(Summary) Ind AS 24
Related Party Disclosures
is to ensure that an entity’s FS contain the disclosures necessary to draw attention to the possibility that its financial position and profit or loss may have been affected by the existence of related parties and by transactions and outstanding balances with such parties.
Application of standard:
- Identifying related party relationships and transactions;
- Identifying outstanding balances, including commitments, between an entity and its related parties;
- Identifying the circumstances in which disclosure of the items in (a) and (b) is required; and
Determining the disclosures to be made about those items.
- Related party
- Related party transaction
- Key management personnel (KMP)
- Close members of the family of a person
Related party –
A person or entity that is related to the entity that is preparing its FS (referred to as the ‘reporting entity’).
A person or a close member of that person’s family is related to a reporting entity if that person:
- has control or joint control of the reporting entity;
- has significant influence over the reporting entity; or
- is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.
An entity is related to a reporting entity if any of the following conditions applies:
- The entity and the reporting entity are members of the same group (each parent, subsidiary and fellow subsidiary is related to the others).
- One entity is an associate or JV of the other entity (or of a member of a group of which the other entity is a member).
- Both entities are JV of the same third party.
- One entity is a JV of a third entity and the other entity is an associate of the third entity.
- The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.
- The entity is controlled or jointly controlled by a person identified in (a).
- A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
- The entity, or any member of a group of which it is a part, provides key management personnel services to the reporting entity or to the parent of the reporting entity.
The following are not related:
- Two entities simply because they have a director or key manager in common
- Two venturers who share joint control over a joint venture
- Providers of finance, trade unions, public utilities, and departments and agencies of a government that does not control, jointly control or significantly influence the reporting entity, simply by virtue of their normal dealings with an entity
- A customer, supplier, franchiser, distributor, or general agent with whom an entity transacts a significant volume of business merely by virtue of the resulting economic dependence.
Relationships between parents and subsidiaries: regardless of whether there have been transactions between them,
Disclose the name of its parent & the ultimate controlling party:
- Disclose key management personnel (KMP) compensation in total and for each of the following categories:
- Short-term employee benefits
- Post-employment benefits
- Other long-term benefits
- Termination benefits
- Share-based payment benefits
- If an entity obtains KMP services from a management entity, do not disclose the compensation paid or payable by the management entity to the management entity’s employees or directors.
- Disclose the amounts incurred by the entity for the provision of KMP services that are provided by the separate management entity.
Related party transactions.
Disclose the nature of the related party relationship as well as information about the transactions and outstanding balances.