Significantly Influenced Entities

Significant influence is the ability to influence the strategic operating, investing and financing policies of an entity. Significant influence can be present for a variety of reasons: representation on the Board; the sharing of common management; involvement in policy making; or a strong economic interest in another organization may point to the existence of significant interest. There is a presumption that the reporting organization has significant influence over a for-profit organization if it holds at least 20% of the voting shares. (An organization does not have to consider the accounting implications of significant influence if the significant influence is only of a temporary nature.)

Where there is significant influence over a non-profit organization, the following should be disclosed:

a description of the relationship (eg. significant influence and how it arises)
a description of the significantly influenced organization’s purpose, community of service, and income tax status
the nature and extent of any economic interest the reporting organization has in the influenced organization (4450.40)

Where significant influence exists over a profit orientated organization, the reporting organization should account for the investment using the equity method as described in section 3051 of the CICA Handbook. (4450.43)