Ind AS 112 requires an entity to disclose information that enables users to evaluate the nature of, and risks associated with, its interests in subsidiaries, joint arrangements, associates and unconsolidated structured entities, and to evaluate the effects of those interests on its financial position, performance and cash flows — which in audit terms means testing that every entity in the group structure chart appears in the note with the right classification, and that significant restrictions, risk exposures and judgements used to determine control or significant influence are each separately disclosed rather than assumed to be covered by the consolidation itself.
What the disclosure completeness check should cover
| Relationship | Minimum disclosure to test |
|---|---|
| Subsidiaries | Proportion of ownership and voting rights held by non-controlling interests, and significant restrictions on the ability to access or use group assets or settle group liabilities. |
| Non-controlling interests | NCI's accumulated balance and allocated profit/loss for each subsidiary with material NCI, not an aggregated figure. |
| Joint arrangements and associates | Nature, extent and financial effects of the interest, including summarised financial information for each individually material joint venture or associate. |
| Unconsolidated structured entities | Nature and extent of interests, including the type of exposure to loss from any support provided, even where no contractual obligation to provide that support exists. |
| Significant judgements | The basis on which control, joint control or significant influence was determined, especially where it is not obvious from voting rights alone. |
Testing procedure
- 01Obtain the full group structure chart independentlyDo not rely solely on the entity list management provides for the disclosure note — cross-check against statutory filings, shareholding registers and board minutes to catch an entity omitted from the note.
- 02Trace summarised financial information for JVs/associates to their own financial statementsFigures quoted in the Ind AS 112 note should agree with the audited (or latest available) financial statements of the investee, not an internally prepared summary that hasn't been reconciled.
- 03Test for undisclosed support arrangements to unconsolidated structured entitiesLook for guarantees, liquidity facilities, or informal support (letters of comfort) given to an entity not consolidated — these need disclosure under Ind AS 112 even without a present legal obligation.
This is practical guidance written for audit teams, not an authoritative statement of any standard or statute. Standards, forms and timelines change. Check the current text issued by the ICAI and the relevant authority before relying on anything here in an audit file.
Related resources
- Audit workflow & automationSA 600: group audits, and the group auditor's responsibility for component auditors' workUsing another firm's work on a subsidiary doesn't transfer responsibility for the group opinion. SA 600 is explicit about what stays with the group auditor regardless.
- Related parties & disclosuresCommon-control entities: why they raise audit riskA promoter running several unlisted entities under common control creates a structure where money, not just transactions, can move without much friction. That is the risk to test for.
- Related parties & disclosuresRelated-party disclosure checklist for financial statementsA related-party note that lists transactions but not relationships, or balances but not terms, is an incomplete disclosure even if every number in it is correct.
- Audit workflow & automationSA 320: materiality in planning and performing an auditOverall materiality and performance materiality are not the same number with a safety margin added — they answer two different questions.
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- Purchase register checkDuplicate payments, round-sum amounts, weekend-dated invoices, incomplete records.
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- Related-party transaction screenerTransactions above a threshold you set with no approval reference, grouped by counterparty.
- Depreciation useful life checkerCompares a useful life in use against the Schedule II, Part C indicative figure.
- Materiality calculatorOverall and performance materiality against PBT, revenue, assets or equity, with reasoning shown.
- Sample size calculatorStatistical sample size for a test of controls or a substantive test of detail.