IFRS 11 specifies standards for financial reporting by businesses with stakes in jointly owned structures (joint arrangements).

The IFRS 11 standard, released in May 2011, is applicable to annual reporting periods starting on or after January 1, 2013.

Core Principle of IFRS 11

The fundamental tenet of IFRS 11 is that an entity in a joint arrangement must analyze its duties and responsibilities in order to identify the kind of joint arrangement in which it is engaged and then account for those responsibilities and liabilities in compliance with that type of joint arrangement.

Important Terms:

Joint Arrangement

An agreement that two or more entities jointly control is referred to as a joint arrangement.

The qualities of a joint arrangement are as follows:

  • A contractual agreement between the parties binds them
  • Two or more of those entities will share joint control of the contractual arrangement

A joint agreement is either a joint venture or a joint operation.

If a potential investor is interested in a joint venture, they must classify the arrangement correctly and employ expert accounting services in Dubai to carry out the proper accounting procedure.

Joint Control

Joint control is the legally agreed-upon division of control over an arrangement, and it only occurs when decisions on the pertinent activities—those that have a major impact on the arrangement’s financial results—require the assent of all entities who share control.

Joint Venture

A joint arrangement in which the entities that share control of the agreement have entitlements to the agreement’s net assets.

Joint Operation

A joint arrangement in which the entities that share authority over it have entitlements to the resources and responsibilities to pay the liabilities related to it.

Party to a Joint Arrangement

An entity that partakes in a joint arrangement, regardless of whether it shares control with another organization.

Joint Venturer

A partner in a joint venture who holds common control over it.

Separate Vehicle

A distinct financial structure that can be identified, including independent legal entities or those that are recognized by law, irrespective of whether they possess a legal personality.

Where Joint Arrangements are Common?

Joint arrangements are frequent across a broad range of businesses, either via strategic partnerships or having separate vehicles. IFRS 11 has numerous practical implications for various sectors, including:

  • Wholesale commerce
  • Business services
  • Real estate
  • Investment and commodities companies
  • Durable and non-durable items
  • Software
  • Electronics
  • Extractives – mining, oil & gas
  • Telecommunication

Financial Accounts of the Entities to a Joint Arrangement:

Joint Operations

A joint operator acknowledges the following in respect to its stake in a joint operation:

  • its assets, along with its share of any joint assets
  • its liabilities, along with its share of any joint obligations.
  • its share of sales proceeds from the joint operation’s production
  • its profits from the selling of its portion of the joint operation’s output
  • its costs, as well as its portion of any expenses involved jointly

According to the applicable IFRSs, a joint operator accounts for the assets, liabilities, revenues, and costs associated with its participation in a joint operation.

It is the holder’s responsibility to adhere to all of IFRS 3’s financial reporting rules, with the exception of those which contradict IFRS 11, when he or she owns shares in a joint operation that is a business, as defined in IFRS 3 Business Combinations.

Both the original acquisition of a stake in a joint operation and the purchase of a subsequent interest in a joint operation are subject to these requirements (in the latter case, previously held interests are not remeasured).

Joint Ventures

A joint venturer must account for its interest in a joint venture as an investment in compliance with IAS 28 Investments in Associates and Joint Ventures, unless the entity is excluded from doing so according to the rules of that standard.

An entity that partakes in a joint venture but it does not have joint control of it accounts for its stake in the arrangement in compliance with IAS 28 unless it holds effective control over the joint venture, in which case it accounts for it in compliance with IFRS 9 Financial Instruments (as amended in 2011).

Individual Financial Statements

Depending on how much the entity is involved in the joint arrangement and what kind it is, the joint arrangement will be accounted for differently in the separate financial statements of the entity:

  • If the party is a joint venturer or operator, it must disclose its interest in a joint operation and a joint venture as defined in IAS 27 Separate Financial Statements.
  • If the entity is a participant in a joint arrangement but does not hold joint control over it, it must account for its stake in:
  1. a) a joint initiative in line with paragraph 23
  2. b) joint venture should be treated in compliance with IFRS 9, unless the party has effective control over the joint venture, in which situation it should be treated in compliance with IAS 27’s paragraph 10 (as amended in 2011).


IFRS 11 does not mention any disclosure requirements. However, the disclosures required are described in IFRS 12 Disclosure of Interests in Other Entities.

For parties with stakes in joint arrangements, the more important disclosure obligations are:

  • Essential assumptions and judgements
  • The type, extent, and financial impact of a company’s interests in joint arrangements
  • Agreements regarding joint ventures

Association with IFRS 10

The same control principle that underpins IFRS 10 Consolidated Financial Statements also underpins IFRS 11.

In summary, the control model in IFRS 10 necessitates the presence of three essential components:

1)      Power

2)      Variable return exposure

3)      The link between power and variable returns.

All of the three elements of the control model has separate elements to examine when deciding whether the component is in compliance with the definition.

Audit Firms in Dubai:

For many years, external and internal auditors at audit firms in Dubai have been using International Financial Reporting Standards (IFRS) to help them perform their duties. IFRS were created to provide a single set of standards for all countries. One can better understand the flaws in their organization’s internal controls and procedures by conducting an internal audit process before the external audit. Although some businesses do internal audits using their own resources, hiring the top audit firms in Dubai for the auditing process results in better outcomes.

The chartered accountants at audit firms in Dubai can provide expert support quickly if your business is based in Dubai or the United Arab Emirates.


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