Topic 8: IAS 24

• This Standard requires disclosure of related party relationships, transactions and outstanding balances, including commitments, in the consolidated and separate financial statements of a parent or investors with joint control of, or significant influence over, an investee presented in accordance with IFRS 10 Consolidated Financial Statements or IAS 27 Separate Financial Statements.
• This Standard also applies to individual financial statements.
• Related party transactions and outstanding balances with other entities in a group are disclosed in an entity's financial statements.
• Intragroup related party transactions and outstanding balances are eliminated, except for those between an investment entity and its subsidiaries measured at fair value through profit or loss, in the preparation of consolidated financial statements of the group.
• Related party relationship


  A normal feature of commerce and business where an entity has the ability to affect the financial and operating policies of the investee through the presence of control, joint control or significant influence.
• A related party relationship could have an effect on the profit or loss and financial position of an entity.
• Related parties may enter into transactions that unrelated parties would not.
• The mere existence of the related party relationship may be sufficient to affect the transactions of the entity with other parties.
• Knowledge of an entity's transactions, outstanding balances, including commitments, and relationships with related parties may affect assessments of its operations by users of financial statements, including assessments of the risks and opportunities facing the entity.
• Related party


  A person or entity that is related to the entity that is preparing its financial statements (the 'reporting entity').
• Related party transaction


  A transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged.
• Close members of the family


  Family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.
• Compensation


  All employee benefits, including employee benefits to which IFRS 2 Share-based Payment applies.
• Key management personnel


  Persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity.
• Government


  Government, government agencies and similar bodies whether local, national or international.
• Government-related entity


  An entity that is controlled, jointly controlled or significantly influenced by a government.
• In considering each possible related party relationship, attention is directed to the substance of the relationship and not merely the legal form.
• Certain entities and relationships are not considered related parties in the context of this Standard.
• In the definition of a related party, an associate includes subsidiaries of the associate and a joint venture includes subsidiaries of the joint venture.
• Related party relationship


  On or because a member of key management personnel of one entity has significant influence over the other entity
• Related party relationship


  Two joint venturers simply because they share joint control of a joint venture
• Entities that are not considered related parties simply by virtue of their normal dealings with an entity


  • Providers of finance
  • Trade unions
  • Public utilities
  • Departments and agencies of a government that does not control, jointly control or significantly influence the reporting entity
• Related party relationship


  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
• In the definition of a related party, an associate includes subsidiaries of the associate and a joint venture includes subsidiaries of the joint venture
• For example, an associate's subsidiary and the investor that has significant influence over the associate are related to each other
• Relationships that shall be disclosed irrespective of whether there have been transactions between them


  • Between a parent and its subsidiaries
• An entity shall disclose the name of its parent and, if different, the ultimate controlling party
• If neither the entity's parent nor the ultimate controlling party produces consolidated financial statements available for public use, the name of the next most senior parent that does so shall also be disclosed
• 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 an entity obtains key management personnel services from another entity (the 'management entity'), the entity is not required to apply the requirements in paragraph 17 to the compensation paid or payable by the management entity to the management entity's employees or directors
• Disclosures required for related party transactions and outstanding balances

  • The amount of the transactions
  • The amount of outstanding balances, including commitments, and their terms and conditions, including whether they are secured, and the nature of the consideration to be provided in settlement, and details of any guarantees given or received
  • Provisions for doubtful debts related to the amount of outstanding balances
  • The expense recognised during the period in respect of bad or doubtful debts due from related parties
• Categories of related parties for which disclosures are required

  • The parent
  • Entities with joint control of, or significant influence over, the entity
  • Subsidiaries
  • Associates
  • Joint ventures in which the entity is a joint venturer
  • Key management personnel of the entity or its parent
  • Other related parties
• Examples of transactions that are disclosed if they are with a related party

  • Purchases or sales of goods (finished or unfinished)
  • Purchases or sales of property and other assets
  • Rendering or receiving of services
  • Leases
  • Transfers of research and development
  • Transfers under licence agreements
  • Transfers under finance arrangements (including loans and equity contributions in cash or in kind)
  • Provision of guarantees or collateral
  • Commitments to do something if a particular event occurs or does not occur in the future, including executory contracts (recognised and unrecognised)
  • Settlement of liabilities on behalf of the entity or by the entity on behalf of that related party
• Participation by a parent or subsidiary in a defined benefit plan that shares risks between group entities is a transaction between related parties
• Disclosures that related party transactions were made on terms equivalent to those that prevail in arm's length transactions are made only if such terms can be substantiated
• Items of a similar nature may be disclosed in aggregate except when separate disclosure is necessary for an understanding of the effects of related party transactions on the financial statements of the entity
• Government-related entities


  A reporting entity is exempt from the disclosure requirements of paragraph 18 in relation to related party transactions and outstanding balances, including commitments, with a government that has control or joint control of, or significant influence over, the reporting entity, and another entity that is a related party because the same government has control or joint control of, or significant influence over, both the reporting entity and the other entity
• Information to be disclosed by government-related entities that apply the exemption


  • The name of the government and the nature of its relationship with the reporting entity (ie control, joint control or significant influence)
  • The nature and amount of each individually significant transaction, and for other transactions that are collectively, but not individually, significant, a qualitative or quantitative indication of their extent
• Factors to consider in determining the level of detail to be disclosed for government-related entities that apply the exemption