According to FRS 102, what constitutes control over an entity?

Control over an entity, as defined in FRS 102, specifically refers to the power to govern the financial and operating policies of that entity. This concept emphasizes the ability to make decisions that fundamentally affect the direction and strategic management of the organization. The power to control includes setting policies that govern how resources are utilized, how operations are managed, and how financial reporting is conducted.

This definition encompasses various aspects of governance beyond mere ownership, acknowledging that control can exist in different forms, such as through contractual arrangements or other means of influence. It is not solely dependent on ownership percentages or board representation but focuses on the actual authority to make decisions that impact the entity's operations and objectives.

In contrast, the other criteria mentioned, such as owning a certain percentage of voting rights or having a seat on the board, do not, by themselves, ensure comprehensive control as defined by FRS 102. While these may contribute to having significant influence, they do not encapsulate the full extent of governance power over financial and operational policies. Therefore, the most complete understanding of control aligns with the definition focusing on the governance of financial and operating policies.