This free, guided checker walks your finance team through the key decision points for IFRS 10 Consolidation and Control Assessment. Answer a few questions to see the likely treatment and the evidence to document.
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This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
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Identify activities that most significantly affect returns before evaluating voting rights, contractual arrangements, and potential voting rights over structured vehicles. Only substantive rights count: test whether barriers, exercise windows, or the need to act with many other parties prevent exercise in practice (IFRS 10.B22-B25). A common trap is treating veto or approval rights that only protect the holder as power - those are protective rights under IFRS 10.B26-B28.
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Official guidance: IFRS issued standards
Consultation memos consolidate short-life structured entities when the group has power, exposure to variable returns, and ability to affect those returns even if external equity is immaterial. For entities where voting rights are not the dominant factor, weigh purpose and design, evidenced decision-making at inception, and rights embedded in servicing or management contracts (IFRS 10.B51-B54).
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Official guidance: IFRS issued standards
Returns can be positive, negative, or both and include synergies, fees, residual interests, write-down exposure on subordinated instruments, and other benefits. Even fixed fees can be variable returns when they expose the recipient to the investee's performance risk, such as fees at risk of non-payment on default (IFRS 10.B56-B57). Assess the full range of the investor's involvement, including guarantees, liquidity facilities, and retained interests.
Without exposure or rights to variable returns the IFRS 10.7(b) control element fails, so the investee is not consolidated (IFRS 10.15).
Official guidance: IFRS issued standards
The investor must have practical ability to use power for its own returns, not merely protective rights over a special-purpose issuer or trustee vehicle. IFRS 10.17 links the power and returns elements: a decision maker with delegated authority may direct the relevant activities yet still be an agent. The common trap is concluding on control from exposure alone without demonstrating the investor can act to change its own returns.
Power and returns are not linked, so the third control element in IFRS 10.17 fails and consolidation is not appropriate.
Official guidance: IFRS issued standards
Evaluate the size and dispersion of other holdings, participation patterns, and whether potential rights are substantive at the reporting date. Potential voting rights count only when substantive - deeply out-of-the-money options or rights exercisable far in the future generally are not (IFRS 10.B47-B50). Where voting analysis is inconclusive, weigh the additional indicators in IFRS 10.B18-B21, such as ability to appoint key management and dependence relationships.
No substantive power indicator is identified, so the power element in IFRS 10.7(a) is absent and the investee is not consolidated (IFRS 10.B38-B50).
Official guidance: IFRS issued standards
Weight scope of authority, removal rights held by others, remuneration, and exposure to variability, including whether a trustee role is controlled by the reporting group. A substantive removal right exercisable without cause by a single party is determinative of agency on its own; rights exercisable only collectively by many dispersed investors carry less weight (IFRS 10.B65). Also consider de facto agents acting on the investor's behalf under IFRS 10.B73-B75.
A decision maker acting as an agent does not control the investee for its own account; delegated power is attributed to the principal (IFRS 10.B58-B60).
Official guidance: IFRS issued standards
Tier 1 Sukuk consultation memos consolidate the legal issuer and assess classification at group level, eliminating the SPV instrument against equity when classified as an equity component. Instruments issued to external holders by a consolidated SPV are evaluated from the group perspective under IAS 32.15: discretionary distributions and no contractual obligation to deliver cash support equity classification, and the balance is then presented as a separate component of group equity.
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Official guidance: IFRS issued standards
NCI shares of profit or loss and net assets are presented separately even when allocated losses create a deficit balance in the non-controlling interest. IFRS 10.B94 prohibits capping loss allocation at zero, a common legacy error. Changes in ownership that do not result in loss of control are equity transactions under IFRS 10.23, with no gain or loss recognized in profit or loss.
Consolidate the investee from the date the investor obtains control until the date control is lost (IFRS 10.20).
Official guidance: IFRS issued standards
Interim reporting packs may consolidate immaterial structured entities without changing group totals materially, but unconsolidated vehicles still need structured-entity disclosure when required. IFRS 12.24-31 covers sponsored entities even where the group holds no remaining interest at period end (IFRS 12.27), and requires the maximum exposure to loss and any financial or other support provided without a contractual obligation (IFRS 12.29-30).
Prepare consolidation entries, NCI presentation, and the unconsolidated structured-entity disclosures (IFRS 10.B86; IFRS 10.22; IFRS 12.24-31). Prepare consolidation entries and NCI presentation; no unconsolidated structured-entity note is required (IFRS 10.B86; IFRS 10.22; IFRS 12.10-19).
Official guidance: IFRS issued standards
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