Related Party Disclosures
IAS 24
Related Party Disclosures
IAS 24
Definition
- 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 over 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 (which means that each parent, subsidiary and fellow subsidiary is related to the others).
- One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group)
- Both entities are joint ventures of the same third party (common venturer)
- One entity is a joint venture of a third entity and the other entity is an associate of the third entity
- The entity is controlled or jointly controlled by a person related to the reporting entity (see above)
- A person who controls or joint controls the reporting entity 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)
- Close members of the family of a person include = children, spouse, and dependents
- the following are not related parties:
- two entities simply because they have a director or other member of key management personnel in common or because a member of key management personnel of one entity has significant influence over the other entity.
- two venturer’s simply because they share joint control over a joint venture.
- a customer, supplier, franchisor, distributor or general agent with whom an entity transacts a significant volume of business, simply by virtue of the resulting economic dependence.
- Key management personnel have authority and responsibility for planning, directing and controlling the activities of the entity
Disclosures
- Relationships between a parent and its subsidiaries shall be disclosed regardless of whether there have been transactions between them
- An entity shall disclose key management personnel compensation in total and for each of the following categories:
- short-term employee benefits;
- post-employment benefits;
- other long-term benefits;
- termination benefits; and
- share-based payment
- if there are related party transactions, must disclose the following
- nature of the related party relationship
- amount of the transactions
- the amount of outstanding balances and commitments
- terms and conditions
- guarantees given and received
- provision for doubtful debt related to the outstanding balances from related parties
- expense recognized in the period due to bad debt from related parties
Comparison to ASPE
- Related party transactions are covered under ASPE 3840
- Under IFRS, related party transactions are measured just like any other transaction; however, you need to disclose the details of the related party transaction
- Under ASPE, there are measurement rules for related party transactions; at either the exchange amount or carrying value