BC86 IFRS 12 requires an entity to disclose information that enables users of financial statements to understand the nature of, and changes in, the risks associated with its interests in structured entities (see paragraphs BC92-BC114). As a consequence, an entity would be required to provide disclosures about its exposure to risk when it has sponsored an unconsolidated structured entity and has retained an interest in the structured entity, for example by holding debt or equity instruments of the structured entity.

BC87 However, that decision would not require an entity to provide disclosures if the entity does not retain any interest in the structured entity through explicit or implicit involvement. The Board received views from many constituents who reasoned that sponsoring a structured entity can create risks for an entity, even though the entity might not retain any interest in the structured entity. If the structured entity encounters difficulties, it is possible that the sponsor could be challenged on its advice or actions, or might choose to act to protect its reputation.

BC88 IFRS 12 also requires disclosure regarding the provision of financial and other support to a structured entity when there is no contractual obligation to do so and about any current intentions to provide financial support or other assistance in the future (see paragraphs BC102-BC106). Although helpful, the disclosure provides an incomplete picture of an entity's exposure to risk from its sponsoring activities because: