IAS 24 outlines disclosure requirements for related party relationships and transactions. It defines a related party as persons or entities that can control or influence the reporting entity. Entities must disclose the nature and amount of significant transactions with related parties, as well as outstanding balances, including key terms. They must also disclose compensation for key management personnel. The objective is to draw attention to how a company's financial position and results may be affected by related party relationships.
IAS 24 outlines disclosure requirements for related party relationships and transactions. It defines a related party as persons or entities that can control or influence the reporting entity. Entities must disclose the nature and amount of significant transactions with related parties, as well as outstanding balances, including key terms. They must also disclose compensation for key management personnel. The objective is to draw attention to how a company's financial position and results may be affected by related party relationships.
IAS 24 outlines disclosure requirements for related party relationships and transactions. It defines a related party as persons or entities that can control or influence the reporting entity. Entities must disclose the nature and amount of significant transactions with related parties, as well as outstanding balances, including key terms. They must also disclose compensation for key management personnel. The objective is to draw attention to how a company's financial position and results may be affected by related party relationships.
IAS 24 outlines disclosure requirements for related party relationships and transactions. It defines a related party as persons or entities that can control or influence the reporting entity. Entities must disclose the nature and amount of significant transactions with related parties, as well as outstanding balances, including key terms. They must also disclose compensation for key management personnel. The objective is to draw attention to how a company's financial position and results may be affected by related party relationships.
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IAS 24
Related Party Disclosures
Prepared by IFRS Project Office Nov 2019
Objective of IAS 24
• The objective of IAS 24 is to ensure that an
entity's financial statements 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. Who are related parties? • A related party is a person or entity that is related to the entity that is preparing its financial statements (referred to as the 'reporting entity'). (a) A person or a close member of that person's family is related to a reporting entity if that person: controls, jointly controls or exercises significant influence over the reporting entity; or is a key management personnel of the reporting entity or its parent.
Prepared by IFRS Project Office
Cont’d…. (b) An entity is related to a reporting entity if any of the following conditions applies: 1) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). 2) Two entities are joint ventures of the same third party. 3) 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. Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity. Like : That person’s children and spouse or domestic partner; Cont’d
• The following are deemed not to be related:
• Two entities simply because they have a director or key manager in common. • 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 (even though they may affect the freedom of action of an entity or participate in its decision-making process). • a single customer, supplier, distributor, or general agent with whom an entity transacts a significant volume of business merely by virtue of the resulting economic dependence. Cont’d • What are related party transactions? • A related party transaction is a transfer of resources, services, or obligations between related parties, regardless of whether a price is charged.
Prepared by IFRS Project Office
Disclosure
• Relationships between parents and subsidiaries.
• Regardless of whether there have been transactions between a parent and a subsidiary, an entity must disclose the name of its parent and, if different, the ultimate controlling party. • Management compensation. 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 • share-based payment benefits Cont’d… •Related party transactions. If there have been transactions between related parties, disclose the nature of the related party relationship as well as information about the transactions and outstanding balances necessary for an understanding of the potential effect of the relationship on the financial statements. These disclosure would be made separately for each category of related parties and would include: the amount of the transactions the amount of outstanding balances, including terms and conditions and guarantees. provisions for doubtful debts related to the amount of outstanding balances. expense recognized during the period in respect of bad or doubtful debts due from related parties. Thank You !!!