Objective: IAS 24 requires disclosure of related party relationships, transactions, and outstanding balances to draw attention to the possibility that financial statements may have been affected by such relationships.
- Applies to all entities preparing financial statements in accordance with IFRS
- Focuses on relationships that could affect financial statements
- Key objective: Enhance transparency about potential conflict of interest situations
Related Party: A person or entity that is related to the entity that is preparing its financial statements.
A party is related to an entity if:
- Direct or indirect control: Has power to govern financial and operating policies
- Joint control or significant influence: Over the entity
- Members of key management personnel: Of the entity or its parent
- Close family members: Of individuals in control or key management
- Post-employment benefit plans: For the benefit of employees
| Category | Examples |
|---|---|
| Entities | Parent, subsidiaries, fellow subsidiaries, associates, joint ventures |
| Individuals | Key management personnel, close family members of such individuals |
| Other Parties | Post-employment benefit plans, entities controlled by related individuals |
Note: Two entities are not related parties simply because they have common directors or key management personnel.
Key Management Personnel: Those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly.
- Includes all directors (executive and non-executive)
- Includes senior executives with strategic responsibilities
- Compensation disclosures required for all KMP
• Short-term employee benefits
• Post-employment benefits
• Other long-term benefits
• Termination benefits
• Share-based payment compensation
- Relationships between parent and subsidiaries (regardless of transaction occurrence)
- Name of the entity's parent and, if different, the ultimate controlling party
- Key management personnel compensation in total and by category
- For each related party: nature of relationship, transactions, and balances
- Amounts of transactions, outstanding balances, and provisions for doubtful debts
- Terms and conditions of related party transactions
| Transaction Type | Disclosure Required |
|---|---|
| Purchases/Sales | Goods, services, or property |
| Leases | As lessor or lessee |
| Transfers | Research and development |
| Licensing | Agreements |
| Finance | Loans, equity contributions, guarantees |
Note: Disclosures are required even if no consideration is exchanged (e.g., free provision of services).
- No disclosure required for compensation, expense allowances, or similar items paid to KMP in the ordinary course of business
- Government-related entities may provide simplified disclosures
- No need to disclose transactions eliminated in consolidated financial statements
- Disclosure of related party relationships with state-controlled entities may be limited