IAS 24 Related Party Disclosures

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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 !!!

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