities, joint arrangements, associates and structured entities that are not consolidated – covering composition, non-controlling interests, significant restrictions and risks, ownership changes, and the fair-value hierarchy. Effective 1 January 2017. (IFRS 12 equivalent.)
Active Standard
IPSAS 38 Disclosure of Interests in Other Entities is the current, active standard issued by the IPSASB for disclosing interests in controlled, unconsolidated controlled, joint-arrangement and associate entities, and in structured entities that are not consolidated. Effective for periods beginning on or after 1 January 2017 (earlier application encouraged). Paras. 1–57.
IPSAS 38 is the IPSASB's adaptation of IFRS 12 Disclosure of Interests in Other Entities for the public sector – mirroring the composition, risk and VIE-style disclosures, with public-sector commentary on service-concession and shared-service arrangements.
1
Objective, Scope & Out-of-Scope Interests (paras. 1–4)
Objective & scope (para. 1)
Requires an entity to disclose information that enables users to evaluate the NATURE OF, AND RISKS associated with, its interests in (a) controlled entities, (b) unconsolidated controlled entities, (c) joint arrangements and associates, and (d) structured entities that are not consolidated.
Key definitions
Interest
A direct or indirect interest in an entity – control, joint arrangement, associate, structured entity.
Out of scope
ExcludedInstead, see…
Separate FS own disclosuresIPSAS 34
Consolidation mechanicsIPSAS 35
2
Definitions – Interest, Structured Entity & Binding Arrangement (para. 7)
Core definitions (para. 7)
TermMeaning
Structured entityEntity whose assets/liabilities are carried in a way dependent on assets not available to pay claims
Binding arrangementContract giving rights to the holder and risks to the entity
3
Significant Judgments, Assumptions & Investment Entity Status (paras. 9–16)
Judgment calls (para. 9)
Disclose the JUDGMENTS and ASSUMPTIONS used to determine (a) whether the entity has a controlling financial interest; (b) whether it is an investment entity (and the basis for that status); and (c) whether a VIE-like structured entity should be consolidated. Transparency over the how.
Where the entity is an investment entity, disclose the nature of the status and any changes in it.
4
Interests in Controlled Entities – Composition & Non-Controlling Interests (paras. 17–19)
What's inside (para. 17)
DisclosureContent
Composition of the groupSegment, geography, line of business
NCIAmount, ownership %, valuation basis
5
Significant Restrictions & Risks From Consolidated Structured Entities
VIE-style risks (para. 20)
Disclose the nature of the involvement with each structured entity over which the group has a controlling interest, the significant restrictions to which it is subject, and the impact on the entity's financial position and performance if it were to lose the structured entity.
Structured entity
Entity whose assets are exposed to residual risks of assets not available to pay liabilities.
6
Consequences of Ownership Changes & Loss of Control
Change events (para. 25)
Disclose the gain/loss recognised on acquisition or loss of a controlling interest, including the movement in NCI and any deferred/contingent consideration involved. Reconcile the opening and closing balances of NCI equity.
A change in control is a separate transaction from the continuing acquiree.
7
Interests in Unconsolidated Controlled Entities – Investment Entities (paras. 27–34)
Unconsolidated (para. 27)
Where an investment entity holds an interest in a controlled entity that is NOT consolidated, disclose the reason for non-consolidation, the nature of the interest, the carrying amount, and the unobservable inputs used in valuing structured-entity interests.
ItemDisclosed
Cause of non-consolidationInvestment entity status
Fair value hierarchyLevel 2 vs Level 3 split
8
Interests in Joint Arrangements & Associates (paras. 35–39)
Joint & associate interests (para. 35)
Disclose the carrying amount of interests in joint arrangements (IPSAS 37) and associates (IPSAS 36), the share of profit/loss recognised, and the FV hierarchy where measured at FVOCI. Include a maturity analysis for commitments.
Separate line for unobservable (Level 3) inputs – critical for structured-entity interests.
9
Interests in Structured Entities That Are Not Consolidated (paras. 40–48)
Unconsolidated structured (para. 40)
BasisMetric
Why not consolidatedNo power over activities
Exposure metricCarrying amount + max loss potential
This is where the public sector 'guarantee' exposure most often surfaces – disclose it explicitly.
10
Non-Quantifiable Ownership Interests
Unobservable bits (para. 49)
Disclose the nature and carrying amount of ownership interests that are NOT measured at fair value (e.g. cost-method interests, interests with no quoted price), including the basis for that treatment and the unobservable inputs used in any valuation technique.
Level 3
Inputs other than quoted prices for identical or similar assets/liabilities.
11
Controlling Interests Acquired with the Intention of Disposal
Held for sale (para. 51)
DisclosureContent
Acquisition with disposal intentNature, carrying amount, FV less costs to sell
TimingExpected disposal horizon
12
Current Value Measurement Disclosures (paras. 57A–57D)
Valuation detail (para. 57A)
Where interests in structured entities are measured at fair value, disclose the valuation techniques used, the inputs (Level 1/2/3 split), the reconciliation of beginning/end carrying amounts, and any transfers between levels of the hierarchy.
Level 3 movements must be reconciled in detail – the IPSASB treats structured-entity valuations as high-transparency.
13
Effective Date & Amendment Timeline (paras. 61–61D)
Timeline
DateEvent
Jan 2015Issued
1 Jan 2017Effective date
2023Amended (latest)
IPSAS 38 superseded IPSAS 9 (Interests in Offshore Entities) – that earlier Standard withdrew.
14
Relationship to IFRS 12
Mapping (para. 61E)
IPSAS 38 mirrors IFRS 12's disclosure framework – composition of the group, NCI, VIE-style structured entities, unobservable inputs, and changes in control – with public-sector commentary on government guarantees and shared-service entities.
IFRS 12 compositionIPSAS 38 sameIFRS 12 VIE disclosuresIPSAS 38 sameIFRS 12 unobservable inputsIPSAS 38 same
15
Statement / Process Mapping
Where it flows
ProcessLedger
Interest registerEntity Register → composition/NCI
VIE assessmentRisk Function → Structured Entity Dashboard
FV hierarchyValuation → Disclosure Engine (Level 1/2/3)
16
Related Standards – Cross-Reference Map
See also
StandardRelation
IPSAS 35Consolidation (composes the group)
IPSAS 36Associate interests
IPSAS 37Joint-arrangement interests
IFRS 12Direct equivalent
17
Quick-Reference Glossary
Structured entity
Entity whose assets depend on assets not available to pay liabilities.
Investment entity
Holds investments for capital appreciation; FV exception.
Non-controlling interest
NCI share of subsidiary equity not attributable to parent.
Level 3
Unobservable valuation inputs.
Control
Power to govern policies so as to obtain benefits.
Loss of control
Derecognition; gain/loss to P&L.