Qualitative disclosures refer to the non-numeric information that provides context and insight into the financial statements and operations of an entity, helping stakeholders understand the qualitative aspects of a company's financial position. These disclosures are crucial for interpreting the nuances behind quantitative data, particularly in complex structures like special purpose entities (SPEs) and variable interest entities (VIEs). They include management's discussion on risk factors, governance practices, and the nature of relationships with related parties, which are essential for assessing the risks associated with these entities.
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